Elk Grove's 2020 budget adopted, city council member suggests not addressing ongoing deficits

Elk Grove Vice Mayor asking why the city can't "leave that deficit on the books." |  

Except for one exchange between a council member and staff during their deliberation, the Elk Grove City Council unanimously approved their 2020 budget at their Wednesday, June 12 regular meeting without discussion.

The total budget, including capital improvement projects for the fiscal years, which starts on July 1 is $291 million. The general fund budget is $77.9 million, which is $3.3 million (4.4-percent) increase over the current fiscal year.

In the general fund, the largest single element is the police department, which consumes $48.7 million, which reflects a $7.2 million increase over the current fiscal year. In addition to adding five officers, much of the increase comes from the anticipated opening of the animal services unit shelter, which is part of the police departments budget.

During public comment, two speakers expressed concern over aspects of the budget. Speakers included Gary Sibner who said he did not believe the city's capital improvement plan, which is part of the annual budget should not include funds for a freeway off-ramp near Elk Grove Boulevard and I-5 and a park and ride facility. 

Sibner reminded the city council that pursuant to their adoption of the general plan, all capital projects related to the proposed California Northstate University's 400-bed hospital should be removed.  

"The timing of these two Elk Grove Boulevard projects is suspect," Sibner said. "The items themselves don't make much sense."

Addressing Sibner's comments, was Kevin Brewsey, the city's capital improvement program manager who said the projects had been funded for several years, but added they are under further examination.  

"We are looking at this project and whether it is needed still," Brewsey said.

During her comments, Lynn Wheat commended city staff for the preparation of the document and answering her questions on the budget. She noted the plan is a reflection on the city council's priorities, which to her view, does not consider citizen's concerns. 

"Where does the public give their consent for the city to continue to run over a $2 million annual shortfall in infrastructure maintenance, while the city regularly purchases property at questionable prices and carries notes [financing to purchasers] when they resell," she said. 

The only council inquiry came from Vice Mayor Pat Hume who asked staff during the transportation funding section of the presentation. Hume wanted to know why the city could not ignore the deficits accumulated in particular accounts and carry them on indefinitely.

Attempting to answer the question was the city's finance director Brad Koehn who said while non-payment of debts would not affect the city's bond ratings, it should nonetheless be addressed.  

"It is a weakness on the city's own balance sheet because that money needs to be funded from someplace," Koehn said. "That would need to be eliminated at some point over time." 

When Koehn said that money spent on items not funded must be addressed, Hume persisted. 

"If you are covering your expenses year over year over year, what does it matter," he asked Koehn.

Koehn told Hume that it meant that funds from the general fund have paid for the expenses but not recognized as a liability on the city's balance sheet is not allowed by Transportation Development Act rules. Although Koehn did not expressly say it, doing so could additionally be considered a violation of generally accepted accounting principles, which are illegal.

Hume and Koehn's exchange can be viewed below. 

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D.J. Blutarsky said...

"The California State Auditor’s office slammed the city of Lincoln for years of financial mismanagement of public funds, lax accountability and inadequate oversight from officials that “threaten the city’s stability,” in an audit report released Thursday.

...The city would then loan money from the water connections fund, in addition to other funds, to separate accounts that “clearly did not have the capacity to repay those loans,” according to the report, breaking the city’s interfund loan policy. The city has five outstanding interfund loans it is obligated to pay back, totaling $9.6 million, according to Hanson.

The city would also temporarily transfer money from the water connections fund each year to several other funds with deficits, such as the Fire Department, Parks Department and the airport, from 2013 to 2017, misrepresenting its financial position in its annual financial statements, the audit reported"....

Source: Sacramento Bee, 3/21/19

Capt. Benjamin Willard said...

Mr. Hume was obviously watching documentaries recently and stumbled on The Smartest Guys in the Room, because he seems to be challenging Kenneth Lay, Jefferey Skilling and Andrew Fastow. For those who may not recall, SGINT was about the Enron collapse.

The only question left is if Mr. Hume is pretending to be the SGITR, what role is he acting out and who among his council colleagues are his co-conspirators?

Eye on Elk Grove said...

Since 2006, when elected to the Elk Grove City Council, Pat Hume is required to fill out yearly Statement of Economic Interest forms (SEI) whereby he lists his occupation as “Controller.”

Definition of controller: “A person in charge of an organization's finances.”

Given the above painful-to-watch exchange whereby city staff is trying to avoid the deadly sin of making Hume look bad, one can only think, “Hmm. . . .”

Or better still, let’s help the Vice Mayor with the following link:

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