New York State Comptroller's Office

The president and chief executive officer of Western Regional Off-Track Betting Corp. this morning said that stronger policies and procedures have been put into place in light of audits by the New York State Comptroller’s Office that revealed the public benefit company failed in its oversight of perks distributed and in prompt reimbursement for personal use of an official vehicle.

The audit findings were released today by State Comptroller Thomas P. DiNapoli, who said WROT “needs to clean up its operations.”

“Revenues from the OTB are supposed to go to participating municipalities, not to give board members and employees generous perks and other benefits,” he stated in the report. “The board said they are acting on our recommendations and I urge them to continue to tighten oversight and eliminate questionable spending.”

WROTB President and CEO Henry Wojtaszek, speaking after the organization’s board meeting today, said new controls and record keeping policies have been made.

“We have issued a policy that is a very good policy,” he said. “We welcome the Comptroller’s input and we will continue to improve upon our protocols.”

Wojtaszek said the WROTB board has provided an answer to the Comptroller’s Office, which is included in the audit report.

According to the first audit, WROTB (the parent company of Batavia Downs Gaming & Hotel) spent at least $121,000 on tickets to sporting events, concerts, food and alcohol for board members, employees and other individuals without the oversight required by state rules. A second audit released found that Wojtaszek did not reimburse the organization for his personal use of an official vehicle in a timely manner.

DiNapoli reported that both audits “found lax oversight of operations by the board of directors, a troubling tone at the top of the organization for establishing and following the rules, and poor documentation.”

He also urged WROTB to seek reimbursement for tickets and other expenses that were distributed improperly.

The first audit examined the corporation’s marketing and promotional operations from September 2017 through December 2019 which featured giving free tickets to Buffalo Bills, Buffalo Sabres and Rochester Americans games and to area concerts.

While this is permitted by the state Gaming Commission, this practice also requires WROTB to “submit an annual marketing plan identifying who may receive promotions and keep information on who received the complimentary items.”

The audit states that the corporation’s board approved almost $1.3 million on leases for suites at sporting venues, concert tickets and food and beverages, but failed to keep accurate records of at least $121,000 worth of these perks given to board members, employees and others.

Specific mention was made of a hockey game on Nov. 23, 2018 when the board chairman (Richard Bianchi) received six tickets and the vice president of operations (Scott Kiedrowski) received nine tickets, and another hockey game on Dec. 29, 2018, when the board chairman received four tickets, and five tickets were given to another board member and five other tickets were recorded as given to “host.”

As a result, auditors recommended that WROTB do the following:

• Develop and adopt a written policy and procedures for the distribution of tickets and who is eligible to get them.
• Seek reimbursement for tickets and food and beverages if not appropriately given.
• Define in the marketing plan what groups or categories of complimentary items, including tickets, will be given out as required by state regulations.
• Develop a system to maintain a complete, detailed, and accurate record of tickets distributed.

The second audit, covering a period of four years to April 2020, found that Wojtaszek did not track his personal use of his official vehicle and keep mileage logs, as all employees were required to do. He also did not pay the annual fee of $260 paid by other employees.

He later reimbursed the OTB $3,484 after an internal auditor found that he was not following the OTB’s policy.

Key recommendations in this case are as follows:

• Ensure all employees who are assigned take-home vehicles complete and file accurate weekly mileage logs.
• Require employees to reimburse the OTB for personal use in a timely manner.

In response to the audits, Bianchi wrote two letters to the Comptroller’s Office, outlining plans of action.

Summarizing, he wrote that the WROTB board has implemented a new procedure to provide for better tracking of “charitable tickets,” with continued updates “in respect to ticket distribution” for the board’s review and adoption, and will conduct a review of the prior ticket distribution to see if any tickets were given “to a non-eligible person,” and, if so, will seek reimbursement.

Also, the annual marketing plan will be expanded to specify “groups and categories of eligible complimentary items, including tickets, and the basis for such distribution,” with all tickets to be logged into a “dual recording system to ensure accuracy and proper distribution.”

As far as reporting of the use of personal vehicles, Bianchi wrote that the board is reviewing its motor vehicle use policy to “include the elimination of take-home vehicles for assigned WROTB employees” but, in the meantime, “a procedure has been established to ensure that a supervisor or officer is assigned the responsibility to review the vehicle logs monthly to determine and collect any reimbursement from the assigned employee for personal use of the vehicle.”

He also reported to the Comptroller’s Office that Wojtaszek, in April 2019, reimbursed the company $3,484 for personal use of an assigned vehicle for the period of July 2016 through April 2019 and, after further review by an internal auditor, another $528 last month for vehicle use from June 2016 through January 2017.

Despite the efforts of state representatives in Albany, the Genesee County Legislature’s hopes for enabling legislation to remedy its sales tax and revenue distribution dilemma have been dashed by the Democratic majority in the New York State Assembly and Senate.

"Senator (Edward) Rath and Assemblyman (Steve) Hawley tried everything they could to make this happen, but their colleagues in the majority didn't agree," said Legislature Chair Rochelle Stein on Thursday night.

So, as a result, county leaders have come up with a plan on their own – actually two options depending upon buy-in to updated water agreements from all municipalities – to ensure equitable sharing of revenue to Genesee’s towns and villages.

On Wednesday, Stein and County Manager Matt Landers presented their solution at a meeting of town supervisors and village mayors at the Old County Courthouse.

The Batavian has attained a copy of the discussion outline, which includes the following two options that are on the table:

(1) Distribute $10 million annually to the municipalities in sales tax revenue for the next 38 years as long as all towns and villages sign updated water supply agreements by Aug. 13. As of today, the Towns of Darien and Pembroke and Village of Corfu have yet to sign.

OR

(2) Without universal updated water supply agreements, the county will allot $7 million for annual sales tax distributions to towns and villages, and pass annual revenue distribution resolutions for another $3 million, to allow for the equalization of water surcharge revenue.

SEEKING THE STATE’S HELP

Landers said the county’s current revenue sharing process has created a situation, per state law, where towns with villages inside them have to keep two separate books and have two separate tax rates – an A fund for townwide sales tax that affects everyone and a B fund for sales tax that only affects the services of taxpayers outside the village.

“(State legislation) would have fixed an accounting issue with towns that also have villages,” Landers said.

Unfortunately for the county, state lawmakers didn’t go for the idea.

“The enabling legislation that we were seeking during this last New York State session was to be able to allow the towns that had villages inside them to receive that revenue distribution into their B funds, which was the unintended consequence of revenue distribution,” Stein said. “That failed to get picked up in Albany.”

She said the majority in both chambers “felt the county of Genesee was trying to usurp the power of the state. Therefore, (they were) not interested in helping Genesee County fix that B fund revenue issue.”

ALL IN ONE BASKET?

Now, the county is looking to place all the municipalities back into the sales tax revenue pool.

“The risk to the county in putting everyone back into the sales tax is that we have that water surcharge to help pay for the big water – to bring it into the county,” Stein said. “Without having all 20 towns and villages sign on, we would then most likely get sued by the other 17 that are paying the surcharge – and we would deserve it, let’s put it that way.”

She explained that the $10 million figure that the county is committed to putting into the sales tax agreement would fix the unbalanced A and B tax rate in all but one town – “and that one, through some shared services, could happen very quickly. The $7 million would fix three.”

Should the Towns of Darien and Pembroke and Village of Corfu opt into the water agreement, the county would be able to distribute the $10 million in sales tax revenue to the towns and villages, with the amounts determined by the taxable assessed value of each municipality and equalization rates.

“If those two towns and one village decide not to opt in to the water agreement, the county – in order to equalize the surcharge of the $1.20 per thousand (gallons) for the water users – would have to go to revenue distribution without those three signed agreements (option 2 above),” Stein said.

Calls and emails to Darien Town Supervisor Steve Ferry Jr., Pembroke Supervisor Thomas Schneider Jr. and Corfu Mayor Thomas Sargent for comment were not returned at the time of the posting of this story.

Landers said that he plans to meet over the next couple weeks with government officials in those locations.

“We’re not looking to single out those municipalities,” he said. “I understand they are trying to do the best for their residents.”

A NEW SALES TAX AGREEMENT

In order to make this work, the county needs the Batavia City Council to agree to amend the 40-year sales tax agreement (there are 38 years remaining). The current agreement is only between the county and the city.

“This is a fix that the county has available to us; the county has no skin in this game,” Stein said. “The sales tax agreement is between the City of Batavia and the county, and those are the signatories still to this agreement. We are both amenable to fixing that unbalanced rural property tax situation.”

Landers pointed out that as things stand now, revenue distribution has to go to the town’s A fund; it is not allowed to go to the B fund.

“It would disproportionately hurt rural taxpayers – farms, rural landowners,” he said. “Genesee County legislators agree that unbalance taxation can not continue on rural property taxpayers. Going back to a sales tax model was the only option once the enabling state legislation failed.”

He also credited City Manager Rachael Tabelski for being amenable to revising the sales tax contract.

“It doesn’t impact the City of Batavia one penny, but they understand that if they amend the sales tax agreement it would help our town taxpayers. Rachael was absolutely 100 percent on board with doing this,” Landers said. “Sales tax instead of revenue distribution fixes the problem with rural taxpayers.”

HOW WILL IT WORK?

According to the plan outline, the proposed amended sales tax agreement between the county and city would be dated July 1, 2021 to limit the exposure of towns with villages accounting for voluntary revenue distributions incorrectly in their B funds.

Landers said that revenue distributions would be finished for this year ($5 million has been doled out through June 30), and that two quarterly sales tax payments totaling $5 million will be made before the end of 2021.

“Starting in 2022, quarterly payments totaling either $10 million or $7 million will be distributed. If it is the $7 million figure, then an additional $3 million in voluntary revenue distribution payments will be made,” he reported.

The timeline indicates that a draft of the new sales tax agreement will be sent to the state Comptroller’s Office for review by July 19, and a resolution to cancel the remaining payments for 2021 will be taken to the county’s Ways & Means Committee on July 21. The full legislature would consider that resolution a week later.

The goal is to have an amended signed sales tax agreement sent to the Comptroller by Sept. 14 for formal approval.

HOW MUCH WILL BE DISTRIBUTED?

Following are the projected amounts to be dispersed to the towns and villages, with the first figure based on a $10 million sales tax distribution and the second figure based on a $7 million sales tax distribution:

• Town of Alabama -- $407,659; $285,361.
• Village of Alexander -- $71,006; $49,704.
• Town of Alexander -- $398,581; $279,007.
• Village of Attica -- $28,333; $19,834.
• Town of Batavia -- $1,687,937; $1,181,556.
• Village of Bergen -- $198,962; $139,273.
• Town of Bergen -- $508,589; $356,012.
• Town of Bethany – $408,961; $286,273.
• Town of Byron – $461,621; $323,135.
• Village of Corfu – $137,653; $96,357.
• Town of Darien – $970,992; $679,694.
• Village of Elba – $106,620; $74,634.
• Town of Elba – $360,317; $252,222.
• Village of Le Roy – $718,277; $502,794.
• Town of Le Roy – $822,270; $575,589.
• Village of Oakfield – $199,387; $139,571.
• Town of Oakfield – $299,202; $209,441.
• Town of Pavilion – $543,151’ $380,206.
• Town of Pembroke – $1,020,483; $714,338.
• Town of Stafford -- $649,999; $454,999.