[RP TownTalk] TownTalk Digest, Vol 118, Issue 34

Thu May 26 13:30:46 UTC 2016

If you are concerned about town finances, be sure to attend the Council's
Finance Committee meeting that is tonight (May 26) at 7:30 pm in Town
Hall.  The FY17 budget has not been passed yet, so you can provide your
input.

After reviewing the detailed proposed budget Jonathan Ebbler provided via
Dropbox, I have a number of concerns to discuss.  Now is the time to get
involved before the budget is passed next week!

Ken Laureys
301-661-6682
Laureys.Ken at Gmail.com

On Thu, May 26, 2016 at 8:00 AM, <towntalk-request at riverdale-park.org>
wrote:

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> Today's Topics:
>
>    1. Re: Marsha Dixon--Candidate for Ward 1 Council Member
>       (Corey Slavitt)
>    2. Budget and Other Financial Issues (Jonathan Ebbeler)
>
>
> ---------- Forwarded message ----------
> From: Corey Slavitt <coreyls at earthlink.net>
> To: "Marsha D." <ehmteadee at gmail.com>, towntalk at riverdale-park.org
> Cc:
> Date: Wed, 25 May 2016 13:40:59 -0400 (GMT-04:00)
> Subject: Re: [RP TownTalk] Marsha Dixon--Candidate for Ward 1 Council
> Member
> Thanks Marsha!
>
> -----Original Message-----
> From: "Marsha D."
> Sent: May 25, 2016 10:13 AM
> To: towntalk at riverdale-park.org
> Subject: [RP TownTalk] Marsha Dixon--Candidate for Ward 1 Council Member
>
> To All Ward 1 Residents:
>
> I am writing to let you know that I am a candidate for the upcoming Ward 1
> special election which will be held on June 14, 2016.  I do not intend to
> use this forum for electioneering, but I encourage all of you to visit my
> website to learn more about me and my vision for the future of Ward 1 and
> the greater Riverdale Park community.  I look forward to reaching out and
> meeting each of you in the upcoming weeks.  Please feel free to contact me
> if you have any questions.
>
> website: www.marsha4ward1.com
> Facebook: www.facebook.com/mMarsha4Ward1
> Twitter: @Marsha4Ward1
>
> Warm Regards,
> Marsha Dixon
> 5737 45th Avenue
> (301) 531-4230
>
>
>
> ---------- Forwarded message ----------
> From: Jonathan Ebbeler <jebbeler at efusionconsulting.com>
> To: TownTalk <TownTalk at riverdale-park.org>
> Cc:
> Date: Thu, 26 May 2016 04:14:27 +0000
> Subject: [RP TownTalk] Budget and Other Financial Issues
>
> Mayor Archer –
>
>
>
> It has been a week and you have not responded to any of my questions.  It
> is disrespectful to the office you hold when you refuse to answer, much
> less even acknowledge the points I brought up.
>
>
>
> We live in a small town and this is not the level of constituent service
> any of us deserve.  I spent 5 years routinely engaging and answering the
> tough questions that you, as Mayor, should have fielded.  You have an
> obligation to the town and to constituents that have questions to provide
> answers since I am not longer there to do it.
>
>
>
> Since receiving some of the information via a Maryland Public Information
> Act (other information is being currently withheld unless I prepay a
> minimum of $6200 for the many ‘thousands’ of emails I supposedly was not
> privy to as a sitting Councilman that would shed light on information the
> public has a right to under the law) I can provide some, but not all, of
> the answers for you.
>
>
>
> Feel free to opine in if you wish to clarify any of the ‘answers’, I will
> take your silence as your agreement that my facts are correct.  I apologize
> in advance for taking liberties with using first-person in the ‘answers,’
> but ignoring legitimate constituent questions has consequences.  The
> original post was here:
>
>
>
> http://riverdale-park.org/pipermail/towntalk/2016-May/019752.html
>
>
>
>
>
> My questions are as follows:
>
>
>
> 1)      Do you now view the Executive Order issued as unnecessary and have
> rescinded it?  Under what premise were you communicating that we were going
> to lose 400k in revenue based on your posts and communications when your
> budget does not reflect this reality?  Once you subtract off the 'bond
> proceeds' revenue item that was not realized our anticipated budget as of
> 6/30 is almost dead on the adopted FY budget.
>
>
>
> ANSWER: Yes it was unnecessary and I will not publically disclose the real
> reasons why it was issued unless you pay the town an egregious amount of
> money for its disclosure under the MD Public Information Act.  Clearly,
> from my own budget I knew that we were not in the property tax revenue dire
> straits that I falsely used as a premise for its issuance.  You are correct
> in your assumptions since my budget presumes even more money will be
> collected in property taxes in FY17 despite the loss of the USDA building.
> Ultimately it did not matter since in aggregate the town’s share of
> property taxes have increased.
>
>
>
> 2)      You communicated that the USDA building will have a 'significant
> impact' to our budget yet the budget proposed has even higher anticipated
> revenues this year than last.  Do you now agree with my prior
> well-documented posts on the budget, taxes, and revenue which reflected
> that the Executive Order was an overreach?
>
>
>
> ANSWER: Yes it was an overreach.  The Executive Order did not have a
> legitimate basis.  My budget clearly reflects that and my prior statements
> about the financial impact that one building has on our overall tax base
> are clearly unfounded as my budget reflects.
>
>
>
> 3)      Please clarify that the prior hiring freeze is no longer in effect
> and it is the town's intention based on your budget to hire a Finance
> Director in addition to a Town Manager/CFO to augment the staff we already
> have, HR/Finance Director and contracted CPA
>
>
>
> ANSWER: Mostly true.  The hiring freeze for the administrative side of
> government has been lifted – we are not budgeting for Public Works or
> Safety additions.  We have a Job Request posted looking for a Finance
> Director.  In prior years we had a position filled for the HR/Finance
> Director at a cost of ~50k + Benefits (fully loaded cost of $70k).  We have
> since split the single role into two separate employees with a cost of
> $155k + Benefits (fully loaded cost to the town of $205k).  We still
> maintain our contracted CPA and are increasing the cost of the Town
> Administrator/Manager position by approximately $40-50k.  Please also note
> that the cost of that position alone has risen over 30% over the last
> couple of years in addition to the new $40-50k increase which leaves a
> fully burdened cost to the town of roughly another $200k.
>
>
>
> 4)      Please clarify 'Bond Proceeds' as a revenue item in FY16 for the
> public
>
>
>
> ANSWER:  We balanced the budget by assuming we could increase our debt
> load and borrow against the revenue.  We should have called this ‘Credit
> Card Cash Advance.’  This is not a true revenue source but we are required
> by law to at least on the books balance the budget.  We routinely get
> flagged by the auditors for violating GAAP (Generally Accepted Accounting
> Principles) for claiming revenue on debt-based items and they have to
> restate our books every year.
>
>
>
> 5)      You communicated to the RPBA this month that Economic Development
> money is available yet your budget clearly does not reflect this in the
> level of expenditures required for this FY or next.  Please clarify if you
> are going to act on the requested grants or not
>
>
>
> ANSWER:  No action will be taken.  The budget clearly reflects that grant
> money assumed to be spent this year and next will be modest (in the
> neighborhood of $5k).  Businesses should not expect any substantial
> leasehold improvement assistance despite money being appropriated for that
> purpose in FY16 ending next month.  We did, however, spend most of monies
> to date in this budget category on attorney fees.
>
>
>
> 6)      Please clarify the actual surpluses (rainy day funds) the town has
> is anticipated to have as of the start of FY17
>
>
>
> Worksheets:
> https://www.dropbox.com/s/xroimgxrttbm2t5/FY17BUDGET_NOSALARY.pdf?dl=0
>
>
>
> ANSWER:  As CFO of the town I should have clear and immediate access to
> this information.  I believe the numbers you previously arrived at were
> correct because as the budget worksheet reflects on Page 121 I did not back
> out the $912,118 from the balance we ended with on 6/30/15 ($2,616,418). It
> should have been listed in the FY16 Appropriated Fund Balance line that
> currently shows $0.  This budget worksheet clearly shows that as of 3/31/16
> we have already expensed the $912,118 so the real math should have been:
> 2,616,418 – 187,339 – 912,118 for a revised Projected General Fund Balance
> as of 6/30/16 of $1,516,961.  Subtracting out the 3 months of reserves we
> keep on hand for revenue shocks of $1,508,944 leaves an Available General
> Fund Balance of just $8,017 not the $920,135 we claimed for this budget
> exercise.  We needed $348,000 to balance our budget, however, which would
> not be available if the budget worksheet reflected only 8k not 920k so we
> left off the prior year’s deficit spending to artificially increase monies
> available to spend.
>
>
>
> 7)      Please clarify when the town is anticipated to stop balancing
> budgets on structural deficits (in what FY)
>
>
>
> ANSWER:  Hopefully when the Cafritz project starts returning a positive
> cash flow.  Best guess on that is 2-4 years out before the tax revenue
> outweighs the expense.
>
>
>
> 8)      Prior statements that the Cafritz/Whole Foods project would
> self-finance and the town would not be subjected to paying for it via
> property taxes seem no longer to be valid.  Please confirm or clarify this
> assumption/statement.
>
>
>
> ANSWER:  The statement is no longer valid.  I realize it is what the town
> was told but the priority of creating a professional administrative staff
> is greater than worrying about promises made a few years ago.
>
>
>
> 9)      Please clarify what is left in the Debt Service Fund Reserve since
> a portion is being used as structural deficit spending to avoid raising the
> tax rate (taxes already increased because assessments increased townwide).
>
>
>
> ANSWER:  This is unknown at this time.
>
>
>
> 10)   It was stated in several public meetings that this would be an
> austere budget.  Once the budgets are normalized to remove surpluses and
> 'bond proceeds' the budget actually increases over last year which
> shouldn't be surprising since revenue increased 160k.  Do you stand by your
> prior statements that it is really austere?
>
>
>
> ANSWER:  No, of course not.  Anyone that can do math can realize that we
> artificially pumped the budget up by using up our surplus and balanced our
> budget on phantom revenue like ‘bond proceeds.’  Town operations haven’t
> been decreased and we in fact are adding additional costs to the
> administrative side of government.
>
>
>
> 11)   Generally speaking, your emails indicate a lack of familiarity with
> our accounting system.  Do you, as the town's CFO, spot audit and/or
> validate the town's financial reporting personally?  On what frequency do
> you generate management or other ad hoc reporting that is available via
> Quickbooks delivered reports?
>
>
>
> ANSWER:  Never.  I have delegated all responsibilities to other people and
> despite being CFO of the town depend on others for all aspects of financial
> accountability.  This, hopefully, will not be an issue going forward since
> I have abdicated these responsibilities and assigned them to the new Town
> Manager thanks to the Charter change vote in May.  Any financial messes the
> town becomes aware of will no longer be my responsibility even if my
> administration was the cause of them.
>
>
>
> 12)   On our Retiree/OPEB 100% unfunded liability what plan does the town
> have to address this ticking time bomb?
>
>
>
> ANSWER:  None.  We have adopted a PayGo (pay as you go) model to address
> any current and future liabilities.  As you indicated the liability will
> grow exponentially over the next 10-15 years but hopefully the town can pay
> for it.  The town has two choices, raise taxes substantially or terminate
> the plan; each has their own set of issues.
>
>
>
> 13)   Based on your budget projections, as CFO of the town, when will the
> town stop its deficit spending and/or what FY is there a potential tax rate
> increase due to surplus exhaustion
>
>
>
> ANSWER:  Unknown but we are out of money currently other than our rainy
> day fund.  We continue to balance current budgets with bad accounting so
> performing budget projections are sketchy at best.
>
>
>
> 14)   At what level of financial shock would the town be forced to raise
> taxes (i.e. lawsuit, tax revenue shortages, additional Cafritz/TIF Bond
> expenditures)
>
>
>
> ANSWER:  We are basically there now.  We had to borrow money from our
> reserves so as to not have to raise the tax rate this year.
>
>
>
> 15)   What consequences was CM Thompson referring to regarding the
> inability to withdraw the Council/Manager legislation and why were they not
> discussed or disclosed publically well in advance of a vote for public
> scrutiny and comment?
>
>
>
> ANSWER:  This will not be answered and we will refuse to produce
> documentation that reveals that information unless a requester pre-pays the
> town thousands of dollars in advance of the production of the documentation.
>
>
>
> 16)   What financial auditing/process improvement steps or practices did
> you as CFO put into place, if any, to address the town being flagged for
> material misstatements during our audit
>
>
>
> ANSWER:  None other than publically claiming we had a clean audit with no
> warnings or flags, although this was not true.
>
>
>
>
>
> JWE
>
>
>
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