Tuesday, June 16, 2020

Budget Time And Questions

 Tonight at 6:30 there is a meeting of the Financial Advisory Board.  
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)

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.

The Participants Are Talking Right Past Each Other

I've recommended personally the following.

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 great Molly Ivins once wrote that in her experience, the problem with poor people is that they don't have any money. 

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

Thursday, June 11, 2020

Not An Isolated Island

Updates Week of June 8 2020

A lot went on this week.

  • The Curfew was lifted.
  • Pools and Gyms are opened.
  • The Beaches are open.
  • The Dog Park is open.
  • Many other services are opening.
Before we get to the details, I want to point out something extraordinary and in my view confidence building about the North Bay Village Police Department.
The day after the Minneapolis death of George Floyd, May 25, our Police Chief Carlos Noriega ordered a top to bottom review of North Bay Village Police procedures.

The day after!

Before the nationwide protests, before the discussions, the Police Chief made sure to be absolutely clear that the use of force is a last resort, the Duty to Intervene when a cop sees abuse, and reviewed the many aspects of PD training that keep the citizens and the police safe. That's what kind of community we are and what kind of Police Chief we have. Noriega doesn't wait to do the right thing. Never has.
Monday - Marvin Wilmoth Harbor Island Commissioner and Vice Mayor, led the commission in a vigil remembering George Floyd. It was broadcast on Facebook Live and attended in person by 50 people or so at Vogel Park. It was a peaceful, respectful community statement against racism.
Tuesday - At the Commission Meeting, there was a lot but I thought I would break it down below.
  • The George Floyd Murder - The Commission unanimously passed a resolution brought to the dais by Commissioner Jackson condemning the killing and restating the commitment of North Bay Village to inclusion and equality.
  • The Services - The Commission instructed the Village Staff to plan for the inclusion of a services portal and a position to help North Bay Villagers struggling with unemployment, food insecurity, school, housing and other issues. The Commission recognizes that North Bay Village can't solve the worldwide problems but can help our community navigate them.
  • PRIDE - 2020 - The Commission proclaimed Pride Month 2020. North Bay Village has always been an inclusive community but for for 8 years, the previous mayor and her crew ignored Pride every year while greedily lapping up campaign money from the discredited SAVE organization. Mayor Latham promised and delivered.
  • Finances - There are long standing questions about our reserves and how we account for our utility bills, but the Commission heard these clearly and directed the Village staff to stop pretending not to understand the questions that the Financial Advisory Board brought up and to answer them. Be prepared for a long budget fight.

Wednesday - The beaches re-opened.
Things that Need Addressing -
The big one is the Island Walk. Village Manager Ralph Rosado has allowed the Moda walk to stay closed with no clear path to re-opening. Whether he has the need to do that is a question and it's time for the commission to start modifying Emergency Powers so that it is not a convenient political excuse for the Village Manager.
The next one is when or if the playgrounds re-open. Kids don't social distance and it may be a long time but now would be a good time to publicize what conditions must be met for the playgrounds to be re-opened.
The Finances need to be in order. Right now, there are serious questions about how much we have in reserve, how we are funding services from the utilities, what the real impact of the economic downturn is. I keep seeing people talking past each other and that makes me nervous.
It's going to a long hard road out of the lockdown, into the recession and through the civil unrest.  I hope we have the right people on staff to take us through this.

I do know we have the right mayor and a commission that usually does the right thing.

Time to come together and figure out this new normal thing.

Kevin Vericker
June 11, 2020