State Reaudit Offers Closer Look at Hudson Finances

By Dani McCulley

A recently released state reaudit of the City of Hudson examined financial transactions from July 1, 2022, through June 30, 2024.

The report, released Sept. 9, reviewed concerns involving transfers, development agreements, disbursements, bank reconciliations and fund balances. The Auditor of State noted the targeted procedures did not constitute a full audit of the city’s financial statements.

Concerns about Hudson’s finances became a significant public issue in February 2025 as city officials worked through a projected budget shortfall. At a Feb. 20 special meeting, the City Council approved a $350,000 short-term line of credit to cover expenses. Days later, a petition signed by 236 residents requesting a state audit was formally submitted to the city.

The formal request that led to the recently released reaudit came later. According to the state report, the city clerk contacted the Auditor of State’s Office in October 2025 with concerns regarding bank balances, transfers, negative fund balances and payments to a developer. The state determined reaudit procedures were necessary for the concerns identified.

Among the findings, auditors identified several issues involving transfers during fiscal year 2024. Two council-approved transfers totaling $125,156.42 were not recorded in the city’s accounting records, while two other transfers totaling $151,557.28 appeared in the accounting records without council approval. In another instance, the council authorized a $132,704.58 transfer within the General Fund, while the accounting records showed $265,409.16.

The reaudit also reviewed bank reconciliations. Auditors found no issues with the June 2023 reconciliation. However, true bank reconciliations were not prepared for April, May or June 2024 after the city transitioned to a web-based accounting system. The Auditor of State reconstructed the reconciliations and identified a $61,727.18 variance in June 2024, with the city’s book balance higher than its bank balance.

Auditors also identified deficit fund balances. The Capital Projects Fund had an $817,203.13 deficit as of June 30, 2023. As of June 30, 2024, deficits included $280,715.90 in the General Fund, $500 in the Debt Service Fund and $708,368.41 in the Capital Projects Fund. The report states the Capital Projects deficits resulted from project expenses incurred before funding was received and notes bonds were issued in fiscal year 2025 to pay some project expenses.

In its review of development agreements, the Auditor of State found payments to six developers exceeded the amount of TIF debt certified for those payments by a combined $582,814.78.

The reaudit also examined an approximately $1.4 million increase in city disbersements from fiscal year 2023 to fiscal year 2024. After reviewing activity by department and vendor, auditors concluded the increases and decreases were adequately explained.

At Monday’s City Council meeting, Mayor Hector Baldiviezo said city officials had received the reaudit and were reviewing its findings. He said officials were already aware of a number of the issues identified and have been working to ensure procedures are followed, responsibilities are appropriately divided and checks and balances are in place to prevent similar problems.

Officials said they will continue reviewing the report, which is expected to be placed on the next City Council agenda for formal acknowledgment.

The Hudson Herald will continue to follow the city’s financial review and provide updates as they become available.