Saturday, February 27, 2010

February 27, 2010 City Charter and Ordinance: Sewer Funds Must Be Kept in Separate Bank Account

At this past Thursday's City Finance Committee meeting, Councilmember Gene Brooks noted that city sewer funds are required by the City Charter and Ordinance to be kept in a bank account separate from general fund and other monies. 

I first mentioned this charter provision to City Attorney Dick Jessee a couple of weeks ago. Jessee replied that he could not respond to my question about this charter requirement unless an official asked him to answer.  Jessee did copy my e-mail question with its citation to the Charter provisions on the sewer fund to City Administrator Tony Cox and Mayor Barile.

A few days later, I called one of those officials--new City Administrator Tony Cox--to discuss these Charter provisions. 

Cox asked that I send him the charter provisions--even though he already had received them in my e-mail that Jessee had copied to Cox and Barile.  Instead of e-mailing to Cox the Charter provisions that he already had, I contacted Councilmember Brooks--an outspoken opponent of waste of taxpayer dollars--and asked if he would arrange a meeting with Mr. Cox to discuss this. At a meeting among Cox, Brooks, and myself a few days before the Finance meeting, I showed Mr. Cox the Charter sections and a City Ordinance, both of which say that sewer funds are to be kept in a separate bank account from other city funds and are not to be commingled with any other city funds.

[The Charter section and Ordinance that I provided to Jessee and Cox are on the city's website but, of course, there is always a concern that an online posting might be inaccurate or out-of-date, which is why I also asked Mr. Jessee and Mr. Cox to verify the accuracy of the online Charter and online Ordinance that I had noted.]

Mr. Cox was cordial and stated that he was researching the history of the Charter provision and that he had never seen the Ordinance before. He then added that he can't set up a separate sewer bank account right away and that it would take some time to make accounting adjustments to go along with fixing this long-standing Charter violation.

I can appreciate that it might take a couple of weeks to open a new sewer fund bank account and to make other necessary changes to come into compliance with the City Charter. However, in view of the serious nature of a Charter or Ordinance violation and in view of the repeated violations in 2007 and 2008 and 2009 that resulted in violation of state law, putting the sewer funds in a separate bank account should be a high priority, top-of-the-list item.  Click here for the background on the city's violations of state law.

If the City has an up-to-date ledger record of sewer revenue and sewer-related costs, the City can come into compliance by depositing the current sewer funds and future sewer revenues in a new, separate bank account for sewer funds and then paying sewer costs and expeditures out of the new sewer fund bank account rather than making pencil-and-paper ledger entries throughout the year and then trying to straighten it all out periodically or at the end of the fiscal year.

And as I have said before, even if the City were not required to keep sewer funds separate from other city funds by Charter or Ordinance, keeping sewer funds and general funds separate is the commonsense best practice in order to keep sewer funds from "accidentally" being used to pay general fund expenses and vice versa.

On the humorous side, perhaps someone needs to bring one of the city's red light cameras into the council chambers, take a picture of the Mayor and Council, and then give them each a ticket and a $50 fine for violation of the City Charter or City Ordinance.  They can pay the fine--and build up the city's finances! Or they can contest the ticket by appearing in City Court to cross-examine the picture. Or they can claim that someone else was driving the City's financial car and that they didn't have a clue and then throw themselves on the mercy of the court.

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