And if you've been following these meetings, it's quite a show. If you haven't but are interested, I try to break it down here.
Let's dive into the questions.
- How much money do we have?
- How much money are we spending?
- How much money will we have?
- How much money will we be spending?
That's actually about it. I mean, seriously isn't that what always starts discussions about finances?
So why is it so complicated?
First An Accounting Joke? (Yes, Accountants Have Jokes and They Are Funny)
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| Get it? It's pretty funny. |
Okay, First Questions First
In municipal government, the standard for the answers to how much revenue came in and how much spend went out is answered annually through a report called the CAFR (Comprehensive Annual Financial Report) which certifies the numbers from the previous fiscal year.
In normal years, the CAFR is completed and presented by March 31st.
This is not a normal year and the final has not been delivered.
That's a problem. It's important for the FAB to know why the delay and what the anticipated due date is. Once they have the report, that will give them a guide to our current financial situation.
That question must be answered.
On the board and on Facebook posts, there is a disagreement over how much we should have in the utility reserve to repair our utilities.
Board Members Richard Chervony and James Rosenberg point to Charter and Ordinances that show we should have around $2m in the reserves and it looks like we don't.
The administration does not accept that reserve number and says that the law is unclear.
That question must be answered.
There are serious questions about how much revenue will decline next year as we enter the post Covid Lockdown recession. The administration thinks it will noticeable but approximately $800k. The Board has expressed their belief that it could exceed $2m if the reserve question is that we must have $2m in the reserve fund.
That question must be answered.
This is not a normal year and the final has not been delivered.
That's a problem. It's important for the FAB to know why the delay and what the anticipated due date is. Once they have the report, that will give them a guide to our current financial situation.
That question must be answered.
On the board and on Facebook posts, there is a disagreement over how much we should have in the utility reserve to repair our utilities.
Board Members Richard Chervony and James Rosenberg point to Charter and Ordinances that show we should have around $2m in the reserves and it looks like we don't.
The administration does not accept that reserve number and says that the law is unclear.
That question must be answered.
There are serious questions about how much revenue will decline next year as we enter the post Covid Lockdown recession. The administration thinks it will noticeable but approximately $800k. The Board has expressed their belief that it could exceed $2m if the reserve question is that we must have $2m in the reserve fund.
That question must be answered.
The Participants Are Talking Right Past Each Other
If it's ugly or suspicious or just plain difficult, the FAB has to be able to count on village administration for clear answers to clear questions. And the questions have been clear. This is a time for candor.
When you can't agree on the question or the premise of the question, the FAB has to note the importance of the answer and report that back to the commission.
In the military, there is a commonly used technique of RED, YELLOW, GREEN.
Unanswered questions have their implications flagged.
RED - The Mission cannot proceed without this information.
YELLOW - The Mission can proceed in its planning but the answer must be available before execution.
GREEN - The Mission can be executed and the data point as it can be.
In my view, the Financial Advisory Board should code their questions. Here are some examples.
Red Flag Question - Must we have a $2m reserve for utilities? If yes, hold everything and restructure.
Yellow Flag Question - Why is the CAFR late? What effect will this have on budgeting and planning?
Green - Do we need a full time CFO?
I believe this will get the discussion unstuck and I hope they follow it.
Revenues and Cash
The Village depends on many sources of revenue - property tax, fees, State and Federal, grants and other sources. Our revenue is likely to fall so we have to look at new ways to bring in more.
Earlier this month, I proposed that the Budget Board request an accounting of how much the Village paid out owing to the truly disastrous personnel decisions in 2018. In a quick look, I could see $450,000 in personnel payouts. This was not the result of taxpayer's negligence. It was a broken commission following bad advice. I think the Village should explore recouping that money that was spent on bad advice. The Board did not make that request.
The Village has easements throughout the islands that are used for private purposes. Why not charge a reasonable rent for those? It's legal and easy and could raise $200,000 for services annually.
That $650,000 in the next year, surely money we could use now.
My point is that the Village needs to explore every avenue to save costs and increase revenues.
You can't cut your way to prosperity or tax your way to stability. The people would really like to see some more creative thinking on these issues and it starts with getting the questions right.
Kevin Vericker
June 16, 2020
