The Bright Side
What is going on with the city’s finances?
Why is the treasurer’s position being left unfilled and the city auditors being hired to reconcile the finances over the interim? In the distant past the city treasurers were elected and there was a simple transition between city treasures. That was until the city started commingling funds around 2005, which got so tangled and out of control that the city’s audit for 2008 did not get completed until 2010 and millions in unreserved funds were gone. Since that time the city has continued to commingle and juggle funds, including the Transportation Fund, which by state law requires it to be kept in a separate account.
City auditors were questioned about the city putting the transportation funds into the general fund and not keeping it in separate accounts as required by law. The city’s auditors saw no problem with this accounting violation because other cities in the area were doing the same thing! That damaged conclusion demonstrated that city auditors are not above turning a blind eye to the City of Lake Geneva not following the some of the legal requirements of the law.
What is going on in the city today? It looks like there are serious financial problems and inconsistencies in the city’s finances and the city administrator, “Utah” Blaine Oborn, has taken the following steps to try and correct it:
He has recommended holding off on filling the treasurer position to provide time to evaluate a reorganization of the city hall staffing. He also recommended that the city council hire the city’s auditor (Schenck out of Green Bay) to provide interim reconciliation support for the treasurer (even though there is no treasurer). On Oct. 9th the city council approved contacting Schenck for financial reconciliation during the interim period. Financial reconciliation is the process of finding a way to make two different financial facts be taken as true at the same time. Schenck has already shown its expertise in this field. A couple of years ago, when the city was running out of TIF #4 funds that it could legally spend, Schenck was hired to review/audit TIF #4. In their magical review of TIF #4, an extra 6 million dollars became available for the city to spend. The extra 6 million dollars was generated by moving expenditures spent after the last TIF #4 amendment was approved to before it was approved, because the city was being limited by what could be spent after the TIF #4 amendment was approved, but not on what had been spent before it was approved. Because of all the financial juggling that the city has done, the city’s finances are intertwined like a plate of spaghetti.
The following is a simplified illustration of how one of those strands of spaghetti might work:
Lets say that the city has 4 million dollars. There is 2 million in the general fund, 1 million in the parking fund and another 1 million in the lake front fund. To have good financial credit the city needs to keep about $2,000,000 in its general fund at all times, so it won’t spend too much money and lose its good credit rating. So what the city does spend too much money, the city takes the lake front fund and the parking meter fund and puts them into the general fund so that the general fund then shows that there’s $4 million in it. This enables the city to spend an extra 2 million dollars (which, in reality, it did) without losing its good credit rating. This example is not just conjectural. It really happened. This is one of the intertwined financial manipulations that the city has performed that has enabled the city (for a dozen years, or so) to continue to spend about 1 million a year more than what the city’s normal revenue would permit. Unfunded retirements, TIF #4, revolving borrowing, and neglecting the city infrastructure problems are some of the other strands that enable the city to spend beyond its normal revenue and it has created the city’s current dependency on the spending of that extra million.
Transferring the fire hydrant fee to the water bills and increasing parking rates are the latest maneuvers that have partly covered the million-dollar gap, but budget cuts and/or additional new sources of revenue will be needed to solve the financial mess that the city administrator and city council inherited from previous administrations. With the coming reorganization of the staff and financial reconciliation by Schenck, the future responsibility to fix and fund this mess will fall on the city administrator’s ability to guide the city council as blindly through as possible. Unless gunfighter Blaine can get the city council to reign in the EMS ambitions of the Fire Department his chances of getting the city back on firm financial foundations will be doomed.
Is there any wonder about why Utah supports the development of Hillmoor and the annexation of the Geneva Inn? Is there any question about why Utah cannot say anything about any of this, either?
Place of the Week