Town leaders in Hornellsville raised taxes and overrode legal limits while sitting on huge budget surpluses, a state audit has found.
Despite having enough money to cover years of expenses, the town hiked property taxes by 18% over four years and moved nearly $1.1 million in sales tax revenue to the wrong accounts, according to a report released by the State Comptroller’s Office in November.
Too much in the bank, too much in taxes
The audit shows the Town Board consistently underestimated revenues and overtaxed residents—even though it had large amounts of unspent money.
By the end of 2024, the town had enough in reserve to fund over five years of water department costs and three years of sewer services. Yet it continued to raise property taxes and override the state’s tax cap every year from 2022 to 2025.
Where the money went wrong
One of the biggest issues auditors flagged was how the board handled sales tax revenue. Instead of dividing the funds between services used town-wide and those only used outside villages—called TOV funds—the board moved all the money into town-wide accounts.
That decision gave an inaccurate picture of the town’s finances and led to taxpayers in some areas paying more than their fair share, the audit found.
If the money had been properly split, auditors say the town-wide funds would have been in the red—while the TOV accounts could’ve nearly doubled their 2025 expenses without collecting new taxes.
Missed chances to fix the problem
This isn’t the first time the state flagged concerns. A similar audit in 2014 raised many of the same issues. Despite that, town officials still hadn’t adopted a fund balance policy until early 2025—and even then, it left out key details. The town also failed to create long-term financial or capital improvement plans.
The audit also notes the town lacked documentation for some of its reserves and didn’t have proper agreements in place to guide highway spending, making it harder to build accurate budgets.
Town leaders push back—but agree to changes
In a written response, town officials said they’ve started addressing some of the concerns. They pointed to newly adopted policies and said they’ll update their fund balance thresholds and planning processes moving forward.
They also admitted the sales tax money was misallocated and say they’ll fix the accounting and consider repaying the affected funds.
Still, state officials say the town has more work to do to ensure it’s spending taxpayer money fairly and transparently.
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