I’ve never heard of a financial measure for trade receivables called “collection rate” but the term was evidently dropped a good bit at last Tuesday’s City Council meeting like it meant something from a financial standpoint. (The typical measures of receivable efficiency are properly called receivable turnover and my personal favorite, the DSO. I have guesstimated the City’s DSO at somewhere close to 30 days for purposes of this post.)
I mention all this because there has been some chatter about last Tuesday night’s Bay St Louis City Council meeting and delinquent utility bills was a topic of conversation. Let’s start with Dwayne Bremer’s account of it to set the mood:
Ron Thorpe, a member of the Hancock County Alliance for Good Government, on Tuesday appeared before the city council and offered an aggressive presentation with props such as a large garbage bag filled with paper and 135 water bottles arranged on a table.
The garbage bag, he said, represented $400,000 in uncollected utility bills. The 135 water bottles represented how many utility customers are more than 60 days past due, he said.
Councilmen and the audience sat in stunned silence during the presentation. At one point, Thorpe held the garbage bag above his head, shook it, and then threw it toward the council podium.
I think Hancock Medical leads the way with over $34,000 in outstanding H2O. Due to the date the report was run in close proximity to a weekend due date for payment means there are a multitude of current accounts listed including myself, my best friend and brother in law. It still appears WLOX’s Hancock County Beat reporter Al Showers is having Flapper value problems among other local notables that are behind. Al does not live in wards 5 or 6.
And the question in the post title begs the next key question in “Is City is expending the revenues it will never receive?”. The answer to both questions appears to be yes if the City budget is more than a simple piece of paper with numbers on it. First up is an analysis of Revenue account 201, where Ad Valorm Tax Revenue from Real Property is coded. Here is the salient portion of the 2013-2014 City Budget:
We can see that in 2012-2013 the City Budget called for total revenues for this line item, the largest of all the Ad Valorem Tax Revenue sources, of $1,680,000 yet as of September 12, 2013 only $1,284,724 had been collected. That amount ($1,284,724) should be very close to the final number aka actual for the 2012-2013 Fiscal Year as very little Real Property Ad Valorem tax is paid at that time of the year since the property taxes were due in January. Therefore using that number for 2012-2013 means that line item was short $395,276 in Real Property Tax Ad Valorem Revenues, which represents in excess of 10% of total budgeted revenues. Following is a chart which shows the 3 year trend for this revenue line item:
RFP was all over this fact in comments linking a 2011 WLOX story on the problem:
In the Sun Herald this morning on page 3A under “D’Iberville approves tax break to attract business” Joe Cloyd’s CDBG Long Term Work Force housing Riverside senior apartments is asking the city to abate ad valorem taxes for three years. This is not a business that produces or pays any sales taxes and was built with taxpayer money in most part already. Where does it end?
Such things usually end in bankruptcy because the piggies that are hooked into the taxpayer trough rarely stop feeding on their own.
Next up since the Bay St Louis social media policy was topical at last night’s City Council meeting I have this from Eric Goldman.org:
Here is the scenario that has my spidey senses tingling:
1. We have a city with major financial problems that is reduced to using the cash flow from the water and sewer collections billed on behalf of other entities to finance its operations.
2. The same City took a $500,000 loan to pay its past due bills and according to the local Good Government group still has its credit privileges under open account at a major local vendor suspended for nonpayment. There is talk of the City Council taking the checkbook away from the Mayor, who until recently was on the record saying the City’s finances were in good shape. The known tally is $900,000 in the hole and counting.
3. A new anonymous website pops up touting a seemingly easy solution to the financial problem touting deannexation of the 2 wards whose councilman are the Mayor’s biggest fiscal critics. These wards that have paid in property and sales taxes to the City but received little in the way of City services since they were annexed.
4. Within 4 days of the anonymous site going online the newspaper of record for the area writes an article promoting it going so far as to link a blind, anonymous email address in the promotion.
First of all, a Happy New Year to all–hope your holidays were all you wanted them to be and the New Year will be successful for you. This year will be a year of “elections” or “decisions” if you will. Waveland will hold their municipal elections in the Fall, and if that seems far off, just wait. It will be here before you know it. Certainly the announcements and campaigning will be here soon. The Alliance will sponsor a political forum as we do for all the elections, so stay tuned if you are a candidate or simply a voter.
Events that have unfolded since the Bay St. Louis officials took the oath of office last July indicate that the Bay City Council needs to “elect” to see that their city’s bills get paid whether or not the Mayor does. They may have to “take the checkbook” away from him if need be. This is, of course, a figure of speech, but they do have the legal responsibility for seeing that the bills are paid, which could be to refuse to approve any more dockets until he pays the Solid Waste and Hancock County Utility Authorities what the city owes them. After all, these folks have dockets to pay as well. And using the excuse that they fell behind because they didn’t charge enough for utilities is ridiculous. That’s not the fault of the Utility Authorities. By the way, what happened to the $500,000 line of credit that was supposed to cover these utility bills? And, most importantly, what is the administration doing with the money the users are sending to city hall to pay these bills? The city does’t own any garbage trucks or employ any garbage workers. So what makes them think they can keep funds for a service they not only do not, but cannot perform? Amazing. Who knows what the list of delinquent bills looks like? Now we are hearing that Lowe’s has cut the city off for non payment; and heard it from RELIABLE sources.
And yes Virginia, a Purchase order is a binding legal contract. In a well designed procedurement system, something the City of Bay St Louis evidently lacks, it all starts with a “purchase requisition” (requisition for short) and once the applicable legal requirements are checked and met (including checking against the budget), a purchase order is then issued and an encumbrance created.
I mention this because it is clear none of this occurred with the purchase of the new Fire Truck for the Bay St Louis Fire Department, the State Auditor’s office was called in and a controversy created:
In order to follow the rules one must first know what the rules are and I’m wondering if there is anyone at City Hall with any sort of meaningful expertise on the proper financial operation of a Mississippi Municipality. I still cringe in horror knowing the City runs Quickbooks as its ERP package. Such is penny wise and pound foolish on so many levels.
Luckily there is no reason to take blind stabs in the dark when it comes to the proper fiscal operation of a Municipal Government since the good folks at Mississippi State University have been kind enough to post their 2013 Municipal Handbook on the internet free of charge for everyone, and by everyone I mean especially those located at City Hall in Bay St Louis. Chapter IX (that’s 9 for those of you that do not do roman numerals) has a great section on Municipal fiscal operations. It is not an exhaustive treatise on the subject but it pairs nicely with the 2010 Municipal Audit and Accounting Guide, which is also available free of charge from the State Auditor’s Website which goes into a bit more depth. Continue reading “The word he was looking for is “purchase requisition””