Recently, I blogged about Richardson's proposed 2011-2012 budget and declared it not to be in balance. That is, expenditures exceeded revenues. The difference was covered by excess balances in reserve funds. Nothing wrong with doing that, I also declared.
Others were not satisfied. After the jump, new developments.
Cheri Duncan-Hubert, in a number of comments to my original blog posts, insisted that there was indeed something wrong with Richardson's finances. I won't put words in her mouth. She can speak for herself and did so in extensive comments.
I also won't speak for Bill McCalpin. He has just published a long article (four pages) on Rumorcheck.org investigating some of the points made by me and Duncan-Hubert. It's worth reading. Make sure you click on the links to see all four pages.
McCalpin introduces a concept that I do not remember anyone -- bloggers, commenters, city staff -- using to defend the proposed budget. That's the concept of a cyclically balanced budget. Say, one year the city's revenues exceed expenditures and the next year, expenditures exceed revenues by the same amount. The second year's budget, by itself, has a deficit, but cyclically, over the two year period, the combined budgets are in balance. I believe that this is the City of Richardson's practice, even if they just can't bring themselves to admit that second year budget is not, technically, balanced by itself.
McCalpin also goes into a lot of detail about the Consolidated Annual Financial Report (CAFR). My blog articles focused on the budget, not the CAFR, but in Duncan-Hubert's comments the CAFR played a prominent role. McCalpin points out that in key tables, "capital expenditures made with the bond money are listed under 'expenditures' ... but the incoming bond money itself that covered those expenditures is not listed under 'revenues' but under 'other financing sources'." This accounting practice makes it look like expenditures exceed revenues year after year. McCalpin claims that a more global view shows that is not the case.
Rumorcheck.org does not allow for reader comments (a serious shortcoming, in my opinion), so if anyone cares to challenge McCalpin's arguments here, comments are on.
The city council is set to formally adopt this (cyclically balanced) budget at its September 12 meeting. I recommend a "yes" vote. I don't anticipate any suspense. I expect the vote will be 7-0. Then, with any luck, you won't have to hear about budgets from me again until next year ... or until the 2011 CAFR is published. ;-)
9 comments:
Thank you for the reference, Mark. While it is true that RumorCheck does not allow open comments the way that many blogs do (RumorCheck is a content-based website, not a blog), RumorCheck does encourage readers to submit comments via the Contact page (http://www.rumorcheck.org/contact.html).
Although I don't normally publish the very short "atta boy!" comments, I do publish comments that lead to additional research and commentary on the subject - see http://www.rumorcheck.org/RichardsonDebtLoad.html as an example where one of the postscripts was triggered by a reader comment.
Also note that while RumorCheck seldom receives negative comments, I published one such comment here - http://www.rumorcheck.org/CheckYourFacts.html - where a reader consistently misread what I wrote.
Comments are indeed welcome at RumorCheck, but I don't want RumorCheck to become yet another place where anonymous posters spew forth torrents of personal abuse and gross misinformation. Could I police a dynamic comments section the way you do here? Yes, but the amount of time I spend researching and documenting each RumorCheck precludes spending much time babysitting threads.
Bill
Since page 99 of the CAFR states a short fall for over 10 yrs, that a pretty big cycle, isn't it! lol
I wonder how many open records requests Mr McCalpin has made to confirm his research? Just curious
Cheri, you are reading the wrong page - the right totals are on the continuation of Table 4 on page 100. As I noted in my latest RumorCheck at http://www.rumorcheck.org/BalancedBudget.html , it makes no sense to concentrate on the subtotal at the bottom of page 99 if some expense items (like Capital outlays) are listed under Expenditures on page 99 but the corresponding "revenue" (incoming bond money, in this case) is not listed under "Revenues" on page 99 but under "Other financing sources" on page 100.
That is, the subtotal on the bottom of page 99 ("Deficiency of revenues under expenditures") is an artificial construct forced upon the City by the way that GASB requires that the CAFR be laid out.
If you insist on focusing on the total on page 99 which leaves the incoming bond money out of the "Revenues", then the only logical thing to do would be to remove the corresponding expenditure of the bond money from "Expenditures". And look what happens when you do! Go ahead, remove the "Capital outlay" (i.e., bond money) from each year and recalculate the totals...(e.g., in 2001, remove the 54,653 from the Expenditures list). The new "Total expenditures" is 92,432, and the new "Deficiency of revenues under expenditures" is now a POSITIVE 10,649 (i.e., revenues EXCEED expenditures). If you go across the years, you will see that this is true in every year but one: 2005.
Either way, it makes no sense to count one side of the money flow without counting the other...and when you count both, the real financial picture is far different than the one you are painting....
Bill
As for the number of open records requests I have made, what difference does that make? Does that make what I say more or less true?
However, I don't want you to waste the taxpayer's money the way your buddy David C. does (Mark, David recently filed an open records request to find out how many open records requests I have filed - what a complete waste of City staff time and taxpayer money!).
The fact is that I did what ANY RESIDENT of Richardson could do...I used my background in corporate taxation and non-profit management to review the CAFR, and when I had a question on something that I didn't fully understand, I called the City's Finance Department and just asked. Nobody needs an open records request for that, and it's just a waste of our tax dollars to do so...
The people in the Finance Department are very helpful and I think it fair to say that they would encourage people to call to ask questions, to avoid these sorts of misunderstandings...
Bill
I now see that David C. claims that he never did an open records request on my open records requests at City Hall.
Sorry, David, YOU were the one that told us on April 22, 2011 all about the open records request on me...see
http://dc-tm.blogspot.com/2011/04/how-many-foi-requests-has-mccalpin-made.html
or if you get around to deleting that post to hide your embarrassment, here's a snapshot of your post:
http://www.rumorcheck.org/images/DC-TM-FOI-2.jpg
Oh, I see, now you are going to deny that YOU made the request but that someone else did...something that you conveniently forgot to mention so that some day you could have plausible deniability...well, that's just great, David, have one of your close friends do the request with the intention of putting it on your blog, then deny that you had anything to do with it...what nonsense!
Sorry, David, but no one is going to buy either your story or your conspiracy theories...
Bill
No Bill, I am not reading the wrong page. I have posted on earlier blogs here about pages 99-100 and their relevance. And if you had read the mountainous number of words you would know that. And I am most clear of your tenure at CLR years after I worked for Steve Wynn. Not that it has anything to do with this topic or anything else for that matter.
And I am further clear how the carryover of projects and monies is posted in the funds on the budget. And I reference the CAFR because it is the scorecard for the budget. GASB 34 defined some reporting structures that helps in figuring out source of funds over and above revenues and expenditures for the fiscal year and was enacted in 2001. $25m+/- is stripped from funds to funds each year. That is the relevance of source information on page 100. That stripping is improper from the perspective of the Charter. But it happens and is another story.
And your snide remark over making ORR was not about David C. Your childish comments are of no use to anyone, so stick to the issues only.
You are incorrect on who made that request in the first place. It was not David and, for the record, it was not me.
'I' made the comment because 'I' have made many, many requests and have a strong grasp on several issues. Your comment on validity of such is absurd. It is my right and have paid hundreds and hundreds of dollars for the privilege. I do it to understand the logic in the decisions and how they play out as we move forward. More often than not, the council is clueless in most of the details. I just had that conversation tonight with several council members. I have done my homework and make my conclusions based on such. Many documents I am sure you have never seen. Hence the relevance of where you get your data.
You can interpret any way you want and I choose to disagree with your interpretation, but here is the bottom line. The 2006 bond to increase asset base has all but been wiped out and all the citizens are left with is debt. In 2010 a bond election produced a 10% increase in taxes, yet spending increase 7%. The end of January we will see what gifts the 2011 CAFR will bring us. And we already know at least a $2m shortfall.
Have a nice evening Mr. McCalpin.
Ms. Duncan-Hubert, some thoughts...
1. "And if you had read the mountainous number of words you would know that." I have read your postings here on Mark's blog and have seen no evidence of anything that contradicts what I say...please provide specifics.
2. "Not that it has anything to do with this topic or anything else for that matter." Of course, my experience at CLR counts. You have noted elsewhere about how you use your accounting experience to understand the City's finances ("Accountants understand this! lol And interestingly enough I have been one for 35 years"), so since you opened the door to "this line of questioning" as they say in court, my experience is just as relevant as yours.
3. "$25m+/- is stripped from funds to funds each year...That stripping is improper from the perspective of the Charter." I do not believe that either statement is true (at least as you mean it), but have not had the time yet to document it. Yeah, criticize me all you want, but it takes time to properly document the refutation of rumors.
4. "And your snide remark over making ORR was not about David C." Of course it was about David. I have no idea how many open records requests you've made, because, unlike one of David's RCA buddies, I've never made a request to find out. Who cares? But I do believe (and obviously you disagree) that making an open records request which requires City staff time to process when you could just call someone in the City for the answer is a waste of taxpayers' money. City staff time is NOT free...which is why it is a shame that the City had to hire a third person in the City Secretary's office to process all those open records requests. Yeah, it's your right to file those requests, but don't expect the rest of us taxpayers to be happy about it.
(cont)...
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5. "Hence the relevance of where you get your data." So is it your conclusion that it is better to get first-hand data that you don't understand than to ask a certified professional what something means? What you're saying, stripped down to the bare minimum, is that you know better than the 6 professionals at the City who are all either CPAs with a lot of municipal finance experience or Certified Government Finance Officers (or both) the meaning of what's in the CAFR. I am aware of what I know and what I don't know, and am always happy to consult an expert when I am not sure of something. That's a good policy.
6. "The 2006 bond to increase asset base has all but been wiped out and all the citizens are left with is debt." Hello? What about all those capital projects funded by those bonds? Have the reconditioned streets and sidewalks and other bonds items fallen apart already? Of course not! Have the neighborhood vitality project already decayed? It is simply not true that "all [we] are left with is debt" - we are left with a better City! It's like buying a new car and saying "now all I have is debt" - while forgetting that you also have a new car!!!
In the final analysis, we do disagree on a lot of things, but I think that a lot of this boils down to our perspectives: you assume that the City government is crooked and I don't. And yet, when proof is asked of you that the City is doing something wrong, amid your torrent of words, there's never any proof.
Look at a simple case - you claimed on August 29th on Mark's blog that GASB 34 "holds very strict guidelines for a balanced budget to be "total revenues and expenditures, non-inclusive of reserve fund balances"." The same day, Mark asked you for some proof of this. He repeated that request on the 30th. You told him on the 31st that you would get back to him but you never did. Now we know why - because GASB 34 says NOTHING about the definition of a balanced budget - http://www.rumorcheck.org/GASB34.html
Making such obvious errors seriously undercuts your credibility...this is why I heavily document what I write and rely as little as possible on "my" interpretation or what my “friends” say.
Oh, and you, too, have a nice evening...
Bill
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