Fishing’s Best In The Muddy
Waters Of Municipal Finance
Now how’s that old song go? “You get a line and I’ll get a pole, honey. You get a line and I’ll get a pole baby.” Then, something, something, something…fish’n hole. Let’s see, I have my spreadsheets, my magnifying glass for the fine print, my sense of humor, a bucket to put all the money in I find and waders to get out in the deep end where the big ones are. It’s time to go fishing for your tax money that wasn’t spent last fiscal year.
You won’t need a new bass boat, state of the art sonar or even a bucket of bait, but that doesn’t mean public sector finance isn’t a challenging sport. You still need patience and a keen eye to reel in the big ones, which is what your City Council was doing Tuesday night as we considered a multi-million dollar budget amendment from the Mayor.
Our fiscal year starts January 1st, but public projects don’t conveniently stop and start when someone shouts HAPPY NEW YEAR! Money appropriated for a particular purchase in one year may not get paid out till the next year. It could be some sort of contract work, like street reconstruction, which extends from one fiscal year to the next. Or it could be a major project, which was funded over several fiscal years. It might be a vehicle or piece of equipment that is simply on order and didn’t arrive by the end of the year. In these cases, the money is simply in the pipeline and the necessity for that funding to carry over from one fiscal year to the next is clear.
Things get a little murkier when unused funds get rolled over into new projects. These require a budget amendment or BA for those who want to sound cool around municipal officials. It’s probably best to use a real world example for this one.
Last year the City Council wanted to help reduce speeding by buying speed-monitoring trailers. These are the ones the Police place on streets, which flash how fast you’re going. Money for another trailer was already in the Police budget, but the Council at that time thought a second one was warranted. So in the Police budget there was a $15,000 line item and the Council in its own budget provided another $15,000.
That turned out to be more than was needed. As a result there was $8,675 left in each of the line items, after the two trailers were purchased. That’s great news, right? But no one seems quick to share that kind of information. Here’s why.
Extra money is often rolled over to a new line item. In this case, to purchase vehicle mounted video cameras. The so called “residual” money from line items that wasn’t needed in last fiscal year, often goes to pay for items which a department did not get funded in the normal course of the annual budget review process for the current year. I use the word “residual” because they hate it at City Hall when I use the term “found” money. They have a point that it was never “lost”, but it certainly got found.
And what of the residual $8,675 from the money the City Council had put towards this worthy project? The line item in the Council’s budget was zeroed out. We weren’t given the opportunity to say if the money should or shouldn’t go to some other need.
In the past, budget amendments didn’t always get the scrutiny they received Tuesday night. I decided to go “fishing” because there are several key road projects that are short of funds this year, when higher than anticipated bids came forward. There are also pressures on the sidewalk budget and projects, anticipated to be funded in future years, which are needed now.
Towards that goal, the Council “netted” about $2.5 million in its initial review. We “rediscovered” $202,600 that has been floating around since 2001. The project it was to fund never got off the ground.
Our biggest catch of the day, however, had to be $482,436 in gaming revenue that wasn’t needed for the new Convention Center. The taxpayer protection act, adopted as part of selling the Convention Center to the public, pledged that no city tax dollars other than those generated on site and from the tourism fund were to go to underwrite operations of the center. The Finance Director also confirmed this money no longer had to remain in this line item as the project had come in well under budget.
Sometimes money tends to build up in a line item, like the $522,392 rolled over from 2004 in the Economic Development Fund. That’s more than the annual allocation for the fund for 2005. I would like to see this money put to better use, to spur redevelopment of some of our commercial corridors or to help attract new business rather than to sit idle for another year. I should also point out the money I’m talking about is in excess of a fully funded reserve account.
While the Council was able to cut specific line items from the budget amendment, the process is more like catch and release. The extra funds simply go to an unappropriated fund balance. The Mayor and Council have to jointly decide how to reappropriate the money. Hopefully we can reach consensus on how to best fund current needs. In the meantime, we can stow away our gear, brag about the ones that “didn’t” get away and pass around the tartar sauce.
