WHEATFIELD — Town Supervisor Robert Cliffe did not mince words in reacting to a state comptroller’s audit of town finances on Friday.

“This has not been a pleasant week for the Town of Wheatfield,” he said sharply.

The audit, released on Thursday, says the town’s general, highway and fire protection district funds are operating at a combined deficit of $2.71 million.

While differing with the state on the precise size of the deficit, Cliffe laid the blame for the town fiscal woes squarely on the shoulders of his predecessor.

“(In 2006 through 2009) he started spending money like a drunken sailor,” Cliffe said. “He never had a plan to tax or pay for that (spending).”

Cliffe and members of the town board claim former Supervisor Tim Demler took a $2 million grant from the federal Environmental Protection Agency, that should have been used to pay off old sewer construction debt, and instead put it in the town’s general fund and used it for other projects. They also say Demler used the federal cash to keep the town’s operating budget balanced in the face of falling tax revenues.

The state auditor says the $2 million should be repaid by the town to its sewer fund and adds that to an almost $700,000 operating deficit to reach his $2.71 million total. Cliffe and the board say they don’t have to pay the sewer fund and they are working to reduce the operating deficit.

“We reviewed (the auditor’s report) last week,” Cliffe said at a late afternoon news conference with the board, the town attorney and town budget director. “We’ve actually done a lot of the things the auditor asked us to do even before the report was released.”

Cliffe said the audit was based on town finances on Jan. 1 and the current deficit, from all six of the town’s funds, appears to be $663,000. The supervisor also said the town is carrying so-called long term debt totaling $15.6 million, the highest in the county.

“This didn’t happen overnight, it didn’t happen just last year and it’s not gonna be solved in one year,” Cliffe said.

The audit also accused the town board of failing to provide adequate oversight of town finances. However, board members said they had difficulty getting financial information from Demler.

“We continually asked the former supervisor for (financial) reports,” board member Larry Helwig said. “All we got were these one page reports and they all looked the same and showed we had a surplus.”

Helwig said even when the town’s outside auditor’s started raising questions about the state of its finances, Demler insisted there was no deficit.

“We were debating (the 2009-10) budget and I said, ‘Time out. Show me the money’ to Tim,” Helwig said. “He never did.”

Cliffe said he and the board have started discussions on the 2010-11 town budget and are looking to begin cutting the deficit. The supervisor said more program cuts are likely and he did not rule out a tax hike.

“The easy solution would be a $1 million tax (increase) and I would be the supervisor anymore, but the next guy would have it easy,” Cliffe said. “It’s hard to say whether there will be an additional tax. I don’t envision the highway tax going away.”