Financial Failures of 2013 still haunting A Place Apart: The Case for Outsourcing Code and Law Enforcement (Part 1)

Going back over 140 plus posts Slabbed has done on the financial operations of the City of Mayberry Bay St Louis serves as a reminder that we’ve been on that particular beat since the Spring of 2014 and had been paying attention for about a year before that. In hindsight 2013 was the watershed year and that year also happened to be the last election year for City officials. To understand what is happening now is to understand what was going on back then. Also key to understanding today’s events is to understand that “A Place Apart” truly is Apart from a Home Rule Charter standpoint and therein lies the root cause of the problem. First up is the City’s Charter which is colloquially known as “Strong Mayor-Weak Council”.

There are about 300 municipalities in Mississippi and the overwhelming majority (90% or so) use the “Weak Mayor” home rule option. Bay St Louis is one of ten municipalities that use Strong Mayor: Here is the skinny from the Stennis Institute at Mississippi State:

The mayor-council form of government is essentially a “strong mayor” form of government made available by the legislature in 1973 and approved by the Department of Justice in August 1976. It is used in 10 municipalities in Mississippi: Bay St. Louis, Biloxi, Columbus, Greenwood, Gulfport, Hattiesburg, Jackson, Laurel, Meridian and Tupelo.

The Bay is the runt municipality in the strong mayor world. The proverbial strong mayor has vast power including almost complete control over the City’s workforce. Larger Cities benefit from this kind of organization because keeping the bureaucracy on point is easier when there is a clear Chief Executive. In smaller Cities with smaller work forces like “A Place Apart” it has the drawback in allowing day to day municipal operations to be dominated by a single person, in this case Hizzoner.

The City Council (as opposed to Board of Aldermen in “Weak Mayor”) only controls two things directly and those would be the budget and the annual audit. City Councils also have investigative authority under the law.

With that set up we need to circle back to the previous City Council that was in place in 2013. Not long before the election that Council began to allow the Mayor to spend the remainder of the municipal reserve fund on capital projects such as decorative street lamps for Wards 2 and 3. By the time the party primary elections took place in May 2013 the City was effectively broke despite the Mayor’s very public denials in the media. We know the City was broke because less than a year later the City’s auditors disclosed they were considering issuing a “Going Concern” opinion on the City’s financial statements. But its worse than just being broke. Continue reading “Financial Failures of 2013 still haunting A Place Apart: The Case for Outsourcing Code and Law Enforcement (Part 1)”

“They defend their errors as if they were defending their inheritance”

Indeed they do but I’m a bit jaded by prior auditing experience. Speaking of that how about another quote to go with the Edmund Burke quote in the post title.

There is nothing new under the sun but there are lots of old things we don’t know. ~ Ambrose Bierce, The Devil’s Dictionary

Next up put under the Old Town Trolley by Hizzoner is the City’s former audit firm:

Where’s the DOJ money? Feds issue report on Bay St. Louis’ missing $298K ~ Wes Muller

No folks, this is not a bad rerun of the Singing River Health System financial meltdown because the root cause of the problem is easier to trace here in Bay St Louis.  Sources inside City Hall not authorized to speak with the media have repeatedly indicated to Slabbed New Media that the check which closed the bank account holding the Equitable Sharing funds was drafted less than 6 months after Mayor Fillingame first took office. The check to close the dedicated bank account and co-mingle the funds was written by former City Comptroller Katherine Smith and signed by Mayor Fillingame. This transaction was subsequently journalized into the City’s General Fund book of accounts by former City Clerk David Kolf before being expended on things such as fancy street lights for Old Town.

This is not particularly innovative form of administrative fraud folks. You never co-mingle dedicated funds and the former City Clerk should have made that clear to Hizzoner.

I forgot to mention this post is brought to you by the Old Town Bay St Louis Business Council: Continue reading ““They defend their errors as if they were defending their inheritance””

Trolley lolley lolley, fa la la la……

Bay St. Louis council calls for federal probe into $186,000 in police-forfeiture money ~ Wes Muller

Playing games with pooled bank accounts is nothing new or particularily innovative on the book cooking front.  What gets me is the fact that the same pot of money is apparently spent over and over and over again.  I’ll term it Hocus Pocus accounting and it is fairly easy to see through.

Speaking of Hocus Pocus accounting in the Bay we have a Hocus Pocus budgeting as well as.  You see folks in Mississippi by law Municipalities must prepare their budget on the cash basis with one exception. What this means is revenue per the budget is recognized when actually received rather than when earned. This means with the exception of previous fiscal year claims paid within 30 days after September 30 that expenses are recognized when paid rather than when incurred. Since we’re talking governmental accounting this also means that capital expenses are shown as an expense when paid and both loan principal and interest are expensed when paid.  Adjusting for claims paid 30 days after year end this also means the following equation is true. [Section 21-35-23, Miss. Code Ann. (1972)]

Beginning Cash in fund + budgeted revenues – budgeted expenses = Ending Cash in fund

Now I would encourage everyone to visit the City’s website and download the original and amended budgets for 2014-2015. Look hard for the equation I highlighted above but you can also take it from me that you won’t find it because the City did not use the correct format for its budget. Correct format??? What the heck is Handshoe talking about? I’m talking about the Mississippi Audit and Accounting Guide for Municipalities promulgated by the Mississippi State Auditor’s office, which by law has the authority to dictate the form of the budget. [Sections 21-35-7 and 21-35-29, Miss. Code Ann. (1972)] The following is what I am talking about being missing from the Bay Budget: Continue reading “Trolley lolley lolley, fa la la la……”