You, too, can shave 7 cents off the tax rate

(UPDATED 1:30 P.M., Monday Aug. 24)
Midway through this post I wrote "even just a halfway decent warrant officer will pay for himself" because the outstanding fines he could collect would be far more than his salary. I finally got the lowdown on these numbers, thanks to Chief of Staff Jerry Hendrix. The established salary for the proposed warrant officer is $69,670. The amount of court fines outstanding in Kyle as of Friday is $4,578, 838. That means the proposed officer's salary is a measly 1.5 percent of all fines outstanding. That's potentially an incredible investment. Not only that, but 51.6 percent of those outstanding court fines are two years old or less, according to the numbers Hendrix provided. Let's say that officer only manages to collect 50 percent of that number; that's $1.18 million in found money for the General Fund.

To put this in a slightly different, but still positive, perspective, note that the total General Fund expenditures for the upcoming fiscal year are estimated to be $21,983,344. The total amount of the outstanding court fines is a whopping 20.8 percent of that total. And even if that warrant officer can only collect something in the neighborhood of  the aforementioned $1.18 million, that's enough to fill a lot of potholes.

(ORIGINAL POST)
Kyle city government may be transparent, as it likes to claim, but it’s not always clear.

Take last Wednesday’s public meeting on the proposed tax rate as well as the city’s proposed budget for the upcoming fiscal year. Are they open? Are they available to one and all? They certainly are. Are they understandable? That’s open to debate.

For instance, during the public meeting Mayor Todd Webster and Mayor Pro Tem David Wilson, the proverbial two peas in a pod, tried to convince those in attendance that the 26 percent increase in the tax rate was due exclusively to the sale of the road bonds which voters approved two years ago. "You voted for it," they seemed to say. "You told us to raise the tax rate to pay for the roads. So we did. We had no choice."

And if you buy that, I’ll toss in the horse it was excreted from for free. If the only additional money needed was that to pay for the road bonds, the tax rate would be .5633 cents per $100 valuation, not the .6145 that has been proposed. (That figure comes from adding the cost of the bonds, $.0763, to the effective tax rate, which is the rate the city would charge to raise the same amount it did this current fiscal year. That rate is $.4870.)

Three cheers for council member Damon Fogley. Unlike Webster and Wilson, Fogley, at least was honest and above-board about the whole thing. He had the courage to correct Webster’s and Wilson’s lies clarify Webster’s and Wilson’s ambiguities. He told those in attendance the tax hike was going to pay for four new police officers, personnel the city needs to hire now that it’s assuming control of its wastewater treatment plant and other infrastructure improvements. Council member Daphne Tenorio let those in attendance know the budget will also cover the salaries of some 17 other new positions. So, unlike Webster and Wilson, at least Fogley and Tenorio were up-front about what’s really going on with the budget.

But Tenorio went one step further. She told the citizens to look at the budget for themselves (you can find it right here), go through it and come back to the second public hearing on this subject, this coming Wednesday at 7 p.m., also at City Hall, and offer recommendations for changes. She noted that for each $200,000 eliminated, the tax rate will go down one cent.

So I decided to take her up on her offer, knowing that anything I would cut must come from the General Fund because that’s really the only one affected. I examined the employee costs first. I know I don’t want to cut the four new police officers; for a city of its size, even with this addition, the Kyle police force is still undermanned. I also don’t want to cut the new warrant officer position because even just a halfway decent warrant officer will pay for himself. If you don’t already know, this person is charged with seeking out all those miscreants who are trying to avoid fines they owe the city. Most of those fines are for speeding or traffic violations, but there are others handed down by the municipal courts and you’d be surprised to know how much is out there. I’m seeking to find out what that dollar amount is in Kyle but I do know that, to cite just one example, in Hattiesburg, Miss. (population 47,000 to Kyle’s 46,000), its municipal court had $21.4 million in unpaid fines in 2013. That’s a heck of a hunk of moolah that should be available for the city of Hattiesburg, but isn’t.

I could argue that the city really doesn’t need a special events coordinator, but this position is only costing the General Fund about $25,000 this year so, in the overall scheme of things, eliminating that position really isn’t going to do that much. Let’s give this person a shot and see just how many new special events are created and what the tax impact of those events are. There’s $77,978 earmarked for a new storm water master plan administrator and, from where I’m sitting, the city has long neglected its storm water management and I’m encouraged that City Manager Scott Sellers is taking initial steps to correct this. I could also question the nearly $50,000 salary for a pr guru, spin doctor, city flak communications specialist. Eliminating that position would knock .0025 off the tax rate which only translates into a savings of $5 a year for the owner of property valued at $200,000.

But then I looked at other General Fund expenditures and I stumbled across what I feel is the elephant in the room: $1.5 million to create "Internal Service Funds for Equipment, Fleet and Facility." Here is the definition I found for Internal Service Funds: "Proprietary funds, which are accounted for on a flow of economic resources measurement focus, which requires full accrual accounting." And there are probably thousands, if not millions, of accountants out there who understand that, but what it comes across to me is little more than a slight-of-hand bookkeeping trick. I’ve seen city managers pull of these kind of maneuvers many, many times.

So I went to the city and asked for an explanation for this $1.5 million expenditure. Here’s the reply, verbatim, I received from Chief of Staff Jerry Hendrix:

"These funds were established as a way to keep up with the replacement requirements of the various assets the city owns and that are critical in carrying-out basic municipal functions. Examples would be heavy equipment, police vehicles, technology, and facilities. As growth and development of our city continues, it is also creating an urgency for timely replacement of such assets. Each year, it is becoming a competing prioritization challenge to budget funds for acquiring new assets to meet expanded demands for service delivery while having to continually defer the replacement of existing assets.

"In an effort to rectify this structural shortcoming and the resulting funding gap, the city manager in his budget for FY 2015-16 has proposed to establish an effective management system by which funds will be budgeted and dedicated each fiscal year for the timely and planned replacement of these types of assets by the end of their economic useful lives. The proposed budget, as amended by city council on Aug. 1, includes $1,616,384 to seed the three internal service funds. The principal source of funds for establishing these three funds was the $1,250,000 accumulated balance in the City's Emergency Reserve Fund which the City Council repealed under Ordinance No. 826 which was passed on September 16, 2014.

"For a growing and progressive city such as the city of Kyle, the ramifications of delaying the implementation of a comprehensive asset replacement program can be significantly expensive for the taxpayers when considering such cost factors as for safety, reliability, service delivery, emergency response, customer service, maintenance and repairs, salvage value, replacement cost, etc. It is important to note that there is absolutely no guaranty that either funding will be available next year to implement this much needed program or that other higher priority projects will not defer it for yet another budget cycle. "

So there you have the explanation and it sounds reasonable, up to a point and that point is the current proposed tax rate increase as well as the fact that I could find plenty of other expenses in the budget for vehicles ($75,000 for a police patrol vehicle; $59,000 for a truck/trailer for the parks crew; $50,000 for a roller/trailer for Public Works, etc.) Now I guess it could be argued that the internal service fund is money being set aside to replace those vehicles that haven't even been purchased yet (as well as others in the fleet). But does that mean the more equipment the city buys, the more has to go into the fund?

But, as Tenorio said, for every $200,000 you cut from this General Fund expenditure, you reduce the tax rate by one cent and if you defer $1.4 million of this fund until next year, at least, the owner of that $200,000 property is now saving $140 a year and that could go a long way toward buying school supplies during the next tax free weekend.

Now let me be clear on this. I’m not taking a position on these internal service funds. I’m just saying to look at Hendrix’s explanation for this, weigh it against your own budget and decide which is more important to you right now: Establishing these internal service funds for the reasons Hendrix cited or taking a one-time savings of $140.

Whatever you decide, make sure you show up at City Hall next Wednesday at 7 p.m. and let your voice be heard. This is your money these folks are playing monopoly with and you have the absolute right — I should say you have the responsibility — to tell them exactly how you want it raised and how you want it spent.