Mayor's Weekly Update 2/6/10 Please explain To Me

[Bill Rook]

Originally Posted by piratexox

Luke the budget game continues. We're going to shorten this cycle. Check it out here:

http://mo-lebanon.civicplus.com/arch...37&Type=&ADID=

Look under Jan. 23rd.

Pirate, I remember them saying this was to bring the city in line with the state's fiscal year. Nothing fishy here.

[piratexox]

Originally Posted by Bill Rook

Pirate, I remember them saying this was to bring the city in line with the state's fiscal year. Nothing fishy here.

You're right Bill.
The thing I was thinking is that it will be harder to read for this year and the next. It has become more itemized and now with it following the State calendar it will be more in uniform. In the long run I think that's for the better.
I read a budget 2 ways. 1st bottom line category to compare YTD and to the projection. 2nd I look at the itemized entries to see what needs adjusted for YTD or if the projection is realistic to obtain.

ETA: My concern is are the projections for the entire year or just the period the budget will run?

[Bill Rook]

Originally Posted by piratexox

You're right Bill.
The thing I was thinking is that it will be harder to read for this year and the next. It has become more itemized and now with it following the State calendar it will be more in uniform. In the long run I think that's for the better.
I read a budget 2 ways. 1st bottom line category to compare YTD and to the projection. 2nd I look at the itemized entries to see what needs adjusted for YTD or if the projection is realistic to obtain.

ETA: My concern is are the projections for the entire year or just the period the budget will run?

I know very little about reading governmental budgets. The more itemized they are, the more questions I have about various line items, why they are placed under subcategories that don't appear to be related and why they are funded from those sources. This is why the majority of citizens never complain, until they see a final tally of a surplus where it shouldn't occur or a deficit that nobody likes. Otherwise, they simply don't know the difference.

[Luke]

Originally Posted by Bill Rook

I know very little about reading governmental budgets. The more itemized they are, the more questions I have about various line items, why they are placed under subcategories that don't appear to be related and why they are funded from those sources. This is why the majority of citizens never complain, until they see a final tally of a surplus where it shouldn't occur or a deficit that nobody likes. Otherwise, they simply don't know the difference.

This is why the public places their trust in the elected officials to do what is right and fair for the citizens. In the the case of the electric fund it is becoming increasingly clear that our own elected officials living amongst us here in Lebanon have betrayed that trust in the way they have mismanaged the electric revenue. They knew what they were doing was wrong. If you go back to review the video tapes of the city council meetings you can see and hear it in their discussions on the topic. They knew yet they still did it...raised electric rates 40% and stole from the electric reserve and electric revenue funds. They knew they were using electric money for things other than electric expenses. They split hairs with what the auditor wrote in the report. They went to the city's "wonderful" lawyer to figure out how to get around the auditor's recommendation. The mayor so blatantly calling it a "recommendation" and not something the city had to follow. Despite the mayor himself campaigning on the issue of the audit and doing what it took to fix any problem areas. The elected officials need to fix what they have done to the electric rates. Be honest in the evaluation with what it costs to provide electrical services to the citizens. They need to be completely transparent to the public with the costs. Let the citizens know what they are being charged and why. The only acceptable "why" is because somehow the expense is related to cost/delivery of electric to the citizens. They need to be innovative in ways to save the city money.

[Bill Rook]

Here are excerpts from the 2008 Audit:

[Utility customers may be paying too much for some utility services as a result of subsidizing the promotion of economic development and general city expenses through the payment of their utility bills. The city has transferred substantial amounts from various funds to the Administrative and Economic Development Funds without proper documentation or justification. City officials indicated the transfers are based upon the benefit provided to those funds; however, the city had no documentation to support these allocations. Approximately one percent of customer billings for electric, water and wastewater are transferred to the Economic Development Fund to promote economic development activities. The city has not established an ordinance approving or justifying these transfers.

Over $6.6 million was due to the Electric Fund at October 31, 2007, from the Economic Development and Airport Funds as the result of three interfund loans to cover two building projects for economic development purposes and for the building of an airport hanger. Loan repayments are funded by amounts received from building leases, and based upon current lease agreements, one loan will not be completely repaid until 2026. The city's budget and financial statement do not reflect the amounts owed to the Electric Fund for these loans. In addition, inter-fund borrowing is not appropriate as a long-term funding mechanism.

Interfund borrowing is not appropriate as a long-term funding mechanism. In addition, without proper presentation of the amounts due, the city's budget and financial statement do not accurately reflect the true financial position of these funds.

WE RECOMMEND the City Council:

A. Ensure utility rates are set to generate revenues as necessary to produce and deliver the related service.

B. Develop a methodology for determining the amount of transfers, retain adequate documentation to support the calculation of the transfers, and establish ordinances authorizing the transfers.

C. Discontinue the practice of making long-term interfund loans and ensure all loans are properly presented on the city's financial statement.]


The mayor was correct is saying that the auditor was only recommending. The auditor's power does not include directing anyone to do anything. Audit and recommendation is as far as it goes. Direction and compliance, in accordance with state statutes and other applicable laws, are AG and Judicial responsibilities. In brief by the auditor and further audit review, the AG's office must not have determined any of this as actual violations of law that must stop immediately or they would have taken appropriate action.

Audits can be valuable tools, if used to ensure compliance with the laws and considering recommendations to operate properly. But again, I saw no direction from the AG that directed Lebanon to suspend or cease use of the reserve for things other than those specifically related to electricity and providing it to the customer. No RSMo's were quoted in the audit directing the city to do anything differently. It only states the auditor was recommending the city ensure A., B. and C. above.

The previous and current councils haven't stolen anything. To the best of my knowledge, funds didn't go into anyone's pockets, excluding the library/True and employee bonus instances or maybe others not related to this discussion.

I have no faith in the city's ability to target the cost of providing electric service to us on their own. This "cost to provide service" study may give a ballpark figure, but that's all I expect it to accomplish. Until the city actually reduces the customer's current electric rate, (if in fact, MoPEP rates are lower) to bring the reserve to a stable or much less progressive amount, (minus repayment of past loans) I won't be satisfied they are truly committed to treating customers fairly. MoPEP rates may be cheaper in the long run and maybe not. But people say they are more stable than most. We'll see.

[AFRetired]

Until they get the electric rates straight I suggest any ballot issue asking for funding be turned down. Seems the only thing this city understands is money so hit them back by not approving ANY of their pet projects.

[momathome]

They try so hard to make it sound like they are doing us a favor.
One by delaying a rate increase then by splitting it up.
Well I did some math . And this is the true favor that they did for us.

Based on a $100 electric bill

Total rate increase if given at one time is 44% That would have been a bill of $144


this is the split increase they gave us

12% $112
16% $129.92
16% $150.71

We are paying just over $5 more per 100 per month, Than we would have if they had just done the 44% at one time. Now I know that does not sound like that much , but when you look at it like this see what you think.

In one year that is $60 more per $100
Now I dont know the number of households being served so lets just say 2000 homes . That comes to $120,000 a year that the city is getting for doing us a favor. You add that to the rebates they are getting and still will get for awhile even after they switch over to the new provider.
Now those kind of favors I could do with out.

[Bill Rook]

Originally Posted by momathome

They try so hard to make it sound like they are doing us a favor.
One by delaying a rate increase then by splitting it up.
Well I did some math . And this is the true favor that they did for us.

Based on a $100 electric bill

Total rate increase if given at one time is 44% That would have been a bill of $144


this is the split increase they gave us

12% $112
16% $129.92
16% $150.71

We are paying just over $5 more per 100 per month, Than we would have if they had just done the 44% at one time. Now I know that does not sound like that much , but when you look at it like this see what you think.

In one year that is $60 more per $100
Now I dont know the number of households being served so lets just say 2000 homes . That comes to $120,000 a year that the city is getting for doing us a favor. You add that to the rebates they are getting and still will get for awhile even after they switch over to the new provider.
Now those kind of favors I could do with out.

February's electric bill will be another large one... Since my last read, (20 days ago) I've consumed 1228kwh, for a total of $114.30. If it continues on the same path, I can expect a bill of $160+. But, that's cheaper than my last at $222.51.

[Luke]

Originally Posted by Bill Rook

Here are excerpts from the 2008 Audit:

[SIZE=3]...
The mayor was correct is saying that the auditor was only recommending. The auditor's power does not include directing anyone to do anything. Audit and recommendation is as far as it goes. Direction and compliance, in accordance with state statutes and other applicable laws, are AG and Judicial responsibilities. In brief by the auditor and further audit review, the AG's office must not have determined any of this as actual violations of law that must stop immediately or they would have taken appropriate action.

Audits can be valuable tools, if used to ensure compliance with the laws and considering recommendations to operate properly. But again, I saw no direction from the AG that directed Lebanon to suspend or cease use of the reserve for things other than those specifically related to electricity and providing it to the customer. No RSMo's were quoted in the audit directing the city to do anything differently. It only states the auditor was recommending the city ensure A., B. and C. above.

The previous and current councils haven't stolen anything. To the best of my knowledge, funds didn't go into anyone's pockets, excluding the library/True and employee bonus instances or maybe others not related to this discussion.

I have no faith in the city's ability to target the cost of providing electric service to us on their own. This "cost to provide service" study may give a ballpark figure, but that's all I expect it to accomplish. Until the city actually reduces the customer's current electric rate, (if in fact, MoPEP rates are lower) to bring the reserve to a stable or much less progressive amount, (minus repayment of past loans) I won't be satisfied they are truly committed to treating customers fairly. MoPEP rates may be cheaper in the long run and maybe not. But people say they are more stable than most. We'll see.

"Stole" was the word I chose to use to describe charging extremely higher than necessary electric rates to raise money to be used for something other than electric. The electric rates sound more like an unapproved tax. The mayor and council both know it's a very shady practice. They know it's a play on words they are using to justify these grossly inflated electric rates. It's a shame they take the citizens for fools. Look at the city letter they sent out Saturday trying to explain the increase. No where in the letter did they explain they were using the electric money to fund traffic signals, economic development, waste water system, or anything else they deem that needs some money. Why? The mayor made no mention of inappropriate transfers to other city funds in his weekly update. The city is intentionally trying to mislead the citizens of Lebanon about the true reason of the current electrical rates. Even check out the section entitle "City Efforts" in the letter. No mention the city is trying to become more efficient or put a halt to the mis-appropriation of the electric funds. Seems the section is more written towards leaving the door open for even higher rate increases. The city went through the expense and trouble of writing the letter yet only presented half-truths in it. Why not fully disclose they are using the electric revenue as an unofficial tax on city citizens because the city does not have enough total revenue and they do not know how to become any more efficient? The city needs to give the electrical system to Laclede Electric if they cannot resist the temptation to use electric revenue for non-electric activities.

[Luke]

Originally Posted by AFRetired

Until they get the electric rates straight I suggest any ballot issue asking for funding be turned down. Seems the only thing this city understands is money so hit them back by not approving ANY of their pet projects.

I would go a step further and start repealing the taxes that were already voted on. There's no law against repealing the taxes. It is the same principle the city is operating under in that there is no law saying we can't use the electric revenue for city expenses such as traffic signals, waste water, and economic development.