What I witnessed yesterday evening at the City of Bay St Louis budget workshop gave both reason for hope and horror. Let’s start with the hope and not as a budgeting tool.
The City Council, at least 4 of ’em anyway, are providing the kind of financial oversight the taxpayers deserve in this time of fiscal crisis. A Water & Sewer bond payment the City can’t afford is due in less than a month, as is the City’s audit to the Single Audit Clearinghouse. Part time City Clerk David Kolf is officially missing in action, out on medical leave according to the Mayor and certainly une victime de la guerre. The City Council’s oversight is vital and that is where we get to the horror part.
It appears Mayor Fillingame’s financial plan to deal with the crisis is hope – hope that the rains stops so people will water their yards more and use more water, hope that unrealistically budgeted revenues will be realized, hope that no one notices the almost $1MM in salaries the Mayor is expending in the Water and Sewer fund, which fund City Council sources are indicating to Slabbed the Mayor has pushed salaries the general fund could no longer afford to pay. Even worse is he contradicts himself with his financial explanations. Frankly folks, I’m not sure if Hizzoner is that slick or that financially clueless but either way the results are proving disastrous.
Lest people think I am gratuitously bashing Les what we need is a real life example and it is encapsulated in one exchange between Hizzoner and Jennifer Lenain, a free lance writer for the Sun Herald. Jennifer was looking at the latest budget actual report and she evidently did some homework and nabbed the 2013-2014 approved budget from the City’s website. Slabbed covered the financial concepts behind Lenain’s question to the Mayor back in January such question as salient today as it was then. Continue reading “City of Bay St Louis at financial cross roads: Budgeting hope versus reality”
Mayor Fillingame of Bay St. Louis can not get a free pass on the city’s current financial crisis. Before the last election several citizens had determined that the city was going down a financial path of going broke. Mayor Fillingame did nothing but deny, deny and deny our findings. And at every turn in the downward spiral of the city’s finances he gave excuses. He proclaimed all would be fine in two months, three months, next month,, tomorrow. Then City Council would capitulate and let him keep doing the same things again and again depleting all of our reserves.
The Administration is still in a state of denial believing that they can borrow their way to prosperity. All they are doing is kicking the can and financial crisis down the road. The Independent Auditors Draft report presented to City Council on May 6, 2014 is page after page confirming what we concerned citizens have been telling City Council for months about mismanagement and deception by the incumbent administration.
Until we have at least four council members who are strong enough to stand up for and take charge of this city, the present administration with denial, delay tactics and deception will continue to lead the city into a collision course with reality.
This Administration has champagne taste but the city of Bay St. Louis can only support a beer budget.
Bay St Louis
As I hear the other night at the Bay-Waveland School Board meeting the fact student enrollment declined from 2012-2013 school year was discussed:
‘Just a buzz about the Bay’ as population rebounds in Bay St. Louis ~ Anita Lee
Sales tax is flat at best, record number of properties are being turned over to the state after failing to sell at tax sale, the local Casino is not doing as well as it has in the past as the gaming market has become saturated both locally and regionally. I think the polite term here is “headwinds” and not at all indicative of a Town in the midst of a population boom.
Not that the Bay doesn’t have a lot going for it beginning with its location. What those census numbers, if they are completely accurate, show is a place in the midst of a secular demographic change typified by new residents such as James Carville and wifey. Somewhere out there in cyberspace right now is a picture of me and my bride at a nonprofit event where we sat with a very nice older couple that are coming home to the Bay after a successful business career in the greater New Orleans area. Not that Carville and company are not quality additions to the taxpayer pool here because they are, but it’d be nice to see the community get younger overall.
In-substance defeasance is an accounting term for removing debt from an entity’s balance sheet though the debt itself is not cancelled. The debt is considered paid from an accounting standpoint if a dedicated sinking fund is created with a financial intermediary that is sufficient to extinguish the original debt over time. In the case of the City of Bay St Louis, the proposed Utility Fund refunding bonds would In-substance defease the previous refunding bonds that In-substance defeased the original bond issue.
In layman’s terms this would mark the second time the original Water and Sewer capital improvement bonds have been refinanced. Having a bit of experience with the back end of this type of transaction, I can say first hand that it is complex and carries hefty legal and professional fees as the Bay City Council found out first hand at last night’s meeting.
In other news:
Bay eyes cuts, new projects to fix budget ~ Dwayne Bremer
To the council’s credit, public input was welcomed, even on an impromptu basis, though the nice lady from Ward 6 that wore out Mayor Fillingame did end up being gaveled by Council President McDonald. Continue reading “The Technical Term is “In-substance defeasance””
Councilwoman Wendy McDonald will be hosting a town hall meeting for residents and business owners in Ward 2 next Thursday evening, May 22, 2014 from 5:30 to 7:00 PM in the Bay St Louis City Council Chambers.
Topics for discussion may include parking, speeding, activities and events such as runs, festivals, Second Saturday etc., noise, harbor opening and other topics of interest to the residents and business owners in our Ward. Because there will be a 2 ½ hour workshop related to the city budget starting at 3 PM on Tuesday, May 20, 2014 with a council meeting to follow at 5:30 PM we will not get into the budget at this meeting but use this time to address other concerns such as those outlined above.
Mike Favre, Councilman at Large and Les Fillengame, Mayor are attending this meeting as well and are interested in your input and feedback as it relates to Ward 2. Please feel free to send in topics of interest ahead of time if possible so we can allow time to cover topics of interest and for participation from the residents and business owners.
Wendy McDonald, Councilwoman Ward 2
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”
Yesterday’s Bay City Council finance workshop was horrifying on two levels in fact folks. I put the workshop out on Twitter yesterday via my smartphone while Dwayne and Jennifer took pages of copious notes old school style. The long and short of it is the City is broke and has been broke for several months. Now the Mayor is pitching a new plan to refinance the City’s debt just weeks after telling Dwayne that City finances were groovy. The plan hizzoner is pushing will plunge the City deeper into debt to paper over the accumulated deficit the City has been financing off the back of its trade vendors and claims docket.
Accounting, legal compliance and related financial concepts are arcane, sometimes mind numbingly so thus I get a charge when audit presentations are recounted by the print media. I’ll be back with a detailed post on this exact topic but first here are the takeaways from the other two media organizations in attendance on this issue of vital public interest:
Bay eyes audit; tax hike may be near ~ Dwayne Bremer
Bay St. Louis council passes measure supporting LGBT residents ~ Jennifer Lenain
No word in either story on whether the City Council authorized the Mayor to begin discussion with Butler Snow to begin the bond refinancing process as proposed by Mayor Fillingame. In fairness to the Echo, Dwayne was fighting deadline issues. The Sun Herald is not in the game.
There were two items I thought newsworthy from yesterday’s Bay St Louis City Council meeting. From the Slabbed New Media twitter account:
No action was taken. The bigger news:
Councilman Falgout laid out a compelling case that convinced the others that a more detailed look at the City’s finances was needed: Continue reading “Meantime at last night’s City Council meeting”