Horrifying isn’t too strong of a term to describe what I witnessed back on May 6th during the City Council’s finance workshop. Hopefully I’ll be able to explain why I was horrified as the subject matter is somewhat technical in Mississippi Municipal Finance. From a big picture standpoint, financially the City of Bay St Louis is a rogue municipality, making loans without any statutory authority to do so while spending fantasy tax revenue, unrealistically budgeted and never received. Worst of all is the Mayor is in deep denial – either that or he gets his kicks from telling whopper after whopper about the state of the City’s finances. It does not serve the public interest.
To me, there were two moments that encapsulated the entire two hour workshop the first was when auditor Jennifer Bell was giving her presentation on the internal control and legal compliance findings.
To set up her finding on purchasing, rumors have been swirling since last August the City was financing its deficit using what is most commonly known as its trade payables, or in Mississippi Governmental parlance its claims docket. Whether a local government or a struggling business, when cash gets tight the first way operating cash flow is financed without a bank is to simply let bills ride until the money comes in to pay them. Robbing Peter to pay Paul is a time honored way of buying time in the business world for cash starved entities public and private. Unfortunately Mayor Fillingame and City Clerk David Kolf have been telling whoppers about the City’s cash flow being A-OK for months so when the rubber met the road the Mayor essentially accused the auditor of fabricating her results. Dwayne Bremer’s story on the workshop made it sound like it some sort of difference of opinion. Here is the salient snippet:
Falgout said the draft audit states that the city is experiencing a cash-flow problem and that bills were being paid in order of priority, rather than order received.
Fillingame said that he challenged the assertion and pointed to the fact that the audit is not yet complete.
Audit results are true/false propositions folks. Either the City has delayed paying its bills for 100 days or they didn’t. And since business do not run their bills late 100 days for no reason, a cash flow problem would be the only reason it would do so. Here is the draft finding: Continue reading “Writing checks that can’t be cashed: Bay St Louis is broke”