With the bulk of the money already paid back to the city, both sides say no budgetary harm was done, but the underlying question of why the sizable accounting error occurred and how the city can ensure it won’t happen again still looms.

Mayor John M. Picard on Tuesday took responsibility for the error, saying the overpayments occurred during the four-month period after former Finance Director Nalini Srinivas was suspended in December 2006 and before Robert Barron took over the finance office in May 2007. Picard stressed the clerical error had no lasting impact on the fire districts or the city.

“At the end of the day, we found it. You find out what’s wrong and you fix it. Then you put a system in place so it doesn’t happen again,” Picard said.

Barron on Tuesday explained that former Assistant Finance Director Anne Granfield, who resigned earlier this year to take another job, discovered the error in September after she was assigned the task of reconciling tax payments to the three fire districts over the past couple of years. Taxes for the fire districts are collected by the city on behalf of the districts and distributed at a later date.

Barron estimated that the Center District was overpaid about $1.7 million, the West Shore District $1.1 million and Allingtown $400,000. While the Center District has fully paid back the city, according to Barron, West Shore still owes $226,700 and Allingtown $62,600.

Most of the money was collected by the city withholding tax allotment payments in December and part of January. In addition, the Center District gave the city a check for $500,000 in December. Barron added that by the end of this week, the city will owe more money in tax payments to all three districts, as January is typically a big collection month.

Picard said no fire district came forward to report an overpayment. The city called all three districts to a meeting Dec. 13 to alert them of the overpayments and to ask each to review its own files.

Fire commissioners with the Center and West Shore districts said they had an idea early on that the city overpaid them for taxes, but that it took time to confirm their suspicions.

Robert Pimer, chairman of the West Shore Fire Commission, said actuaries are still reviewing the district’s finances to confirm the amount of the overpayments.

“It absolutely did not hurt the West Shore Fire District. We were just smart enough not to spend it,” he said.

Mike Zisek, business manager for the Center District, said he set aside the money when he suspected there was an overpayment.

“It doesn’t affect the budget. Just because we get all this money from the city, we can’t just spend it,” he said.

Zisek said a payment from the city that came in the spring did not include supporting paperwork, as most payments do, and that was the first red flag for him that something was amiss.

Allingtown Fire Commission Chairman Louis P. Esposito Jr. declined Tuesday to acknowledge whether there was an overpayment.

“We are negotiating as to whether we do or do not owe the money,” he said, adding the district’s accountants are reviewing the information.

Esposito said Allingtown knew it had collected more money than expected, but thought the surplus might have come from aggressive back-tax collection on the city’s part.

Barron said the overpayments happened because Srinivas changed the standard procedure for issuing tax payments to the fire districts and did not communicate that change to staff.

When she left office in late 2006, remaining staff looked for — but never found — payments to fire districts because they came from different accounts and via different methods. So staff reissued the payments in January and February 2007, using the old, standard method, Barron said.

Like Picard, Barron stressed the positive changes that came out of the ordeal.

“The important thing is what we’ve done to make it better,” Barron said.

A new reconciliation system is in place in the finance office that Barron said will prevent such mistakes from happening again.

But some city leaders expressed concerns Tuesday that the errors indicate a bigger problem at City Hall.

Brent Coscia, chairman of the A Better Future Party, said the overpayments are the result of a lack of checks and balances in place under Picard’s administration.

“His financial house is not in order,” Coscia said. “We’re not talking about a $25,000 mistake here. We’re talking about a mistake in the millions. How could you let a mistake that large go for so long?”

Newly appointed City Council Finance Committee Chairwoman Nancy R. Rossi, D-7, did not know about the overpayments when contacted Tuesday. She said the lack of transparency concerned her.

“I find this news very disturbing,” she said. “It’s extremely important that the public be kept aware with the debt that we have.”

Picard on Tuesday defended the city’s decision not to go public with the information about the overpayments, saying he wanted to give the fire districts time to verify the amounts.

Abbe Smith can be reached at asmith@nhregister.com or 789-5615.