December 22, 2014

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Audit finds Lorain officials illegally moved funds

LORAIN — An audit released Tuesday by the Ohio Auditor’s Office said Lorain officials made two illegal budget transfers totaling $100,000 last year.

The transfer process was approved by City Council members in 2009. However, the audit said the transfers during the 2012 fiscal year from the Water Fund and Water Pollutions Control Fund to the Economic Development Fund violated Ohio law. It said approval from a Lorain County Common Pleas Court judge or from the Ohio Department of Taxation wasn’t sought.

The audit recommends returning the money to the funds. “We recommend Council and management carefully review and adhere to the (law),” said the audit signed by state Auditor Dave Yost.

Lorain Auditor Ron Mantini said he has consulted with Law Director Pat Riley and Lorain plans to seek approval for the transfers from a Common Pleas Court judge and state Tax Commissioner Joseph Testa. Mantini said no legal opinion was sought when Council approved the transfer process.

“It was something we felt we could do based on what other cities have done,” said Mantini, adding that the city of Hamilton has a similar process. “We certainly do plan on appealing it because we don’t want to have to pay that $100,000 back.”

The Economic Development Fund has a $150,000 annual budget, which includes $50,000 from the general fund, Mantini said. The fund provides money for business loans, tax incentives and marketing to attract businesses to Lorain and expand existing ones.

Mantini said the idea behind the transfers is that expanding businesses increases sewer and water bill payments.

Mantini said money from the fund to market Lorain to businesses included spending between $3,000 and $4,000 to send Rey Carrion, then acting director of building, housing and planning, to attend a trade show in Las Vegas in June or July.

“You make contacts by doing that,” Mantini said.

Contact Evan Goodenow at 329-7129 or egoodenow@chroniclet.com.