"GENERAL FUND" GYRATIONS: Kick off City Hall shell games

Part Two of a series:  Bulging Budget Baloney at Columbia City Hall 

 

COLUMBIA, 8/15/10  (Beat Byte) --  With nearly $1/2 billion in surpluses accumulated over the years, Columbia city management has devised a shell game that moves money around 27 piggy banks, otherwise known as "fund balances" or simply "funds."  

 

"Fund balances represent the net cash after all revenues have been deposited and all expenses have been paid," says Toni Nelson, a small cities specialist with the Washington State Auditors Office and co-author of the Small Cities Manual, a reference guide about governmental accounting procedures.   "Just like your checkbook at home at the end of the month, it represents how much you have in the fund."  

 

Compared to Boone County's roughly $11 million reserve, similarly divided into several funds, Columbia's bottom line looks like a slice of hog heaven.  Many of the city's funds have balances -- as a percentage of annual expenses -- exceeding 500%!    

 

"The Government Finance Officers Association has developed a 'recommended practice' for fund balance levels," Nelson says.  "It generally suggests a minimum of 15 percent, but many issues come into play when making this determination."    

 

The highest recommendations from national agencies top out at roughly 50%.   But Columbia's Airport Fund has a 704% fund balance; Railroad Fund, a 608% fund balance; Sanitary Sewer Utility Fund, an 869.7% fund balance. 

 

The General Fund -- used to pay for firefighters, police officers and other services important to average folks -- has a far more modest 22.5% fund balance, or roughly $17 million.   

 

Dog and piggy show

 

Vaguely defined on page 11 of Columbia's annual budget, the General Fund "is used to account for resources traditionally associated with government which are not required legally or by sound financial management to be accounted for in another fund."   The General Fund shows a "loss" in revenue this year, sparking an annual dog-and-pony (or is that piggy) show led by city manager Bill Watkins.   The idea, apparently:  Worry taxpayers about the General Fund, while paying little (public) attention to the other 26 piggy banks. 

 

City Hall's annual dog-and-piggy shows usually begin with a frown and a harrumph, as Mr. Watkins solemnly downtalks the city's financial situation during his annual City Manager's Address and in subsequent interviews. 

 

He rarely, if ever, smiles. 

 

Local media boom with doom and gloom; City Council members feel the heavy weight; constituents get turned off and away; and another management-driven budget gets pushed through after a brief "public input" process that invariably starts during hot summer vacation months (tomorrow night, in fact).   This year, while IBM and the Lemone family are living it up on the city taxpayer dime, the rest of us will hear:   

 

Columbia police school resource officers:  CUT!

The Neighborhood Response Team:  CUT!

Firefighters:  CUT! 

Water, Sewer, Electric and Trash bills:  UP!  

 

Worries, woes, and frets

 

Not content to fret about 2010 and 2011, Mr. Watkins wrote in his Columbia Business Times column last week, "2012 will be a very tight year."  He cited the General Fund fully seven times.   

 

"I propose $1.1 million less in General Fund total expenses," Watkins wrote.  "The General Fund supports public safety, public health, parks...."  

 

He ticked off a list of "General Fund highlights, most of which are human services."   

 

He worried "whether General Fund revenues increase or decrease...."

 

He noted that the cost of "supporting our city workforce" is "disproportionately found in the General Fund." 

 

About a possible shortfall, Mr. Watkins said he's concerned about "already scarce General Fund revenue to make up the shortfall."   Of course, he only mentions revenue -- never those big piggy bank balances. 

 

Finally, he discussed offsetting "other General Fund costs" and recommended no pay increases for city employees for a second year in a row.  

 

__________________________

 

General Fund Facts

 

Used to finance basic city services

Shows nearly $3 million "loss" this year

$17,149,096 in the bank for 2011

Fund Balance = 22.5%  ($17,149,096 divided by annual expenses of $76,155,029) 

Balance is "high-normal" 

__________________________

 

-- Mike Martin, M.B.A. M.S. Physics.  Martin served as chairman of the City of Columbia Finance Advisory Commission between 2002-05.