Monday, May 22, 2017

The FY 2018 Budget...And some Video Clips

As most of us are aware, there is a proposed property tax increase for this year for the City, explained in this Commercial Appeal article.  

The City has more information and links on its website.   

Tonight (May 22) there is a BMA meeting, and if you have any thoughts about these issues, you have the opportunity to speak for three minutes in "Citizens to be Heard" if you desire. 

This year, citizens are especially interested in the budget due to the proposed increase in property taxes.  Last week there was a work session on the budget, and a citizen's film clips were made available to this blog, and are below:

Clip Number 1

Below Mr. Lawton explains that we need to keep the pension plan funded at least at the 80% figure (80% of projected pension expenses should be "funded"). We are assuming a lower return from the funded plan in the future, so we need to put more money into the pension plan. 

Although he states that this $890,000 figure in the budget presentation is due to increased pension funding, he then says that this also includes 3% salary increases. Well, does it include anything else? The budget should be detailed enough to show what amount is due to 3% salary increases, and which part is for adjustments for the pension fund, and the computations that went into both of these things. We also should be given historical returns on the pension fund, to help demonstrate why this is needed.

Clip Number 2 

The need for more detail on the budget is discussed in the clip below. The Charter requires that the BMA make available the entire budget for public inspection prior to a vote.  

A good example of where more transparency is needed is human resources.  Referring to Clip 1, what exactly is in the $890,000 increase requested by the City?  A part of it is for 3% salary increases, and a portion of it is for more dollars for the pension fund, to compensate for having lower returns. Again, we need the exact amounts and computation for these things. 

In general we need more transparency for the human resources budget. As has been discussed in this previous blog post, the City has a policy of allowing "vacation buybacks." That really isn't a particularly common practice among employers. The City has a generous vacation policy, and, the employees do not have a "use it or lose it" policy. How much does this cost this City?  Has that figure ever been calculated?  There are both costs and benefits to having this policy, but these costs and benefits should be discussed openly, and with full information. As citizens we have the right to expect this.

Also, how do the controversial variable insurance policies (discussed in this previous post) fit into the budget?  How are we accounting for those?


Clip Number 3 

According to our Charter, the administrator sits at the will of the Mayor and the BMA sets the salary. There was a big discussion of this last year, because the salary had never been voted on specifically by the BMA, but as a part of the overall budget. Yet, the raise in salary of the administrator was generally in the middle of the budget year, and never voted on by the BMA. This was discussed in this blog post at the time. 

Here it is explained that the City Administrator did not get a salary raise in the middle of the year. But since his salary has never been voted on past December 31 (as specified by the budget last year), there is concern expressed that we are not following the Charter. 

Clip Number 4

Below I learned that the City only has two accountants!! I have no idea who has been assuring compliance prior to this, and providing analysis. I am kind of shocked that we have been getting by without appropriate accounting support. This lack of support, of course, has enabled past "mistakes', such as the City Administrator taking a car allowance for several years, while also enjoying the benefits of a city-issued car.  I am ALL for internal controls and compliance! We do need a qualified person for this position, for sure. The only question I have is, why so late?

Clip Number 5 

This explains our property tax increase and how it was computed:

Clip Number 6 

What follows is a discussion of what happened to the proceeds of the last sales tax increase, enacted in 2012. This was sold as a way to finance the new school system, and led many citizens to believe that it would all be used for the schools. In fact, it does cover the minimum amount required by the state for the City to fund the schools; however, the required amount is actually based on a property tax rate, and the sales tax increase was not a dedicated tax for the schools. The tax was for the general budget, to boost the income in order to pay the minimum state required amount to the school system.

Clip Number 6 

This is a discussion of the Tennessee Hall tax (income tax on dividends and interest) disappearing. In 2004 we also had a tax increase that was purportedly due to the Hall tax disappearing. The explanation was slightly confusing to me, but you can listen to it. It involves some kind of a shift between the operating budget and capital projects budget, the recession, the length of time since then, etc.

No comments:

Post a Comment