The Office of the Comptroller of Puerto Rico issued a qualified opinion on the fiscal operations of the Municipality of Mayagüez. A qualified opinion is issued when noncompliance, individually or as a whole, is significant but not pervasive.
The Report reveals that Mayagüez did not take sufficient administrative measures to avoid and reduce the accumulated deficits in the Operational Fund and did not appropriate the current deficits in the budgets. The deficit of $4.4 million recorded in 2015 increased to $8.1 million in 2016 and to $23 million in 2017, this last figure representing 32% of the total budget.
To the detriment of the Municipality, the budgets also did not consider the revenues based on the collection experience of prior years nor the revenues certified in the most recent single audit, as required by Act 81-1991 on Autonomous Municipalities. In this way, from 2014 to 2017, the Municipality overestimated revenues by $6.3, $13.4, $13.7 and $12.8 million respectively (see Exhibit 1 of the Report). These situations are attributed to the fact that the Finance and Budget managers, the mayor and the Municipal Legislature departed from the provisions of law and regulation and did not administer the finances efficiently.
The five-finding audit notes that an improper payment of $51,250 was made to a contractor for services not performed. Our auditors did not locate, nor did the officials provide, any work plan from the company contracted for the coordination of a First Festival of Treasures of the Cultural Heritage of Mayagüez. Nor was information found on the contracting of artists, promotion and graphic designs for the contracted activity. A similar situation had been noted in Audit Report M-13-35 of 2013.
The Municipality accumulated debts totaling $12.1 million with private suppliers and governmental entities such as the Retirement Systems, the Treasury, the Aqueduct and Sewer Authority and others. To pay the debts, it obtained three loans from the Government Development Bank for $12.1 million with surcharges of $50,247 in May 2012. In addition, the Department of Labor and Human Resources imposed $16,168 in interest and surcharges for paying the unemployment insurance late.
The Report reveals that the Municipality spent $672,675 on a building for administrative offices and a parking area that have not been used. The interior of the construction was deteriorated due to leaks. This situation, which is attributed to the mayor's lack of planning, leads to having to use additional resources to repair the damage to the structure (see photos in Exhibit 2 of the Report).
The audit comments that the Municipality has not collected $166,200 from the lease of the municipal parking lot or of La Candelaria Cockpit. In addition, 514 employees have worked under the classification of temporary, for periods of up to 41 years. Current law provides that such appointments may not exceed one year, with the exception of persons on special projects.
The Municipality had 33 civil lawsuits pending resolution for $20.4 million. The lawsuits were for damages, collection of money, civil action and unjustified dismissal.
The report covers the period from July 1, 2013 to June 30, 2017.
See Audit Report M-19-44.
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