Is There A Sheriff To Call?

That’s one of the questions raised by citizen fiscal watchdog John Marshall Lee in his address to the City Council this week. From Lee:

The new administration is nearing 100 days in office. How prepared are you for what is coming across your desks? From my own observation, I think that the new administration is in a stronger position than you are and that you need help. What discussions have you held to determine how to provide competent, independent, financial and legal assistance to help you steer a course favorable to the City and consider the plight of the taxpayer?

The funds in your Other Services line item have been available for years. New members, please ask the longer-term members why those dollars have not been used, in the name of Open, Accountable, Transparent and Honest governance process. Please explain it to your voting public.

The Comprehensive Annual Financial Report hit your desks about a week ago. What is your takeaway from the material presented?

Page 4 of the report from City Management indicated that the “assets of the City were slightly less than its liabilities,” at year end the Liabilities were $(50.3) million. And the total unrestricted net deficit was $(771.5) million, an increase of $(434.8) million from 2014. We are in the red, in operating budget and balance sheet. Scary? Seriously? No specific comment from CT Post.

Another note on that page indicates that the City’s total long-term debt decreased by $36.7 Million during the fiscal year. While that may sound positive, page 7 has a chart showing restatements of 2014 positions and similar data for 2015 indicating that the difference in total long-term debt outstanding was actually an increase over $121 Million. (Is this an error in fact or just fiscal confusion from a restatement?)

Many changes have come about because retirement plans for former City employees require much more real funding than we have contributed during the past 15 years. The taxpayer retains the responsibility to fund what the politicians have approved after your approval as a legislative body. What is that responsibility? Should you request the City actuaries to indicate the City responsibility for the past several years relative to what has been actually paid? Do you know what reasonable funding would be this year for the upcoming budget? What happens when you do not fund to these schedules?

What if the assumed rates of return and actual returns are different by hundreds of basis points? Did any of you see page 60 where an illustration of asset classes shows one class called Alternative Investments with a long-term expected rate of return of 70.0%?! Did anybody see that? 70.0%?? Why not publicize that return and put all our money down on that? Could it be an error? But when you do not read or perhaps understand the detail in the CAFR, where are you? Errors creep in. Last year I reported 20 such errors to this body. Was anyone concerned? Was anything done about it? I never heard so I assume you think that I am falsely reporting.

Capital assets of the City include land, buildings and financial assets, but not “construction in progress” a form of asset that is not ready for depreciation. Page 44 indicates that on June 30 2015 the City had an ending balance of $249,441,931 being constructed, an increase from the previous year of about $62 Million. Who is minding this store for the City? If you see that it is mostly Board of Education projects, then the School Building Committee is responsible with Chair James Holloway as City Council liaison. When was the last time anyone received a detailed report from this group? Who will comment on the cost overruns for certain schools? Or the estimates requiring millions for redesign? To whom do the taxpayers look for an answer? Whom do we look to, if not you?

Finally, in mid-January I noted the statement from OPED in their request for new bond funds. They reported that a substantial sum had been removed from their capital account late in the year. It turns out that $955,000 went to Construction Management Services to pay off a $900,000 Port Authority mortgage with a 10.75% interest rate payable. Does OPM have a right to unilaterally transfers funds? Where is CC transfer approval? How do departmental capital funds end up paying off debt for an entity that is not a City department? If the City had in a manner of speaking “taken over this” quasi governmental unit for about 7-8 years, where are the financial details? Is there a sheriff to call?

Capital budgets are in front of you. Operating budget is to come in about one month. Do you need help? Will you ask for it? Time will tell.