7/16/07, The city's new "shell game" with our capital funds

What you are about to read will take you to a place you've never been; and even with a good map you'd probably get lost trying to find your way out.

The place? Redmond's Capital Fund "Cavern". It's a dark, squishy place where a headlamp won't help and the more your squirm the deeper you sink. Even council bumps against the walls.
Redmond's 2007-2008 budget has 3 "Funding Sinkholes" (shells):

1) General Fund ($127M),

2) Utilities Fund ($116M),

3) Capital Fund (CIP) $216M.

For over 5 sessions the council and mayor have been playing a 'shell game' with taxpayer Capital funds (CIP) and our General Funds. It's close to impossible to keep up with the game because the rules change from council meeting to meeting. "Now you see it, now you don't."

The $32 million of "Unallocated capital (CIP) funds" quoted in our recent 2007-08 budget was "played down" to $13 million two weeks ago by Council. $32 million was "re-programed" to a more manageable number . At the last meeting, council "clarified" the $32M unallocated funds are "in reality" only $20M; since, $7M of those funds are "programed" for various reserves (operating, building, insurance) and other programs, leaving ta,dah! $13M in unallocated reserves! Why wasn't this $19M of "programed expenses" not written up in the Blue Book Budget? When the public doesn't know these "things", the budget and people are lost in the abyss. I for one, could have used the info in my Reporter article on Perrigo Heights to better explain the city decision not to "go after" the land acquisition.

After thorough review of last week's taped council sessions some of the recent CIP shell games are described below. Even with close scrutiny council dialogue is muffled, the CIP shells move too fast and council's shell choice (fund) is often fleeting. It appears the purpose of the game is to keep us guessing, confused, apathetic, unknowing. The message of the game? Perhaps -- the less we know about "their" business, the better.

"Citizen Vicky" (during an "Items from the Audience" talk) couldn't understand why Council would think to classify the City Hall as a General Operating Fund expense. After all, buildings are "capital" costs. Mayor Ives awakened when Vicky threatened an audit. The next week, council conveniently "re-classified" the City Hall lease from the "operating" to a "capital fund" (CIP). City Hall funds are now paid out of two smaller CIP capital funds -- " the "General Government CIP" and the "Council Contingency CIP". PRESTO! the state auditor issue vanishes.

CIP funds are as proliferate as breeding rabbits!

The above is just one example of a CIP shell game and how convoluted and discombobulated the budget process is at City Hall. In the real world of accounting one would presume funding a $40M building as anything other than an operating expense.

Not so for the City of Redmond.
SUPER FAST SHELL GAME - "THE LIGHTENING ROUND": City Hall maintenance & operations (M&O) is "captured' by the Capital Fund (CIP) but instantaneously transferred to the General operating fund to pay for city hall maintenance & operations (M&O). Keep in mind, CIP capital funds have always been generated by an annual 5%/year General Fund transfer. The Mayor had to write some new shell playing directions to accommodate this new dog chasing & "capturing" his tail strategy.

Thanks again to "Citizen Vicky's participation at "Items" for straightening the books. This particular game is fast!! And, KUDOS to Mr. Marchione for sticking his neck out bring transparency to the public.

A councilmember told me today the city "operating and capital budgets" change from meeting-to-meeting. So, it appears!

Thus, the CIP shells are moving incessantly AND NO ONE IS ACCOUNTABLE -- council, mayor, or staff --- unless the state performs an audit. Pardon my opinion, but don't you think tax-paying citizens deserve a budget audit from time to tim? Will our new Mayor request an audit to start off with a clean slate? Have the city books ever been audited at all? Does the dynamism of our three funds (Utility, CIP, General operating) have to be as complicated to the public as our Finance Director indicates? Will the next Administration stabilize and simplify CIP shell movements to a reasonable level of visibility and understanding for the viewing public?

Parks Shell game 3: Prior to the levy proposal, Council had long conversations about charging Parks Maintenance & Operations (M&O) to the Capital Fund (CIP) rather then the General Fund. It appeared all councilmembers and the mayor agreed with this change. After all, this reallocation would reduce the total amount citizens would be levied from 9 cents/thousand assessed to 5 cents and make the levy more palatable to the voters.

.

Parks Shell game 3 (continued): Two weeks later another citizen emailed his confusion about the wording of Proposition 2 (Parks levy) --- stating a good portion of the levy $$ goes to funding Maintenance and Operations. But if M&O is now to be paid from the Capital Fund then why does the city need an M&O levy to reload the parks operating fund? .

"are you still tracking the shell?" (I had to replay the game tapes more than once to follow my shell)

Parks Shell game 3 (continued):

At last Tuesday's Council Study Session the Mayor and council reached closure on the Parks M&O quandary by concluding (epiphany) the Capital funded Parks M&O decision was intended for 2-years out into the future --- NOT this biennium! Swhoosh! - away goes bad CIP shell and Proposition 2 is now "good to go" as written. ie. M&O parks funds will be funded by the levy's general operating fund --at least til after the levy vote --at which time the shells start moving again.

"Do you know under which shell your tax dollars are now" ? Most games last only a few hours; maybe a few weeks. Are you willing to track your shell into the next biennium?
Shell game 4: McCormick mentioned recently 10 other smaller CIP funds that are out there and need a looking at. But, that's another game, yet to be played.
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The city's 2007-2008 Operating Budget was completed June of 2006 . The city's 6-year capital funding program (CIP) was "completed" and published in the same blue, 307 page binder as the city's 2-year operating budget. It can be purchased for $6.75 from the cashier; highly recommended if you are a serious player.
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FACTOIDS FROM THE JULY 10, 2007 Council study session.
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The city's average daily cash balance (float) is $125M.
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The city is planning to borrow $78M to pay for: 1) Bear Creek Pkwy, 2) Sewer and 3) Stormwater for downtown redevelopment.
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The City Hall costs $1.4M/year to lease and $500-600,000/year to maintain. City Hall maintenance is 3-4% of the $40M (Robinson). By 2012 cash resources will be depleted for city hall.
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SUPER SHELL GAME: City Hall M&O is "captured' by the Capital Fund (CIP) and transferred to the General Fund to pay for city hall M&O. (CIP is generated by transferring 5%/year to from the General fund). (MARCHIONE's clarification)
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Parks M&O costs $614M for two years, but Parks is responsible for maintaining the new Red-Fall City median ($50K) and other expensive road medians. Council talked of transferring all median M&O expenses from Parks to the Transportation Capital (CIP) Fund. This shell game will free up lots more Parks M&O operating funds for use by Parks (rather than medians). So, why do we need to raise the lid for additional parks M&O operating funds? Answer: Developed parks are sacred in Redmond. Just look at the $10K cushman cart at Hartman Park carrying 2 workers for litter patrol -- one worker to drive and the other to use the litter tool.

FROM RICHARD MORRIS:
The City budget has been carefully crafted by the City Council, which is their main thing. The council is good at this sort of fiscal responsibilty. Mayor Rosemarie Ives has pushed for increased spending for operations, and the City Council has kept a steady eye on the budget. The City Council has been faithful to low property tax increases over the past several years, and voters have responded to the appeal for funding new parks, such as Perrigo Park and Hartman Park. The budget is a public document and is the result of many hours of hard work by City staff and council members. I am proud to call Redmond my home, and I congratulate the council for crafting a budget that is balanced, when there are so many pressures to borrow money and raise taxes.Hartman Park now has 6 baseball fields. During the ball season they are heavily utilized. It is amazing that a small crew can keep the park looking great. This park is a jewel and a wonderful community asset.
Friday July 20, 2007 - 06:16pm (PDT)

FROM YODER:
I'd hope some day the city would invest in a "passive" natural park -- low on maintenance-- and meeting the needs of our growing 60 year + demographic. It's fantastic we have many well-maintained active recreational parks but natural space gets scarcer every day.
Friday July 20, 2007 - 10:50pm (PDT)

FROM SATIN:
High maintenance parks are not scalable. We definitely need to examine alternative ways to reduce maintenance. Also we should explore creating "Park Teams" (local people) that organize to assist with maintaining and being an advocate for parks in Redmond. While I enjoy using the parks, I also enjoy ensuring they are preserved and in as good a shape as they can be so all can enjoy for generations.