More info from last Thursday's City Finance Committee Meeting.
The $2 MILLION "loan" that new City Administator Tony Cox has said that the City must have in order to meet its everyday operating expenses came up. Tony Cox turned the explanation over to Brian Janish, City Budget Director. Click here for Cox's February 11 financial presentation to council and his proposal to get a $2 Million loan to make payroll and pay debt and other expenses through June 30, 2010.
On February 25, Janish said that the city needs to borrow between $2-$4 MILLION to meet its budgeted expenses (payroll, debt, etc) for the remainder of the fiscal year.
Janish added that the city needs to be able to access at least $2 MILLION of these borrowed funds by April 1 with the extra $2 MILLION as a line of credit that is available as, or if, needed.
Since all previous discussion was about a $2 MILLION short-term loan, Kay Senter asked about the extra $2 MILLION that Cox and Janish want as a line of credit.
Janish replied that the extra $2 MILLION is being requested so it can be in place if there is a need without the city having to go back and start another loan process.
Also, for the first time in public, Janish mentioned that the loan/line of credit would include the Sewer Fund in addition to the General Fund. That is an interesting development, but no councilmember asked why the Sewer Fund is being mentioned now in connection with the loan/line of credit.
[In the past three years the Sewer Fund has had excess cash that has been used by the General Fund to meet General Fund operating expenses. What has happened to the Sewer Fund?]
Jinks asked how repayment would be made in six months. Janish said that "after WE borrow the money," it will be up to YOU seven councilmembers to decide how to pay it back.
Janish and Cox then said it will require, drum roll please, "Revenue Enhancements!"
"Revenue Enhancements" is polite political code for "we messed up, now taxes and fees have to go up again."
How were things messed up? Let's look back.
Historic 40-cent property tax increase in the City in 2007. Click here.
Desperate push for sales tax increase in 2008 with a 15-cent rollback in the 40-cent property tax increase. Click here (Feb 2008 countywide sales tax increase defeated) and here (City came back with a city only sales tax referendum that passed).
Big sewer fee increases one after the other. Click here and here.
Council passes 2010 budget in summer of 2009 after City Administrator Jim Crumley recommends cuts of $1.7 Million. Click here.
Crumley canned despite Frank McGuffin's vote against the firing and Mayor Barile's protest that Crumley was being "railroaded." Click here.
Interim Administrator Lynn Wampler comes in and tells Council that they are on the road to bankruptcy (my word) and that the budget that they passed a few months before is a disaster.
Wampler and Council make additional cuts of $900,000 to stave off or at least postpone a deficit situation. Click here.
Mayor Barile admits that the City had no money in reserves (no rainy-day funds) in 2007 and that she and the Council were just becoming aware of this and a lot of other stuff. Click here.
Tony Cox comes in as City Administrator, looks at the finances, and says on February 12 that the City needs to "borrow" at least $2 Million for the General Fund to be able to meet its operational expenses, to pay its debts, and to make it to June 30, 2010, the end of the fiscal year. Click here.
Then on February 25, 2010, Cox and Janish say that the City needs to borrow $2-$4 MILLION for the General Fund AND Sewer Fund--most of which will be used between April and June 2010 and the balance of which will be a line-of-credit "just in case."
How bad could the city's budgeting be if the City can not make it to the end of the fiscal year (June 30, 2010) without a $2-$4 MILLION dollar loan?
How can the City add huge amounts of additional taxes (property and sales) and additional fees (sewer) to its budget over the past 2-3 years PLUS make large budget cuts in the summer of 2009 and then more budget cuts in November 2009 but still can't make it to June 30, 2010, without a $2-$4 MILLION loan and line of credit?
Someone from way outside the tight-knit group needs to come in and see what's going on now and what went on in the past.
The budget that the Mayor and Council passed in June 2009 was nothing but a joke on the citizens and taxpayers. Who has to pay for this and the prior budget jokes? The taxpayers, of course.
Look for additional property taxes, new garbage fees, and/or increased stormwater fees---all under the name of "revenue enhancements." And there will be a few cuts, too, so the City will have "cover" to announce that we have looked at everything and made all the cuts we can.
Mayor and Council to taxpayers: Sorry for the mismanagement, but we still have a Wish List and a Master Plan. We have walking trails to build, brick pavers to lay, lots of chrome to buy, and a beautiful cage right in front on the City Center for bad signs! Now pay up.
Showing posts with label Lynn Wampler. Show all posts
Showing posts with label Lynn Wampler. Show all posts
Sunday, February 28, 2010
Thursday, January 07, 2010
January 7, 2010 Mayor and City Council Caught in Web of Unauthorized Money Shifting in Violation of State Law
[Updated 1/8/10: See my note at the end of this post]
At the end of the January 4th City Finance Committee meeting, Councilmember Kay Senter said, “It is what it is.” Her comment came at the conclusion of a remarkable meeting that showed how little the Mayor and Councilmembers know about the city’s finances and what little effort they put forth to find out what's going on. The meeting also provided a glimpse of how much money shifting (plenty!!) has gone at the City Center to cover up mismanagement and financial problems.
I will try to summarize the major item of discussion but lots more will be said later.
Short and sweet version: The City’s General Government Fund had a deficit of over $1.2 Million dollars as of 6/30/09! Unlike the federal government, local governments in Tennessee can not end their fiscal year in a deficit situation. To remedy this “cash flow” problem, the City was planning to let the Sewer Fund loan $1 Million + to the City’s General Fund. After all, that’s what the City did in 2007 and 2008–illegally and without authorization –when the General Fund had a deficit.
This time, though, it was third strike and you’re out. Citizens and others have caught on to the city’s old scheme of “robbing Peter to pay Paul.” Citizens for Accountability.
See my earlier post discussing the illegal transfer/loan of $2.5 Million from the Sewer to the General Fund to cover up the 2008 General Fund deficit and the auditors November 2009 e-mail to Interim Administrator Lynn Wampler "explaining" the auditors involvement/non-involvement. That illegal transfer/loan was not reported as an audit finding in the 2008 audit by the "independent" auditors. [Interim Administrator Wampler has a copy of my e-mail to the State Comptroller’s Office and Mr. Dycus' reply e-mail stating that David Bowling, State Comptroller's Office, must approve inter-fund loans and that they must first be passed by the city council.]
Faced with another General Fund money shortage in 2009, Mr. Wampler and Budget Director Brian Janish talked to Mr. David Bowling and to MTAS Consultants to see if the City could pass a local ordinance in January 2010 for a Sewer Fund to General Fund loan that would be “retroactive” to 6/30/09 and would erase the current deficit in the 6/30/09 audit.
According to Janish and Wampler, MTAS consultants and the Comptroller’s Office have thus far said “no” to the 6/30/09 retroactive loan--just as they probably would have said "no" to the 2007 and 2008 retroactive loans IF the City hadn’t just slipped the earlier loans through without a word.
[The 2009 audit has been delayed AGAIN. There are rumors that the City and its auditors are still trying to figure out a way to handle the 2009 General Fund deficit without an audit finding. Apparently, the city and the auditors are talking to everyone to try and come up with a "solution" to the violation of state law. Surely, the auditors can't ignore or gloss over these illegal, unauthorized transfers a THIRD TIME. Since cities and counties often get "help" from higher up to cover up violations of law, it remains to be seen what the city and its auditors will be allowed to do to cover up what is actually a third violation in a row of state law. One idea that has been floated around--see below--is to simply call the loan a "payable" and a "receivable."
For two years (2007 and 2008), the city just illegally shifted money from the Sewer Fund to the General Fund without even making an effort to get required local and state approval. I have little doubt that a third illegal money shift would have taken place quietly in 2009 had former City Administrator Jim Crumley still been around. Jim pulled the wool over the Mayor and Council ’s eyes in a lot of ways. Because the Mayor and Council did not pay attention and have not taken care of taxpayers’ and ratepayers’ sewer money, citizens are stepping up to do what they can. [Click on the Citizens for Accountability link for the website of the new citizens group that will be providing information to the public and holding local city and county officials accountable for the actions. Citizens for Accountability.]
Bottom line. The City illegally shifted money (Sewer Fund to General Fund) to cover up or lessen the General’s Fund’s poor financial situation in 07 and 08. Jim Crumley (former City Administrator) and Brian Janish (Budget Director) and Buddy Fielder (Assistant Administrator) and Dynise Robertson (Finance Director) did not report this situation to the Mayor and Council. The local auditors (Craine, Thompson & Jones) did not report this situation to the Mayor and Council nor did they report these unauthorized loans as an audit finding in 2008. The Mayor and Councilmembers obviously did not examine the 2007 and 2008 audits or one of them surely would have spotted these unapproved transfers and would have seen that the money shown as general fund balance or surplus was not really general fund money at all but was largely a temporary loan of money to the General Fund.
The gig is up.
This year the City is “caught” with a 6/30/09 deficit that it can’t erase with another illegal, unauthorized loan. Aas mentioned above, one idea to "get around" the violation is to have the auditors report that “$1.2 Million is due from the General Fund to the Sewer Fund” and “$1.2 Million is due to the Sewer Fund from the General Fund.” That's a loan but it just doesn’t use the word loan. After all, it all depends on what the meaning of "loan" is! If your auditor will report a loan as a "receivable" and a "payable" and if the State will accept this new way of reporting loans, then maybe Morristown will have once again broken ground with a way to "legally" violate state statutes. And then other cities and counties who find themselves with a deficit can also cover it up with this new auditing angle.
Regardless, this three-year fiasco highlights a number of serious problems at the City Center:
1. Auditors that have allowed illegal, unauthorized loans (Sewer Fund to General Fund) for 2007 and 2008 without reporting them to the Mayor and Council.
2. Budget and Finance Personnel who have been a party to these illegal, unauthorized loans without reporting or seeking approval of the Mayor and Council.
3. A former City Administrator who was the major player in these illegal, unauthorized loans without reporting or seeking the approval of the Mayor and Council.
4. A Mayor and Councilmembers who did not take the time to examine the yearly audits, ask questions, and get answers. [The cash poor condition of the General Fund was evident in the audits--but you had to actually open the audit and look at a few key pages to see that unauthorized loans were being recorded in the audits to "cover up" the dire financial condition of the City].
Elected office is not just a fancy title with a nameplate and special parking place. It is a high calling when you are entrusted with other people’s money. Elected officials ask to be put into office. If given the opportunity to serve, they have an obligation to give whatever time it takes and to do whatever is necessary to see that taxpayer dollars are spent wisely and legally.
[Update 1/8/10. I have deleted my 1/5/10 post which was almost identical to this post. My e-mail (left) requesting info on procedures for inter-fund loans was to Mr. Dennis Dycus in the Comptroller's Office. I sent the e-mail to ensure that my understanding of the procedures for such loans does require local and then state approval. In his reply, Mr. Dycus confirmed that a local resolution or ordinance must be passed first and then Mr. David Bowling, Division of Local Finance in the Comptroller's office, must give approval to any inter-fund loans between the sewer fund and the general fund. In 2007 and 2008, the City violated state law and just made these transfers without council approval AND without state approval in order to give a quick "fix" to the general fund deficit. The "independent" auditors reported this "fix" (a/k/a unauthorized and illegal transfer) in the 08 audit as a "loan" even though there was apparently no documentation of a loan in either year. 6/30/09: the city AGAIN has a general fund deficit and the audit is delayed while the city and the "independent" auditors AGAIN try to find a way to "fix" the mismanagement once more.]
At the end of the January 4th City Finance Committee meeting, Councilmember Kay Senter said, “It is what it is.” Her comment came at the conclusion of a remarkable meeting that showed how little the Mayor and Councilmembers know about the city’s finances and what little effort they put forth to find out what's going on. The meeting also provided a glimpse of how much money shifting (plenty!!) has gone at the City Center to cover up mismanagement and financial problems.
I will try to summarize the major item of discussion but lots more will be said later.
Short and sweet version: The City’s General Government Fund had a deficit of over $1.2 Million dollars as of 6/30/09! Unlike the federal government, local governments in Tennessee can not end their fiscal year in a deficit situation. To remedy this “cash flow” problem, the City was planning to let the Sewer Fund loan $1 Million + to the City’s General Fund. After all, that’s what the City did in 2007 and 2008–illegally and without authorization –when the General Fund had a deficit.
This time, though, it was third strike and you’re out. Citizens and others have caught on to the city’s old scheme of “robbing Peter to pay Paul.” Citizens for Accountability.
See my earlier post discussing the illegal transfer/loan of $2.5 Million from the Sewer to the General Fund to cover up the 2008 General Fund deficit and the auditors November 2009 e-mail to Interim Administrator Lynn Wampler "explaining" the auditors involvement/non-involvement. That illegal transfer/loan was not reported as an audit finding in the 2008 audit by the "independent" auditors. [Interim Administrator Wampler has a copy of my e-mail to the State Comptroller’s Office and Mr. Dycus' reply e-mail stating that David Bowling, State Comptroller's Office, must approve inter-fund loans and that they must first be passed by the city council.]
Faced with another General Fund money shortage in 2009, Mr. Wampler and Budget Director Brian Janish talked to Mr. David Bowling and to MTAS Consultants to see if the City could pass a local ordinance in January 2010 for a Sewer Fund to General Fund loan that would be “retroactive” to 6/30/09 and would erase the current deficit in the 6/30/09 audit.
According to Janish and Wampler, MTAS consultants and the Comptroller’s Office have thus far said “no” to the 6/30/09 retroactive loan--just as they probably would have said "no" to the 2007 and 2008 retroactive loans IF the City hadn’t just slipped the earlier loans through without a word.
[The 2009 audit has been delayed AGAIN. There are rumors that the City and its auditors are still trying to figure out a way to handle the 2009 General Fund deficit without an audit finding. Apparently, the city and the auditors are talking to everyone to try and come up with a "solution" to the violation of state law. Surely, the auditors can't ignore or gloss over these illegal, unauthorized transfers a THIRD TIME. Since cities and counties often get "help" from higher up to cover up violations of law, it remains to be seen what the city and its auditors will be allowed to do to cover up what is actually a third violation in a row of state law. One idea that has been floated around--see below--is to simply call the loan a "payable" and a "receivable."
For two years (2007 and 2008), the city just illegally shifted money from the Sewer Fund to the General Fund without even making an effort to get required local and state approval. I have little doubt that a third illegal money shift would have taken place quietly in 2009 had former City Administrator Jim Crumley still been around. Jim pulled the wool over the Mayor and Council ’s eyes in a lot of ways. Because the Mayor and Council did not pay attention and have not taken care of taxpayers’ and ratepayers’ sewer money, citizens are stepping up to do what they can. [Click on the Citizens for Accountability link for the website of the new citizens group that will be providing information to the public and holding local city and county officials accountable for the actions. Citizens for Accountability.]
Bottom line. The City illegally shifted money (Sewer Fund to General Fund) to cover up or lessen the General’s Fund’s poor financial situation in 07 and 08. Jim Crumley (former City Administrator) and Brian Janish (Budget Director) and Buddy Fielder (Assistant Administrator) and Dynise Robertson (Finance Director) did not report this situation to the Mayor and Council. The local auditors (Craine, Thompson & Jones) did not report this situation to the Mayor and Council nor did they report these unauthorized loans as an audit finding in 2008. The Mayor and Councilmembers obviously did not examine the 2007 and 2008 audits or one of them surely would have spotted these unapproved transfers and would have seen that the money shown as general fund balance or surplus was not really general fund money at all but was largely a temporary loan of money to the General Fund.
The gig is up.
This year the City is “caught” with a 6/30/09 deficit that it can’t erase with another illegal, unauthorized loan. Aas mentioned above, one idea to "get around" the violation is to have the auditors report that “$1.2 Million is due from the General Fund to the Sewer Fund” and “$1.2 Million is due to the Sewer Fund from the General Fund.” That's a loan but it just doesn’t use the word loan. After all, it all depends on what the meaning of "loan" is! If your auditor will report a loan as a "receivable" and a "payable" and if the State will accept this new way of reporting loans, then maybe Morristown will have once again broken ground with a way to "legally" violate state statutes. And then other cities and counties who find themselves with a deficit can also cover it up with this new auditing angle.
Regardless, this three-year fiasco highlights a number of serious problems at the City Center:
1. Auditors that have allowed illegal, unauthorized loans (Sewer Fund to General Fund) for 2007 and 2008 without reporting them to the Mayor and Council.
2. Budget and Finance Personnel who have been a party to these illegal, unauthorized loans without reporting or seeking approval of the Mayor and Council.
3. A former City Administrator who was the major player in these illegal, unauthorized loans without reporting or seeking the approval of the Mayor and Council.
4. A Mayor and Councilmembers who did not take the time to examine the yearly audits, ask questions, and get answers. [The cash poor condition of the General Fund was evident in the audits--but you had to actually open the audit and look at a few key pages to see that unauthorized loans were being recorded in the audits to "cover up" the dire financial condition of the City].
Elected office is not just a fancy title with a nameplate and special parking place. It is a high calling when you are entrusted with other people’s money. Elected officials ask to be put into office. If given the opportunity to serve, they have an obligation to give whatever time it takes and to do whatever is necessary to see that taxpayer dollars are spent wisely and legally.
Thursday, December 03, 2009
December 3, 2009 City Council Meeting: Sewergate To Cover-up Bankruptcygate?
In a previous post (click here), I mentioned the City of Morristown's illegal transfer/loan of $2.5 MILLION dollars from the city's sewer fund to the city's general fund in the fiscal year ending 6/30/08. Former City Administrator Jim Crumley apparently authorized the transfer to cover up the "poor" cash situation of the general fund.
The city's auditor is Craine, Thompson & Jones. Terry Winstead of CTJ (click on e-mail below) states that Tom Jones of CTJ was present in a meeting when Crumley authorized the transfer but that CTJ's auditing "independence" and objectivity were not lost because while Jones knew about the entry, he (Jones) didn't physically make the entry himself. So Jones was in the meeting where the entry was authorized. Jones then completed his audit of the city's books and recorded the $2.5 MILLION switcheroo as an inter-fund loan. BUT Jones did not report that this $2.5 Million "inter-fund loan" had not been approved by council (as is required). AND Jones did not report that this $2.5 Million "loan" had not been approved by the State Comptroller's Director of Local Finance (as is required).
At left is Winstead's e-mail to Wampler describing how the $2.5 Million "entry" for fiscal year 2008 came about and then disavowing any direct involvement by auditor Tom Jones-- Jones just happened to be there when the entry was authorized. On the November 2009 e-mail, there is also a written notation by Wampler stating that Dynise (Robertson), the city's finance director, informed Wampler that the $2.5 Million 2008 sewer to general fund transfer was "transferred back last week." No mention of who authorized the transfer-back or why the transfer-back, like the initial transfer, did not go through council.
The scariest part of the note is Wampler's second statement: "We will have to transfer most of that money back to the General Fund before the end of the fisical (sic) year." Why? To cover up a poor financial situation again? After the whopping property tax increase of 2007, after the sales tax increase of 2008, and after red light cameras were installed for even more revenue, is Wampler's comment a warning that the city may still not have enough funds for general government operations at the end of FY 2010 (6/30/10) and will somehow need another sewer loan as a cushion?
At city council yesterday, Charles Cook asked Mayor Barile if she knew about this $2.5 Million sewer fund to general fund transfer in 2008. She said she didn't recall being told at the time.
Cook then passed out an e-mail that I had received from the Director of Municipal Audit (Dennis Dycus) in the State Comptroller's office in response to questions about (1) whether a temporary transfer of money from the sewer fund to the general fund could be made (no) and (2) how an inter-fund loan from sewer to general fund should be handled (carefully). [Cook had blacked out my name on the e-mail so the city officials could concentrate on the contents of the e-mail itself. By now, the Mayor and/or some members of the council or others have probably called up the state to find out who was asking questions when in reality it is the Mayor and the councilmembers who should have been asking this and many more questions all along.]
Mr. Dycus, Director of Municipal Audit, simply confirmed the obvious. There has to be local approval of an inter-fund loan by the city council. Then the loan is sent to the Division of Local Finance in the State Comptroller's Office for approval. Dycus twice notes that any loan of this type has to be an arms-length business transaction and that the going rate of interest has to be paid by the fund that is borrowing the money. In the city's case, the general fund (largely funded by taxes) borrowed the money and should have paid interest to the sewer fund (largely paid by ratepayers) that made the $2.5 Million loan. Click on the e-mail below to enlarge.
Because of the illegalities of the handling of the funds transfer/loan and because the whole thing was cleverly orchestrated to cover-up the dire (essentially bankrupt) financial situation of the city's general government fund, Cook referred to this matter as "sewergate." Maybe it was "sewergate" to cover up Morristown's "bankruptcygate."
Now click again and read Wampler's last statement in his hand-written note on Winstead's e-mail. "I will develop a fund transfer policy as soon as I can." Transfers are not allowed. No need for a transfer policy.
An inter-fund loan from sewer to general fund can be made, BUT it must be an arms-length transaction that is first passed by the council and then approved by the state. The Dycus e-mail pretty much outlines the procedures for such an inter-fund loan. Maybe the city should consider following state law as its inter-fund loan policy!
Of course, maybe the city would not have to borrow money from its sewer fund at all if the Mayor and councilmembers managed the taxpayers' money responsibly and didn't pass every nice-sounding spending proposal that comes around plus borrow and spend every penny that they can get their hands on.
Mr. Cook pointed out to the Mayor and Council that they could and should have known about the $2.5 million switcheroo (my word) if they had ever actually looked at the 2008 audit. He also pointed out that they could and should have known that the city's 2008 general fund balance of $3,431.536.00 was all smoke and mirrors (my words) if they had actually looked at the audit.
The $3,431,536.00 fund balance was largely a charade, but you had to ask questions or you had to be paying attention to see the charade. Every penny of the 2008 "fund balance/rainy day fund" of $3,431,536.00 was reserved or set aside (1) to pay back the sewer loan ($2,500,000.00), (2) to pay existing contracts ($995,419.00), and (3) to pay other bills owed by the city ($135,617.00).
Real available general fund balance/rainy day fund as of 6/30/08. Zero!
Now how many times do you reach the end of the year (December 31) and your debts and bills are EXACTLY, down to the penny, what is in your checking account (fund balance) at that point in time?
Yet, that's what the city's 2008 audit would have the taxpayers believe. The audit suggests that the city's checking account (fund balance) had EXACTLY $3,431,536.00 in it as of 6/30/08 and that the city's current debts and bills just happened to total EXACTLY $3,431,536.00 as of 6/30/08. An unbelievable coincidence? Smoke and mirrors? Or plain old local hoodoo economics?
The city's auditor is Craine, Thompson & Jones. Terry Winstead of CTJ (click on e-mail below) states that Tom Jones of CTJ was present in a meeting when Crumley authorized the transfer but that CTJ's auditing "independence" and objectivity were not lost because while Jones knew about the entry, he (Jones) didn't physically make the entry himself. So Jones was in the meeting where the entry was authorized. Jones then completed his audit of the city's books and recorded the $2.5 MILLION switcheroo as an inter-fund loan. BUT Jones did not report that this $2.5 Million "inter-fund loan" had not been approved by council (as is required). AND Jones did not report that this $2.5 Million "loan" had not been approved by the State Comptroller's Director of Local Finance (as is required).
At left is Winstead's e-mail to Wampler describing how the $2.5 Million "entry" for fiscal year 2008 came about and then disavowing any direct involvement by auditor Tom Jones-- Jones just happened to be there when the entry was authorized. On the November 2009 e-mail, there is also a written notation by Wampler stating that Dynise (Robertson), the city's finance director, informed Wampler that the $2.5 Million 2008 sewer to general fund transfer was "transferred back last week." No mention of who authorized the transfer-back or why the transfer-back, like the initial transfer, did not go through council.
The scariest part of the note is Wampler's second statement: "We will have to transfer most of that money back to the General Fund before the end of the fisical (sic) year." Why? To cover up a poor financial situation again? After the whopping property tax increase of 2007, after the sales tax increase of 2008, and after red light cameras were installed for even more revenue, is Wampler's comment a warning that the city may still not have enough funds for general government operations at the end of FY 2010 (6/30/10) and will somehow need another sewer loan as a cushion?
At city council yesterday, Charles Cook asked Mayor Barile if she knew about this $2.5 Million sewer fund to general fund transfer in 2008. She said she didn't recall being told at the time.
Cook then passed out an e-mail that I had received from the Director of Municipal Audit (Dennis Dycus) in the State Comptroller's office in response to questions about (1) whether a temporary transfer of money from the sewer fund to the general fund could be made (no) and (2) how an inter-fund loan from sewer to general fund should be handled (carefully). [Cook had blacked out my name on the e-mail so the city officials could concentrate on the contents of the e-mail itself. By now, the Mayor and/or some members of the council or others have probably called up the state to find out who was asking questions when in reality it is the Mayor and the councilmembers who should have been asking this and many more questions all along.]
Mr. Dycus, Director of Municipal Audit, simply confirmed the obvious. There has to be local approval of an inter-fund loan by the city council. Then the loan is sent to the Division of Local Finance in the State Comptroller's Office for approval. Dycus twice notes that any loan of this type has to be an arms-length business transaction and that the going rate of interest has to be paid by the fund that is borrowing the money. In the city's case, the general fund (largely funded by taxes) borrowed the money and should have paid interest to the sewer fund (largely paid by ratepayers) that made the $2.5 Million loan. Click on the e-mail below to enlarge.
Now click again and read Wampler's last statement in his hand-written note on Winstead's e-mail. "I will develop a fund transfer policy as soon as I can." Transfers are not allowed. No need for a transfer policy.
An inter-fund loan from sewer to general fund can be made, BUT it must be an arms-length transaction that is first passed by the council and then approved by the state. The Dycus e-mail pretty much outlines the procedures for such an inter-fund loan. Maybe the city should consider following state law as its inter-fund loan policy!
Of course, maybe the city would not have to borrow money from its sewer fund at all if the Mayor and councilmembers managed the taxpayers' money responsibly and didn't pass every nice-sounding spending proposal that comes around plus borrow and spend every penny that they can get their hands on.
Mr. Cook pointed out to the Mayor and Council that they could and should have known about the $2.5 million switcheroo (my word) if they had ever actually looked at the 2008 audit. He also pointed out that they could and should have known that the city's 2008 general fund balance of $3,431.536.00 was all smoke and mirrors (my words) if they had actually looked at the audit.
The $3,431,536.00 fund balance was largely a charade, but you had to ask questions or you had to be paying attention to see the charade. Every penny of the 2008 "fund balance/rainy day fund" of $3,431,536.00 was reserved or set aside (1) to pay back the sewer loan ($2,500,000.00), (2) to pay existing contracts ($995,419.00), and (3) to pay other bills owed by the city ($135,617.00).
Real available general fund balance/rainy day fund as of 6/30/08. Zero!
Now how many times do you reach the end of the year (December 31) and your debts and bills are EXACTLY, down to the penny, what is in your checking account (fund balance) at that point in time?
Yet, that's what the city's 2008 audit would have the taxpayers believe. The audit suggests that the city's checking account (fund balance) had EXACTLY $3,431,536.00 in it as of 6/30/08 and that the city's current debts and bills just happened to total EXACTLY $3,431,536.00 as of 6/30/08. An unbelievable coincidence? Smoke and mirrors? Or plain old local hoodoo economics?
Wednesday, November 25, 2009
November 25, 2009 Anthony Cox Selected as New City Administrator
Not surprisingly, Anthony Cox of Radford, Virginia was named the new Morristown "city administrator-select" at yesterday's 11:30 AM special called meeting of council. Wonder how many working taxpayers were able to leave work and make it to that meeting?
Pat Hardy of MTAS and Interim City Administrator Lynn Wampler had presented the council with a slate of four finalists from which to select a new city administrator to replace the "retired" Jim Crumley.
Two of the four finalists (Angie Carrier of White House, TN and Jody Baltz of Tullahoma, TN) were placed among the final four at the last-minute because of their "close acquaintance" with MTAS' Pat Hardy and Interim City Administrator Lynn Wampler. Although Baltz met the advertised qualifications for the job, selection of Carrier or Baltz would have raised eyebrows since apparently both got an automatic pass to the final four--with no telephone interview--based on MTAS connections.
Of the two who went through the entire process and who actually interviewed with Wampler prior to their inclusion as finalists (Anthony Cox and James Payne), Cox emerged the winner.
Cox has many tasks before him--chief of which is cleaning up the financial mess left by Crumley and company. Hopefully, the Mayor and Councilmembers are now ready to pay attention and be active participants in the operation of city government instead of being a rubberstamp.
Regardless of who is City Administrator, the buck always starts and stops with the Mayor and City Council.
The Mayor and Council appoint an administrator, but they can't just walk away at that point and give free rein to that person, no matter who it is. Absolute power corrupts absolutely. The absolute power given to Crumley led to the current financial debacle at the City Center with a huge assist by a Mayor and Council who fiddled while Morristown burned.
Government at all levels should be a system of checks-and-balances. The Administrator is "selected" to be the day-to-day point man at the City Center, but the "elected" Mayor and Council are the people's representatives in setting policy and acting as a check-and-balance on the power given to the administrator.
Morristown needs an honest administrator who will operate city government like an open book and in a financially responsible manner. Morristown needs honest budgeting without the inflated revenue projections, bloated spending, and excessive borrowing/debt of the past.
Anthony Cox has a huge task before him.
He can't go wrong by relying on the two most basic tried-and-true financial principles: Don't spend more than you take in and realize that excessive debt will cripple and enslave you.
At an ever-increasing pace over the past few years, City officials spent more than they took in, created wish lists, and then spent and borrowed more.
Of course, when you get to spend OPM (other people's money), it is easy to come up with $100 million dollar wish lists and all kinds of nifty spending ideas (e.g., brick-paving machines). It's also easy to go deeper and deeper into debt when you get to use OPM to pay that debt back. It's easy to set up perks for friends and associates when OPM pays it all. It's easy to sign no-bid contracts and work out sweetheart deals when OPM picks up the tab. It's easy to buy the latest, fanciest, and chromiest vehicles when OPM pays for them and the gas, too. Two-million dollar cost overrun (Veterans Parkway)? Not a problem when OPM pays it.
.
The citizens are watching their government and their government officials more closely than ever before--not just in Morristown and Hamblen County but in cities and counties all across the nation.
OPM belongs to the citizens and taxpayers. It is not free money. It is not for frivolous, pet projects. It is not to be wasted. It is not for excessive spending or excessive borrowing.
Pat Hardy of MTAS and Interim City Administrator Lynn Wampler had presented the council with a slate of four finalists from which to select a new city administrator to replace the "retired" Jim Crumley.
Two of the four finalists (Angie Carrier of White House, TN and Jody Baltz of Tullahoma, TN) were placed among the final four at the last-minute because of their "close acquaintance" with MTAS' Pat Hardy and Interim City Administrator Lynn Wampler. Although Baltz met the advertised qualifications for the job, selection of Carrier or Baltz would have raised eyebrows since apparently both got an automatic pass to the final four--with no telephone interview--based on MTAS connections.
Of the two who went through the entire process and who actually interviewed with Wampler prior to their inclusion as finalists (Anthony Cox and James Payne), Cox emerged the winner.
Cox has many tasks before him--chief of which is cleaning up the financial mess left by Crumley and company. Hopefully, the Mayor and Councilmembers are now ready to pay attention and be active participants in the operation of city government instead of being a rubberstamp.
Regardless of who is City Administrator, the buck always starts and stops with the Mayor and City Council.
The Mayor and Council appoint an administrator, but they can't just walk away at that point and give free rein to that person, no matter who it is. Absolute power corrupts absolutely. The absolute power given to Crumley led to the current financial debacle at the City Center with a huge assist by a Mayor and Council who fiddled while Morristown burned.
Government at all levels should be a system of checks-and-balances. The Administrator is "selected" to be the day-to-day point man at the City Center, but the "elected" Mayor and Council are the people's representatives in setting policy and acting as a check-and-balance on the power given to the administrator.
Morristown needs an honest administrator who will operate city government like an open book and in a financially responsible manner. Morristown needs honest budgeting without the inflated revenue projections, bloated spending, and excessive borrowing/debt of the past.
Anthony Cox has a huge task before him.
He can't go wrong by relying on the two most basic tried-and-true financial principles: Don't spend more than you take in and realize that excessive debt will cripple and enslave you.
At an ever-increasing pace over the past few years, City officials spent more than they took in, created wish lists, and then spent and borrowed more.
Of course, when you get to spend OPM (other people's money), it is easy to come up with $100 million dollar wish lists and all kinds of nifty spending ideas (e.g., brick-paving machines). It's also easy to go deeper and deeper into debt when you get to use OPM to pay that debt back. It's easy to set up perks for friends and associates when OPM pays it all. It's easy to sign no-bid contracts and work out sweetheart deals when OPM picks up the tab. It's easy to buy the latest, fanciest, and chromiest vehicles when OPM pays for them and the gas, too. Two-million dollar cost overrun (Veterans Parkway)? Not a problem when OPM pays it.
.
The citizens are watching their government and their government officials more closely than ever before--not just in Morristown and Hamblen County but in cities and counties all across the nation.
OPM belongs to the citizens and taxpayers. It is not free money. It is not for frivolous, pet projects. It is not to be wasted. It is not for excessive spending or excessive borrowing.
Tuesday, November 24, 2009
November 24, 2009 No Public Forum at Today's "Special Called" Meeting of City Council
As mentioned in an earlier post, the City Council is having a special called meeting at 11:30 AM.
The announcement of the meeting in Sunday's paper said that there were only two items on today's agenda:
1) Hiring a City Administrator;and
2) A Bond Anticipation Note in the amount of $950,000 for the purchase of the property on North Liberty Hill Road for the new Public Works Complex.
If you check the city's website, the agenda (click here) shows a third agenda item (Installation of fire hydrants in Witt area) that was not mentioned in the newspaper.
Significantly, today's agenda does not list a public forum where the public is given the opportunity to speak to council. The agendas for Council's regular meetings provide the public with an opportunity to speak near the beginning of the meeting. Today's special called meeting, however, does not include a public forum.
It looks like the council and interim administrator not only called this special meeting for 11:30 AM to keep the working taxpayer from being able to attend but also to keep anyone who might be able to attend (retired or off work today) from speaking about items on the agenda.
The process of naming an administrator has had its own problems--see the post here on the last-minute addition of two "acquaintances" of MTAS' Pat Hardy and Interim Administrator Wampler as automatic finalists.
Now the special called meeting is set for 11:30 AM to make sure that the public can't attend and, if the public should somehow be able to attend, the special called meeting prevents them from speaking
Not exactly a showcase for openness and transparency.
[At its regular meetings, the Mayor and Council at least go through the motions of allowing the public to speak and act like they are listening. At today's meeting, they don't want to hear the public!]
The announcement of the meeting in Sunday's paper said that there were only two items on today's agenda:
1) Hiring a City Administrator;and
2) A Bond Anticipation Note in the amount of $950,000 for the purchase of the property on North Liberty Hill Road for the new Public Works Complex.
If you check the city's website, the agenda (click here) shows a third agenda item (Installation of fire hydrants in Witt area) that was not mentioned in the newspaper.
Significantly, today's agenda does not list a public forum where the public is given the opportunity to speak to council. The agendas for Council's regular meetings provide the public with an opportunity to speak near the beginning of the meeting. Today's special called meeting, however, does not include a public forum.
It looks like the council and interim administrator not only called this special meeting for 11:30 AM to keep the working taxpayer from being able to attend but also to keep anyone who might be able to attend (retired or off work today) from speaking about items on the agenda.
The process of naming an administrator has had its own problems--see the post here on the last-minute addition of two "acquaintances" of MTAS' Pat Hardy and Interim Administrator Wampler as automatic finalists.
Now the special called meeting is set for 11:30 AM to make sure that the public can't attend and, if the public should somehow be able to attend, the special called meeting prevents them from speaking
Not exactly a showcase for openness and transparency.
[At its regular meetings, the Mayor and Council at least go through the motions of allowing the public to speak and act like they are listening. At today's meeting, they don't want to hear the public!]
Sunday, November 22, 2009
November 22, 2009 City Council Special Meeting on November 24 at 11:30 AM (For the Convenience of all Citizens? Not!)
The City Council is having a special meeting on November 24, 2009, at 11:30 AM at the City Center to:
1) Name a new city administrator; and
2) Consider a bond anticipation note in the amount of $950,000 for the purchase of the Roy Widener property on N. Liberty Hill Road.
A very important decision--selecting a new city administrator--is on the agenda. Setting this meeting for 11:30 AM shows that the Mayor and many councilmembers are happy to exclude the working and taxpaying public from being able to participate or observe the handling of public business.
[Of course, the Mayor and most councilmembers have already shown that they are not interested in having any meetings at a time that is convenient for the public. See a prior post on council meeting times here.]
One reason for the inconvenient 11:30 AM meeting time could be questions that have arisen surrounding how the last two finalists (Angie Carrier and Jody Baltz) for the city administrator position were selected.
The newpaper hinted at these questions in the last two paragraphs of a November 19 article when Bob Moore reported: "Interim Morristown City Administrator Lynn Wampler and Pat Hardy, a Municipal Technical Advisory Service (MTAS) consultant, narrowed the (city administrator) field from more than 80 applicants to the final four. Baltz and Carrier, acquaintances of Wampler and Hardy, were added as last-minute entries into the city administrator selection process."
The normal process of application followed by interview of potential finalists was apparently circumvented with the addition of Baltz and Carrier as finalists despite not being interviewed by phone as were other finalists.
Carrier's situation is particularly troubling. It must be very important to be "an acquaintance" of certain people when you can waltz into the final four with submission of a last-minute resume, no phone interview, and an admission that you are not directly involved in formulating budgets and that you have no experience in industrial recruitment because your city (White House, TN) is primarily a bedroom community for people who work in Nashville. [Bob Moore's November 20 article in the Tribune.]
Strangely, I didn't see any quote in Bob Moore's article from Mayor Barile, other councilmembers, Wampler, or Hardy about the passes given to Baltz and Carrier. Surely, Bob asked for comment about failure to follow procedures in connection with Carrier and Baltz. Carrier, as I understand, is a very personable individual. Baltz has the financial expertise required for the job, but he, unfortunately, appears to have received an automatic pass to the final four just on the basis of being an "acquaintance" of Wampler and Hardy.
Contrast the automatic selection of Carrier and Baltz as finalists with the Mayor's comments a few weeks ago rejecting any further consideration of city department head Jay Moore's application and refusing to give Moore an interview because he did not meet the advertised budgeting and financial "requirements" for the job.
If Mr. Moore had just been an "acquaintance" of Wampler and Hardy, perhaps he, too, could have waltzed into the final four without meeting the financial requirements and without having an interview.
On the other hand, one has to wonder about the Mayor's definition of financial requirements. She seemed to think that the departed Jim Crumley was the financial bomb and that the city would be lost without his presence.
Now that Crumley's behind-the-scenes maneuvers are coming out, what does she think of Crumley's illegal transfer of $2.5 Million from the sewer fund to the general fund?
What does she think of the contract Crumley signed to lease the Roy Widener property on N. Liberty Hill Road--a contract that Mr. Wampler looked at and saw for what it was--a bad lease for the city. Now the City is having to issue $950,000 in bonds--more debt--to purchase the property and get out of additional lease payments with the minimum of financial damage. Did she see and approve that contract?
What do she and councilmembers think of Crumley and Janish's 09-10 budget--a budget that the Mayor voted for about 4 or 5 months ago and that is now falling apart around her and around the city employees. Department heads were required to make cuts. Did the Mayor and council take a 4% cut? Probably not, but it is possible and even likely that these officials have protection from any increase or decrease in their pay during their time in office.
What do she and councilmembers think of the huge city debt? What do she and councilmembers think of the astronomical sewer increases--past and future?
Have she and councilmembers ever really looked at and examined the 2008 audit and current financial information to try and figure out what has gone on and what is going on? Have she and councilmembers looked at how much more money the city has taken in over the past five years? Have she and councilmembers ever asked where the money went?
Are she and other councilmembers ready to ask financial questions now without fear of, gasp, micromanaging? Or is the Mayor's real concern still light pollution and those pretty brick-paving machines?
1) Name a new city administrator; and
2) Consider a bond anticipation note in the amount of $950,000 for the purchase of the Roy Widener property on N. Liberty Hill Road.
A very important decision--selecting a new city administrator--is on the agenda. Setting this meeting for 11:30 AM shows that the Mayor and many councilmembers are happy to exclude the working and taxpaying public from being able to participate or observe the handling of public business.
[Of course, the Mayor and most councilmembers have already shown that they are not interested in having any meetings at a time that is convenient for the public. See a prior post on council meeting times here.]
One reason for the inconvenient 11:30 AM meeting time could be questions that have arisen surrounding how the last two finalists (Angie Carrier and Jody Baltz) for the city administrator position were selected.
The newpaper hinted at these questions in the last two paragraphs of a November 19 article when Bob Moore reported: "Interim Morristown City Administrator Lynn Wampler and Pat Hardy, a Municipal Technical Advisory Service (MTAS) consultant, narrowed the (city administrator) field from more than 80 applicants to the final four. Baltz and Carrier, acquaintances of Wampler and Hardy, were added as last-minute entries into the city administrator selection process."
The normal process of application followed by interview of potential finalists was apparently circumvented with the addition of Baltz and Carrier as finalists despite not being interviewed by phone as were other finalists.
Carrier's situation is particularly troubling. It must be very important to be "an acquaintance" of certain people when you can waltz into the final four with submission of a last-minute resume, no phone interview, and an admission that you are not directly involved in formulating budgets and that you have no experience in industrial recruitment because your city (White House, TN) is primarily a bedroom community for people who work in Nashville. [Bob Moore's November 20 article in the Tribune.]
Strangely, I didn't see any quote in Bob Moore's article from Mayor Barile, other councilmembers, Wampler, or Hardy about the passes given to Baltz and Carrier. Surely, Bob asked for comment about failure to follow procedures in connection with Carrier and Baltz. Carrier, as I understand, is a very personable individual. Baltz has the financial expertise required for the job, but he, unfortunately, appears to have received an automatic pass to the final four just on the basis of being an "acquaintance" of Wampler and Hardy.
Contrast the automatic selection of Carrier and Baltz as finalists with the Mayor's comments a few weeks ago rejecting any further consideration of city department head Jay Moore's application and refusing to give Moore an interview because he did not meet the advertised budgeting and financial "requirements" for the job.
If Mr. Moore had just been an "acquaintance" of Wampler and Hardy, perhaps he, too, could have waltzed into the final four without meeting the financial requirements and without having an interview.
On the other hand, one has to wonder about the Mayor's definition of financial requirements. She seemed to think that the departed Jim Crumley was the financial bomb and that the city would be lost without his presence.
Now that Crumley's behind-the-scenes maneuvers are coming out, what does she think of Crumley's illegal transfer of $2.5 Million from the sewer fund to the general fund?
What does she think of the contract Crumley signed to lease the Roy Widener property on N. Liberty Hill Road--a contract that Mr. Wampler looked at and saw for what it was--a bad lease for the city. Now the City is having to issue $950,000 in bonds--more debt--to purchase the property and get out of additional lease payments with the minimum of financial damage. Did she see and approve that contract?
What do she and councilmembers think of Crumley and Janish's 09-10 budget--a budget that the Mayor voted for about 4 or 5 months ago and that is now falling apart around her and around the city employees. Department heads were required to make cuts. Did the Mayor and council take a 4% cut? Probably not, but it is possible and even likely that these officials have protection from any increase or decrease in their pay during their time in office.
What do she and councilmembers think of the huge city debt? What do she and councilmembers think of the astronomical sewer increases--past and future?
Have she and councilmembers ever really looked at and examined the 2008 audit and current financial information to try and figure out what has gone on and what is going on? Have she and councilmembers looked at how much more money the city has taken in over the past five years? Have she and councilmembers ever asked where the money went?
Are she and other councilmembers ready to ask financial questions now without fear of, gasp, micromanaging? Or is the Mayor's real concern still light pollution and those pretty brick-paving machines?
Tuesday, November 17, 2009
November 17, 2009 City Council Makes Cuts, Including Reducing Work Hours of Many City Employees
This afternoon's city council meeting was lengthy. Interim City Administrator Lynn Wampler, who did not have cuts ready for discussion at last Thursday's Finance Committee meeting, today had each department head present cuts to the council today.
The council chambers were full of police, fire, public works, and other city employees. Some employees stood just outside the council chambers while others spilled out into the large rotunda as department heads presented cuts to their 09-10 budgets that were passed a few months ago.
To make up a projected budget shortfall of approximately $900,000, the cuts by various departments included a reducton in hours for many city employees, vacant positions left unfilled or changed to part-time, and the elimination of the positions of two newly-hired firefighters who had just recently been sent for training.
Voting "no" on the cuts were Gene Brooks and Claude Jinks. All others (Bob Garrett, Mayor Barile, Claude Jinks, Doc Rooney, and Frank McGuffin) voted yes.
After the cutting was done, Interim Administrator Wampler asked that the council consider at a future date a number of ways of raising more money for the city. Among the proposals put on the table were raising the hotel-motel tax (which will have to be approved locally, sent to Nashville as part of a private act, and then passed again locally with a 2/3 majority), garbage pick-up charges, and eliminating recycling pick-up and having people deliver their recyclables to convenience centers instead.
I'll have several other separate posts on topics covered at the meeting.
Update: The WVLT report is here. The WBIR report is here. The WATE report is here.
The council chambers were full of police, fire, public works, and other city employees. Some employees stood just outside the council chambers while others spilled out into the large rotunda as department heads presented cuts to their 09-10 budgets that were passed a few months ago.
To make up a projected budget shortfall of approximately $900,000, the cuts by various departments included a reducton in hours for many city employees, vacant positions left unfilled or changed to part-time, and the elimination of the positions of two newly-hired firefighters who had just recently been sent for training.
Voting "no" on the cuts were Gene Brooks and Claude Jinks. All others (Bob Garrett, Mayor Barile, Claude Jinks, Doc Rooney, and Frank McGuffin) voted yes.
After the cutting was done, Interim Administrator Wampler asked that the council consider at a future date a number of ways of raising more money for the city. Among the proposals put on the table were raising the hotel-motel tax (which will have to be approved locally, sent to Nashville as part of a private act, and then passed again locally with a 2/3 majority), garbage pick-up charges, and eliminating recycling pick-up and having people deliver their recyclables to convenience centers instead.
I'll have several other separate posts on topics covered at the meeting.
Update: The WVLT report is here. The WBIR report is here. The WATE report is here.
Subscribe to:
Posts (Atom)