Beginning at 7:00 p.m. tonight at City Hall there is another Committee of the Whole meeting. The agenda (.pdf) isn't very long, but the subjects listed should provide plenty of entertainment.
Under the Finance portion of the agenda, we're looking forward to the debate surrounding the Financial Condition of the City (.pdf). We hope all the corporate authorities take their time to fully vet the subject, but at this point we suspect City Manager Hock is pretty pleased with himself -- being off by only $17,415 under the projections in only one revenue category in a total City budget of more than $53,000,000.00 is not bad.
Even the highly contentious subject of State shared income tax revenue appears to be beating the predictions of some local alarmists. What remains to be seen is how long the State can put off making the promised disbursements and what municipalities can do about it if the State continues to do so.
We would strongly urge some local alarmists to learn the difference between State and local revenues and collections.
Still, these are the numbers for just the first quarter of the fiscal year and if some of the economic predictions are correct, the actions of nefarious characters in the public sector won't be the only time we suffer the aggravation of double-dipping.
The failure of the State to disburse promised funds to local governments, along with scads of other State funding recipients, is one of the reasons City government should seek to be as healthfully flush with cash on hand as is possible.
And being healthfully flush with cash on hand is one of the reasons Benedict Alderman Ryan's scheme to purchase the Scharringhausen parking lot -- referred to in City documents as the Fairview Lot (.pdf) -- makes ZERO SENSE at this time. Hell, the PRU Crew isn't sure such a scheme would ever make sense. But if you've been paying attention, then you understand the difference between fund accounting and actual cash in the bank, and how actual cash in the bank is necessary to fulfill the financial obligations of the City, despite the way in which the City accounts for its funds.
Finally, under Procedures and Regulations, the PRU Crew is really really really looking forward to seeing how the Council, with straight faces, addresses the issue of attendance levels for boards and commissions. Gentlemen of the City Council, are you aware of your own attendance levels and the fact that, collectively, only 54% of City Council meetings have been fully attended by Aldermen so far this year? And that's the best percentage of attendance! COW meetings have only been fully attended 50% of the time, and special meetings and workshops have only been fully attended 41% of the time -- and that 41% is generous since there are meeting minutes and videos missing from the City website for no less than 4 workshops, and 3 of those sets of missing minutes are for the budget workshops.
Additionally, Alderman Sweeney is the only Aldermen who does not appear to have missed a single meeting, while some of the Aldermen have records of attendance for City Council, Committee of the Whole, and Special meetings and Workshops which fail to hit the 75% attendance level they require for members of boards and commissions.
Also scheduled for tonight at 9:00 p.m. is another Special meeting of the City Council. As our faithful PRU readers may recall, due to the absence of Alderman Carey from the last City Council meeting, the Council deferred voting on contributions to community groups. Let's hope all the Aldermen show up tonight! If not for the purpose of moooooving this political football forward, then at least to improve their attendance records!
August 23, 2010
COW Piles of Money! Very Special!
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19 comments:
Pru, don't forget how much they defer. I haven't counted but I am willing to guess they have deferred things at least once at every meeting!
PRU:
I take it you think the budget scare tactics by the Mayor was just more hot air from Park Ridge's best source of natural gas?
Anon@1:58 --
Funny.
We feel the Mayor should have been more cautious in the way he delivered his message. His last email to supporters was premature, at best.
PRU:
Looks to me like the Mayor has egg on his face.
What was Schmidt's last email to supporters??? Some of us aren't his insiders!!!
Anon@2:09 --
As the saying goes, don't count your chickens --
As we noted in today's post, these numbers reflect only the first quarter of the fiscal year.
Anon@2:13 --
For your review, below is Mayor Schmidtzkrieg's budget email to supporters --
From: Dave Schmidt
Subject: Budget
To: supporters@electdaveschmidt.com
Date: Tuesday, August 10, 2010, 10:06 PM
Good evening everyone-
I apologize in advance for the length of this message, but I want my explanation to you to be as comprehensive as possible.
I am writing as a follow-up to my message in the August issue of the
Spokesman in which I reiterated my grave concern about the City's
financial condition. Many of you will recall that I vetoed this
year's budget because I felt certain projected revenues were grossly overstated, specifically sales tax and state income tax sharing receipts. The aldermen, except for Alderman Sweeney (First Ward) and Alderman DiPietro (Second Ward), voted to override that veto without any discussion at all regarding the accuracy of those revenue
projections.
Within the past month, I asked the City Manager to provide, on a
monthly basis, a breakdown of the City's revenues with comparisons
both to the same month last year and also to the projections in this
year's budget. I am still awaiting the first report. However, I have received information from the State of Illinois which shows that the
reported tax revenues are likely to be significantly lower than
projected in our budget, and that we are facing another significant
deficit which we can ill afford.
The Illinois Comptroller is responsible for maintaining the State's accounts and ordering payments into and out of them. In other words, he keeps the State's checking account and pays its bills. According to the Comptroller's July 2010 report, sales tax receipts are down
6.9% for the fiscal year, corporate income tax receipts are down 20.5%, and individual income tax receipts are down 7.7%. If those numbers hold, Park Ridge will receive approximately $315,000 LESS in sales tax revenues than the year before and at least $250,000 LESS in income tax revenues than the year before. That means we will receive
approximately $600,000 LESS from the State in just those two revenue
categories.
Despite my warnings to the Council in the Spring, our current budget
projects an INCREASE of $267,000 in those two categories. That means the budget is approaching $900,000 in overstated revenue projections. And that is assuming the situation does not get worse.
Unfortunately, that is only the half the story. According to the Comptroller:
"The state's financial condition and cash flow position continue[s] to deteriorate rapidly....[T]he decline in revenue sources...greatly impacted the...ability to pay the state's bills."
"The delay in paying [the state's bills] was 153 working days [7
months!]....[P]ayment delays over the course of the next year are
likely to be even more prolonged than what was seen in fiscal year
2010....[T]he state will likely end fiscal year 2011 with a...bill
backlog significantly higher than at the end of fiscal year 2010."
Folks, this is alarming. We receive approximately 17% of our
operating revenue from just these two taxes, and we are dependent on
the State to pay it to us. If that money does not come in on a timely basis, we have to borrow from other funds and our reserves to pay our bills. But our reserves are in jeopardy, because we have been running budget deficits for years, effectively living off of our dwindling savings account.
That is why we simply cannot afford a dime of deficit spending during this fiscal year. I am calling on the City Council to defer all non-essential spending. And once we start receiving hard numbers regarding our own revenues, it is a distinct possibility that the Council will need to convene for the purpose of making further cuts to THIS year's budget.
Thank you for taking the time to read this message. I look forward to receiving your comments.
Thanks. It looks like the Mayor came up with some wild numbers!!!
Anon@2:36 --
We believe the Mayor came up with worst case scenario numbers, based on a logical fallacy--faulty premise.
He seems to be very good at fear and blame. Seems like a familiar strategy to me!!!
There is nothing wrong with taking precautions. Screaming about the sky falling is what I have trouble with. I feel the mayor jumped the shark with that email but it beats some of the aldermen wanting to spend money we do not have.
3:35 PM,
It shows neither the mayor or the aldermen have a handle on the financials. The mayor is doom and gloom and the aldermen put their head in the sand. The only one looking like he's got anything on the ball is the manager. Time will tell.
Help me out here. I fail to see the whole picture and what I see matches well with what the mayor has been telling us. The city budget is $53 million and the figures from the city manager show a budget of $28.9 million, excluding the library funds. What accounts for the difference? Surely the library is not $24.1 million. (Maybe it is.)
Next, from what I can tell using simple math and assuming after 1/4 of the fiscal year behind us, the city manager shows revenues at 20% of what he budgeted. If one were to simply assume after 1/4 of the year has passed, the City should have received 1/4 (i.e 25%)of the revenue, the City is 5% behind the budget which is about $1.5 million.
Also important to note, and even more telling, is the first quarter revenues are almost $300,000 less than last year at this time. Recall the budget for this year is also more than last year. In my opinion this is a very cloudy beginning to the year.
Now expenses have been less than budgeted. Using the same simple assumptions, expenses are below budget by about $0.7 million. This is good news. However, the net shortfall is about $800,000 for just the first quarter.
This also assumes the State pays what it owes Park Ridge. I can't tell if the revenue has actually been received or just booked. If I have somehow misinterpreted the data, please enlighten. If not, the data tells me the City is still faced with serious financial problems, just like the Mayor has been telling us. From what I can tell, there is no hot air. I actually am more concerned having seen the data. Who knows how the Library's year has been going.
Anon@11:39 --
The $28 million figure represents only the City's General Fund.
The City is not 5% "behind" for the total budget. The City is 5% under the projected home rule sales tax receipts for the first quarter -- a dollar amount of $17,415.
The City Manager's report is a response to the Mayor's request for information for what he has said are the areas in which he believes revenues have been grossly overstated.
The first quarter revenue comparison between last year and this year is somewhat irrelevant, since what is important to note is what the projected revenues are for the first quarter of this year and what the receipts have been for the first quarter of this year, in additon to projected expenses and actual expenses.
What and where you are drawing your figures from seems to be very unclear.
What you may also want to keep in mind are revenue trends -- we suspect the first quarter of any given fiscal year tends to be a time of lower receipts, especially in such areas as home rule sales tax. But that is only speculation.
Our biggest area of concern is, as you correctly noted, whether or not the State gets its act together and can fully move funds into the LGDF for disbursement to municipalities. We believe the revenues listed in the City Manager's report are what the Sate owes Park Ridge, not what the State has distributed to Park Ridge for the 1st quarter.
The numbers I used at the 11:39 post came directly from the link in your original posting which is the City of Park Ridge Quarterly Financial Report for 5/10 to 7/10. That report shows total revenues to be $1.5 million short of 25% of the entire year and almost $300,000 less than last year at the same point in time.
I agree there may be some seasonality to the revenue stream, which is why comparing this year to last year at the same point in time is a very relevant figure to review. If we continue to generate less revenue than last year, the City is in trouble. This is especially true since the budgeted revenues for this year is more than last year.
The numbers at this point in time are not making me feel any better. I agree with the mayor on this point. The only positive I can take from this exercise is that at least we know (somewhat) where the City stands financially at an earlier time in the year. Whether the City Council acts on this information is yet to be determined.
Anon@2:21 --
I believe I have found the source of your concern -- page 6 of the financial condition report.
Unfortunately, those individual revenue reports provide a misleading picture and should not be used for the purpose for which you are trying to use them, though I understand the logic behind your attempt to do so.
The reason the totals cast as misleading picture is because those totals contain figures which include property taxes, business licenses, and water transfer -- which you should note have future dates attached. Water transfers alone, which are noted as being scheduled for processing in November, account for $800K in revenues.
The "seasonality" of the City's revenue stream is more accurately measured against this year's budget projections, which is precisely what the Mayor has concerned himself with by stating repeatedly that the revenue projections, in key areas he chose to highlight, have been grossly overstated. That does not appear to be the case.
Your position -- "If we continue to generate less revenue than last year, the City is in trouble. This is especially true since the budgeted revenues for this year is more than last year." -- would be more accurate if you phrased it -- "If we continue to generate less revenue than we have projected for this year, the City is in some trouble."
To use your own preference for comparing this year's 1st quarter to last year's 1st quarter, do take notice of the fact that, with the exception of income tax, the four highlighted revenue streams show gains over or even with last year's revenue.
However, more significantly you should take notice of the difference between budgeted and actual 1st quarter revenues -- only the home rule sales tax is under the revenue projection for the 1st quarter of this year and the amount under is less than the cost of providing, for example, City services at either the fireworks show or the Taste of Park Ridge.
You should also notice that while income taxes revenue for the 1st quarter of this year is 12% under the 1st quarter of last year, this year's 1st quarter is 9% OVER the 1st quarter projections for this year, in addition to also noticing the Council adopted a budget with a revenue projection 3.9% UNDER last year's projection.
I understand your feeling in desiring agreement with the Mayor. For my part, I would prefer the Mayor take a more balanced approach to delivering his cautionary budget messages, because frankly it is ridiculous to rant and rave about financial disasters, but then do little else other than rant and rave -- especially when a closer look at the numbers reveals the Mayor may be overstating the nature of his predictions of financial disaster.
All that being said, I would continue to urge all intersted parties to be cautious about the financial condition of the City and to continue to pay close attention because, as we warned our readers very early on, some things can sneak up and bite you in the ass.
Pru, you don't think we have an unbalanced budget or we will have another deficit this year?
Anon@6:50 --
Dealing with your second question first -- I believe it is more than likely the City will experience another deficit year. I'm cautiously optimistic, but not exceedingly hopeful.
All the current crop of elected officials have a financial management track record which would dampen even the most cheerful of optimists and wishful thinkers.
In addition to their collectively abysmal track record on management of the City budget, there are far too many instances where the unforseen expense arises -- unpleasant surprises or a failure to cross Ts and dot Is correctly, as is demonstrated by the reported expenses incurred in relation to grant monies received.
As to your first question -- it is on paper, which doesn't mean much if you begin from a point of wildly unrealistic expectations and-or you aren't paying careful attention and properly managing your finances. Neither I nor the Crew believe the City Manager's projections were wildly offered in the areas the Mayor chose to highlight. However, each source of revenue projected should be carefully monitored because the cumulative effect of being only a bit off in each area can add up to a larger deficit headache.
Schmidt is a panic peddler.
His whole campaign was based on fear mongering.
It's nothing new.
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