The Rest of the Story…
September 20, 2008, Front Page Headline in the Jonesboro Sun:
“City’s balancing act
Jonesboro expenses not included in budget continue to grow” CLICK HERE for entire Sun article
The truth about the city’s financial situation is beginning to emerge---FINALLY!
I have been talking about this for a while. In fact, I pointed out many facts about the city’s financial problems in my interview at the Fire Fighter’s forum.
CLICK HERE to see my entire response to the Fire Fighter’s Local 3718.
While I applaud the Sun in their attempt to bring these figures to light, some of the numbers presented in the article miss the bigger problem. For a clearer picture of just where we are and where we are headed I would like you to look at the following information and judge for yourself.
While there may be $31 million in all reserves (close to $50 million if employee pensions and trusts funds are included), of that $31 million only $18 million of these reserves can be used for operational and maintenance expenses.
There are 5 city funds that employees’ salaries, benefits and operational costs such as fuel and equipment are paid from. For simplicity's sake I will call the city’s Operation & Maintenance Funds O&M Funds. The O&M Funds consist of the city’s General Fund, Street Fund, Sanitation Fund, Parks Fund and the E911 Fund. Due to the financial software problems, no one knows for certain how much money is being spent on which items from the O&M Funds; however, there is a way to tell if the city is spending more than it is taking in each year.
If we are serious about maintaining an Emergency Disaster Reserve Fund to operate the city services for 3 or 4 months in case of a catastrophic tornado or earthquake we need to think about what will be requred in such an event. Around half of the city’s operational revenue comes from sales tax. Imagine what the destruction of Wal-Mart, Lowes, Turtle Creek Mall, or Home Depot would cost the city in operating funds until they could rebuild. We need a plan that allows us to continue paying city employees even when a natural disaster severely disrupts our income stream.
As mayor, I will assure that city services continue and city employees keep their jobs as we rebuild. For this reason I believe $9 or $10 million of the $18 million must be set-aside for emergency use only. This leaves our practical O&M reserves at $8 to $9 million. Based on the current rate of city spending, these reserves will be exhausted in 2 to 3 more years.
Based on last Thursday’s City Council Finance meeting, it appears that financial oversight and management issues are still not resolved. The amount of capital improvements approved but not budgeted from year-to-year is a significant problem. But since approximately $7 million replenishes this fund each year and all of the expenditures are one time items, i.e. animal shelter, fire station, parking lot, this a manageable problem.
But NO one seems aware or concerned about the biggest financial STORM looming on the horizon for the city.
Each year, the state Legislative Audit Division reviews the city books and reports each fund’s balance as of December 31 of the previous year. The state reported the December 31, 2003 O&M Funds total balances at $20.96 million. The Legislative Audit reported the December 31, 2006 total balances of the O&M Funds to be $23.37 million, an increase of $2.4 million over 3 years.
The state has not completed the 2007 report, but according to the city’s Finance Director, Jim Barksdale, the December 31, 2007 total balances for these same 5 funds, the O&M Funds, is $19.47 million, almost $4 million less than the previous year. Again, according to his numbers, as of June 30, 2008, these same fund balances are $18 million, another $1.47 million decrease in just 6 months. So in 18 months, the city’s O&M Funds reserves, the only funds that can be used for salaries, benefits, fuel and other operational costs, has dropped almost $5.5 million.
Please think about this for a moment. $5.5 million rolls off the tongue pretty quickly, but to put this in perspective, over this 18 month period the city has depleted these O&M Funds at the rate of over $300,000.00 per month!!!
Since these are annually recurring expenses, this disturbing trend seems set.
As Mayor, I vow to find out where the city spends every penny of your money. I pledge to Stop the Bleeding and present budgets that keep our spending within our means.
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