City auditor addresses tax budget hearing

To the editor:

A lot has been said about the city's recent tax budget hearing.  For all the grandstanding theatrics that were involved, it served no useful purpose.

  For the record, I met with Ms. Ellison and  Mr. Holt and they left my office understanding that nothing untoward had occurred regarding the budget. Whether or not that message was given to Mayor Zink I cannot say.

Many have wondered why I didn't have answers to my critic's many questions immediately at the top of my head. The answer to that is very simple. The tax budget is a manually calculated document that involves the processing of literally thousands of numbers. It's a little bit like trying to fit a square peg into a round hole in that it involves taking very specific data from our software system and making it fit into a very generalized template. That a calculating error existed was possible, but there was no way that it could be verified on the spot as was demanded during the meeting.  As it turned out, there was a calculating error but it had no effect on the purpose of the document for a couple of reasons. First, in spite of the error, the numbers that effect the outcome of the document are taken directly from our software system. Those numbers are not corruptible, so the outcome was the same.  Second, my critic's concerns centered around historical data, so it had no effect on the projections for 2011. Those numbers did not change. 

  Ms. Ellison asked her questions to the finance committee chairman on the Friday prior to the Monday meeting. He asked her to take the very short trip to my office so her questions could be clarified. For the rest of that day and all day Monday I was available. Yet neither she nor the mayor granted me the courtesy of letting me know about their concerns prior to the budget hearing. If they had, the error could have been identified and corrected. Bear in mind, however, that the outcome of the document would not have been affected. The bottom line is that one cannot take a document that is 50-percent historical and 50-percent subjective and proclaim that there is $600,000 unaccounted for...unless an agenda is involved.

  Ms. Ellison also stated that she was "concerned" by the 2011 projection that showed a decrease of $116,500 in revenue but a decrease in expenditures of $922,000. In order to achieve the goal of an unencumbered ending balance for 2011 of $450,000; a goal requested by City Council; one cannot simply stop mid-way into the equation and conclude things don't add up. In order to achieve Council's goal, revenues have to be approximately $290,000 more than expenditures, the unencumbered fund balance must be at least $350,000 and the ending cash fund balance must be approximately $640,000. After an estimated $200,000 in year-end encumbrances are taken out, an estimated ending unencumbered fund balance of approximately $440,000 could be achieved.  Of course, there are many variables that effect the final outcome. This information was disseminated on the tax budget documents. This is what needs to happen, or a similar combination of a higher ending cash fund balance with lower encumbrances, to achieve City Council's goal.

  Ms. Ellison was also confused about numbers referred to in a previous article I had written and the latest month-end unencumbered balance of $359,609.20. At no point in my previous article did I refer to $629,254 (actually, the number I stated was $621,254.09) as being the unencumbered fund balance. I was referring to the unexpended balance. The unexpended balance directly corresponds with the amount of money that is in the bank for any particular fund; in this case it was the General Fund. The unencumbered balance is the unexpended balance minus purchase orders (encumbrances).  By the end of July, the General Fund unexpended balance was $614,747.72 and encumbrances were $255,138.52, making the unencumbered balance $359,609.20. None of this, however, had anything to do with the tax budget, which led to even more confusion during the hearing.

  It must be noted that the tax budget is a tool that is used by the county commission for their purposes. It is not a binding document for the city and the mayor was advised of this last month by the law director. The events during the hearing should not have happened. Ultimately Ms. Ellison was upset because the Finance Committee had recommended an across-the-board 10% cut in expenses for the remainder of the year. This would have affected her office, as well as mine, thus creating more work for her. So, her concerns were not nearly as altruistic as initially represented.

I do not mind fielding questions. I have always said that if I do not have the answer I can get it for you. I have always preferred to have the opportunity to provide correct answers later rather than have an immediate answer that may not be correct. If that seems unprofessional to some, so be it. That will, however, continue to be my philosophy. Further, if I seemed mad after the hearing, let me remove all doubt. I was. And I felt it best to remove myself from a situation that could have escalated into an even worse situation. I contended then that the incident was pre-meditated and the evidence seems to point out that it was. It's too bad that some within the administration want to engage in the lowest form of politics.

  Sincerely,

Gary Lewis

Hillsboro City Auditor  

To the editor:

A lot has been said about the city's recent tax budget hearing. For all the grandstanding theatrics that were involved, it served no useful purpose.

  For the record, I met with Ms. Ellison and Mr. Holt and they left my office understanding that nothing untoward had occurred regarding the budget. Whether or not that message was given to Mayor Zink I cannot say.

Many have wondered why I didn't have answers to my critic's many questions immediately at the top of my head. The answer to that is very simple. The tax budget is a manually calculated document that involves the processing of literally thousands of numbers. It's a little bit like trying to fit a square peg into a round hole in that it involves taking very specific data from our software system and making it fit into a very generalized template. That a calculating error existed was possible, but there was no way that it could be verified on the spot as was demanded during the meeting.  As it turned out, there was a calculating error but it had no effect on the purpose of the document for a couple of reasons. First, in spite of the error, the numbers that effect the outcome of the document are taken directly from our software system. Those numbers are not corruptible, so the outcome was the same.  Second, my critic's concerns centered around historical data, so it had no effect on the projections for 2011. Those numbers did not change. 

  Ms. Ellison asked her questions to the finance committee chairman on the Friday prior to the Monday meeting. He asked her to take the very short trip to my office so her questions could be clarified. For the rest of that day and all day Monday I was available. Yet neither she nor the mayor granted me the courtesy of letting me know about their concerns prior to the budget hearing. If they had, the error could have been identified and corrected. Bear in mind, however, that the outcome of the document would not have been affected. The bottom line is that one cannot take a document that is 50-percent historical and 50-percent subjective and proclaim that there is $600,000 unaccounted for...unless an agenda is involved.

  Ms. Ellison also stated that she was "concerned" by the 2011 projection that showed a decrease of $116,500 in revenue but a decrease in expenditures of $922,000. In order to achieve the goal of an unencumbered ending balance for 2011 of $450,000; a goal requested by City Council; one cannot simply stop mid-way into the equation and conclude things don't add up. In order to achieve Council's goal, revenues have to be approximately $290,000 more than expenditures, the unencumbered fund balance must be at least $350,000 and the ending cash fund balance must be approximately $640,000. After an estimated $200,000 in year-end encumbrances are taken out, an estimated ending unencumbered fund balance of approximately $440,000 could be achieved.  Of course, there are many variables that effect the final outcome. This information was disseminated on the tax budget documents. This is what needs to happen, or a similar combination of a higher ending cash fund balance with lower encumbrances, to achieve City Council's goal.

  Ms. Ellison was also confused about numbers referred to in a previous article I had written and the latest month-end unencumbered balance of $359,609.20. At no point in my previous article did I refer to $629,254 (actually, the number I stated was $621,254.09) as being the unencumbered fund balance. I was referring to the unexpended balance. The unexpended balance directly corresponds with the amount of money that is in the bank for any particular fund; in this case it was the General Fund. The unencumbered balance is the unexpended balance minus purchase orders (encumbrances).  By the end of July, the General Fund unexpended balance was $614,747.72 and encumbrances were $255,138.52, making the unencumbered balance $359,609.20. None of this, however, had anything to do with the tax budget, which led to even more confusion during the hearing.

  It must be noted that the tax budget is a tool that is used by the county commission for their purposes. It is not a binding document for the city and the mayor was advised of this last month by the law director. The events during the hearing should not have happened. Ultimately Ms. Ellison was upset because the Finance Committee had recommended an across-the-board 10% cut in expenses for the remainder of the year. This would have affected her office, as well as mine, thus creating more work for her. So, her concerns were not nearly as altruistic as initially represented.

I do not mind fielding questions. I have always said that if I do not have the answer I can get it for you. I have always preferred to have the opportunity to provide correct answers later rather than have an immediate answer that may not be correct. If that seems unprofessional to some, so be it. That will, however, continue to be my philosophy. Further, if I seemed mad after the hearing, let me remove all doubt. I was. And I felt it best to remove myself from a situation that could have escalated into an even worse situation. I contended then that the incident was pre-meditated and the evidence seems to point out that it was. It's too bad that some within the administration want to engage in the lowest form of politics.

  Sincerely,

Gary Lewis

Hillsboro City Auditor