Friday, September 6, 2013

Going Broke - Gradually

Hemingway wrote this in The Sun Also Rises:
“How did you go bankrupt?" 
Two ways. Gradually, then suddenly.” 
That's how it goes.  Nobody goes broke overnight - not a person, not a business, not a city.   The warning signs are there and ignored.  The small decisions taken without consideration and then the big panicked decisions are made too late without time to think.   Detroit went bankrupt and nobody was surprised.  Too many companies to count have done so in exactly that way.  

Which bring us to North Bay Village and the TRIM notices.  You've seen by now that the proposed millage rate caps at 7.5, up from 4.7772.  Nobody believes it will go that high and is far more likely to settle around 6 to 6.1.  Still, that's a 27% increase in property taxes at a time when most entities are holding steady.   

That's a steep increase and the city has to ask why.  Are we getting 27% more value?  The answer of course is no, we are not.   The only reason this increase is happening is because of a series of small decisions taken without consideration that have eliminated our reserve and destroyed value.  Those decisions include:

  • Nearly $1 million over 2 years spent pursuing two cases in the police department where virtually everyone agreed that the 2 fired officers would prevail in the courts, as they did.   
  • Approximately $200,000 in non value added spend to pay for the move of city hall from a facility that it should never have been in to begin with and severance pay for a village manager who didn't work out.  
  • Over $100,000 on a retirement that was not planned for.  
Add to these some of the ongoing small spend decisions such as $3,000 for our commissioners to attend a four day conference in Orlando that mostly consists of vendors trying to sell their services, little stipends like iPad's which in this day and age are a luxury since smart phones can do the same things and other costs and you see a commission that does not get that the habits of economy and value need to start at the top.  

It is important to look at why and there is no escaping that the vast majority of the money spent for no value is with the Police Department.  The PD is about to lose the nearly $1 million dollars they get from the Federal Law Enforcement Trust Fund, yet continues to maintain an expensive separate detective bureau whose primary function is to support the DEA.   I've already mentioned the $1 million lost on the personnel cases.  The chief needs to be accountable for his decisions and so far the commission has not held him to any standards at all.  

Now we're probably stuck with the tax increase of 27% and that's that.  But what about next year?  What steps are in place now to prevent another 27% tax increase?   I think our interim manager Frank Rollason is the right guy and will do his best to extract value for money spent but unless and until our elected representatives actively engage in demanding accountability, setting standards and practice the habits of  economy themselves,  it won't happen.  

The first budget hearing is September 17 at 6 PM.  We need to show up.  It can't just be the same people saying the same things.   

Kevin Vericker
September 6, 2013

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