Lake Luzerne Under State Audit Following No-Confidence Vote Against Supervisor

Lake Luzerne Under State Audit Following No-Confidence Vote Against Supervisor Gene Merlino

LAKE LUZERNE, N.Y. – The New York State Comptroller’s Office has officially launched an audit of Lake Luzerne’s town finances, following a unanimous vote of no confidence in Town Supervisor Gene Merlino by the Lake Luzerne Town Board. The move comes after months of financial irregularities and questionable decisions that board members say warrant deeper investigation.

What is a No-Confidence Vote?

A vote of no confidence is a formal statement from a governing body—such as a town board—that they no longer trust a public official’s ability to perform their duties effectively. While the vote itself does not automatically remove the person from office, it serves as a public declaration of their perceived failure to lead and can influence further legal or administrative action.

The no-confidence vote against Merlino was initially delayed at the June 14 town board meeting due to a medical incident involving the supervisor. Since then, Merlino has not attended meetings, leaving Deputy Supervisor Dan Waterhouse and other board members to divide responsibilities previously controlled by Merlino alone.

“We’ve restructured things,” Waterhouse stated. “Now, every board member has a role—unlike before, when Merlino ran the town like his own business.”

Key Concerns Behind the Audit

The town board’s June resolution of no confidence outlined a list of questionable financial decisions and procedural missteps over the past nine months. Among the most pressing concerns:

• A Boat with a Mysterious Past – The town’s old 18-foot boat—used to manage invasive milfoil removal—was sold and replaced with a 24-foot boat without board approval. Waterhouse and other board members suspect the new boat may have been stolen, as its hull numbers were rubbed off, and its registration doesn’t match the documentation. The case is now under review by the DMV and State Police.

• Overtime Spending Gone Unchecked – Waterhouse revealed that Merlino admitted in a town meeting that he never monitored overtime pay, resulting in approximately $100,000 in uncertified funds spent. One town employee reported that whether they worked an hour or just 20 minutes overtime, Merlino approved a full four hours of extra pay.

• Budget Mismanagement – With Lake Luzerne’s annual operating budget at just $4 million, Waterhouse estimated that Merlino’s mismanagement led to nearly $250,000 in wasted funds.

• Unapproved Payments & Questionable Purchases – Other financial concerns include:

  • $12,000 paid annually to retired town employees without proper documentation.

  • Over $1,000 spent on flowers—purchased from a town employee’s business.

  • Failure to document and maintain town water pumps, leading to an emergency pump replacement costing $30,000—an expense that could have been avoided with proper upkeep.

Waterhouse confirmed that the criminal division of the Comptroller’s Office has been actively investigating these claims. State officers are scheduled to arrive within the next two weeks to begin an in-depth review of town records.

What Happens Next?

Despite the audit, Gene Merlino remains the official town supervisor. However, in his absence, Waterhouse and the town board have taken over his responsibilities to keep Lake Luzerne running efficiently.

While Merlino could not be reached for comment, his future as town supervisor remains uncertain as the state audit unfolds.

For ongoing updates on Lake Luzerne, Hadley, Hadley-Luzerne, Town of Day, and Stony Creek, visit HadleyLuzerne.com.