Budget Disaster Straight Ahead!
Caution!! Do not try this “two pie charts method” of accounting anywhere in the real world–you’ll get laughed at (at best) or maybe even arrested. Can you imagine a business owner giving his accountant two pie charts and telling him that they represent his income and expenses for a $37-million operation?
Ted has been asking for better budgeting analyses for years and last Tuesday’s City Council meeting was more of the same. I guess it’s easy to have such a lackadaisical attitude when you’re spending other peoples money.
|Subject:||Budget Disaster Straight Ahead|
|Date:||Thu, 20 Aug 2015 14:50:25 -0400|
|From:||Ted Noftall <Ted@tednoftall.com>|
|To:||Hank Springer <firstname.lastname@example.org>|
|CC:||Jake Johansson <email@example.com>, ‘Fenwick, Robin’ <firstname.lastname@example.org>, Bob Ford <email@example.com>, firstname.lastname@example.org, Drew Bastian <email@example.com>, Mayor Green <firstname.lastname@example.org>, Scott Stiltner <email@example.com>|
Good afternoon Hank and Pat,
The FY 2016 Operating, Utilities, and Capital budgets presented by interim Manager Harden and his Finance staff are a confused mishmash of understated revenue and overstated expenses that will produce increased surpluses by over taxing City residents.
This is more than puzzling as Council signaled just several weeks ago that it wanted to reduce un-warranted high reserve balances ( 48% in the General Fund ) resulting from past practices of understated revenue and overstated expenses – down to the 30% level,
AND the Manager true to past practices turned right around and proceeded to understate projected property tax revenue, AND overstate projected expenses yet again.
Council should be focusing how much below roll back they should be moving not how much above.
The 6.91% millage increase in the proposed Operating Budget for FY 2016, recommends $ 1,079,000 in new spending, in a total spending package of $33,465,169, that is up $3,389,840, or 11% over last year’s actual spending.
An 11% increase in budgeted spending sustained by a 6.91% millage increase in the most insidious of all taxes, that can strip a person from a property he had paid off over a lifetime , is as un-conscionable as it is un-sustainable.
Those intent on supporting this spending spree are attempting to grow government faster than the City itself. New property growth in Port Orange totaled $ 50.4 million this past year and that equates to just over $300,000 in new property tax revenue.
As responsible citizens we are expected to live within our means in our respective households. We should hold our City government to no less of a standard. Those on Council who believe otherwise, and in particular Don Burnett who likes to profess his concern about the struggling economy right before he votes to raise taxes and fees, had best get ready for a spirited debate now and into the 2016 elections.
Port Orange has amassed obscenely high reserve balances ( 48% in the General Fund ) by understating budgeted revenues and by overstating budgeted expenditures year in and year out.
This year alone they have understated property tax revenue by $ 949,605 ( Line 18 on the DR-420 discloses that the total taxes to be levied under the proposed millage will be $ 11,894,362 vs The budget that was presented on slide 14 that provides for only $10,944,757 )
Likewise the Manager has presented a police budget that is up a whopping $1.4 million or 12.85 % over last year. This amount will never be spent, and if such increases were ever spent in a sustained fashion they would bankrupt the City.
The nicely packaged proposed round number Capital Budget expenditures with scant exception are devoid of demonstrable analysis.
Many project the same annual expenditure till the columns run out at the end of the page. Many more will never be spent in total and certainly not in the next fiscal year.
Some more are straight up place holders that will never be spent at all and will be added to a list of other unspent reserves totaling in the millions whose main purpose would appear to be ensure fees and taxes will never fall to the level actually required to operate the City adequately.
The Manager did not seen fit to not present detailed budget summaries for the Utilities Funds. All that has been presented are 2 pie charts and 200 pages of difficult to understand computer generated detail. That is not acceptable.
The revenue and expenses of the utilities funds ( Water & Sewer, Solid waste, Storm Water Utility, Golf Course ) are found on Page 36 of the Comprehensive Annual Financial Report ( CAFR )
In FY 2014 these 4 Proprietary funds reported revenues in excess of $37.4 million dollars These funds are larger than the Government funds which includes the General fund.
The General Fund also had its difficult to understand computer generated detail, BUT in addition 30 pages of budget summaries and analysis were presented in support of that fund.
These 4 Utility funds are problematic at best. Recent activist questioning has prompted the Manager to concede that the City’s internal controls are so lax they fail to track expenditures by project and that the latest consultant’s musings on the dismal revenue improvement following the multi-million dollars spent on meter replacement was largely conjecture.
Several made-as-instructed studies of the W&S have recommended tepid rate increases that appear designed to gage how many more increases rate payers will likely tolerate.
This is the fund that has invested $ 50 million dollars in an augmented reclaimed sprinkler system that services less than half the City at less than optimal performance, and is to the point where it probably makes as much financial sense to abandon the reclaimed meters as to continue metering reclaimed usage.
It is also the fund that is unable to advise if it is making money, breaking even, or losing money on contracts it has outside City limits that require major capital investment because it does not track revenue and expenses on a contract basis.
The storm water utility fund is an embarrassment. It has collected $ 35 million in storm water abatement fees from property owners over the past 10 years. With a 1 to 1 or 2 to 1 match that means that upwards of $70 million to $ 100 million dollars were available to be spent on drainage improvements in the City over that period. Did that happen ?? Perhaps it did, or perhaps it didn’t We don’t know because as the Manager conceded the City does not track expenditures by project.
What we do know is that flooding in the City is getting worse, AND projects that were targeted to mitigate flooding such as the Dunlawton Avenue Drainage Improvements Project were surreptitiously co-opted to provide even more capacity for the non-performing Augmented Reclaimed Sprinkler System.
No one has assessed or at least no one will disclose the true financial condition of the Golf Course. Payroll expense controls are lax, and considerable golf course expenses never make it to the Golf Course financials as they are paid off-the-books through the Golf Course Fund. Next year’s post-renovation Golf Course budget is projecting operating losses such that any loan repayment is not feasible, meaning that we are unlikely to ever again see any future loan payments. No analysis has ever been provided explaining what happened to the $ 2 dollar per round R&R surcharge and the latest proposal is to eliminate it all together when in fact it should be strengthened as a 20 year sinking fund for future renovations.
The Utility funds are a financial mess and they are a mess because of incompetent financial record keeping. That decades old incompetence did not happen by chance. Rather it was tolerated and even encouraged by those who felt projects of dubious value that they favored would be more easily advanced in an obfuscated environment of incomplete financial reporting, than in one that was transparent and comprehensive.
The proposed budgets on which massive property tax and utility fee increases are based deserve far more inquiry and analysis than what they have received to date. I hope the Manager’s thoughtless attempt to paper over the whole Utility Funds mess with 2 pie charts will be the impetus for a thorough budget review in the time remaining.
Candidate for Mayor
City of Port Orange -2016
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2 thoughts on “Budget Disaster Straight Ahead!”
the greatest thing about this is that ted will never be mayor, he is a big bully and will lose the race for mayor. he is a bully who most people here flipped out that he wanted pike back but now you all support him. it seems to me that you all are upset about many things and only agree with people if it fits your own agenda at the time. I hope the new city manager stops trying to please 5 people out of 60 thousand.
Well said Anonymous.
It is time we get Port Orange back to the good old days where a manipulative Mayor and an amoral Manager can run the show from the back room with the assistance of brain dead Councillors and willing yes men who can again be purchased for chump change in petty payroll thievery unlike our higher priced lier for hire engineering firm that have demanded and received 1+ million in consulting fees each year.
You are right Anonymous – screw Ted and the activists pissing on the parade to get back to the good old days by asking all those embarrassing questions and calling attention to this year’s budget sell out that Burnett Bastien and Stiltner support.