2011 – 12 Goodyear Budget. Part 1, Revenues


The City of Goodyear made slide presentations in April in which they said that they had a “balanced” budget.  Two days ago, I managed to obtain a copy of the 102 page May 10, 2011 details of the “Staff Proposed” budget which your city council plans to approve five days from now.  Here is the entire 102 pages. 2011-12 Draft Budget  Where I show page numbers in what follows, I refer to this document unless I explain otherwise.

How can they with a straight face claim to have a balanced budget when;

  1. An additional $20 million dollars was borrowed by the city last year (net $7mil) to increase the city’s total debt to nearly $320 million; over 5 times General Fund Revenue?
  2. Projected revenues are $172 million while total expenditures are $213 million?
  3. Citizens are over charged on their utilities by $3.5 million per year in order to fund the General Fund?
  4. Projected city revenues are expected to increase by 75% over last year?  Think about how ridiculous that is in this economy.
  5. New borrowing and unbalanced spending have led to declining fund balances each year, dropping from $110 million in 2010 to $68 million in 2011 to a projected $27 million by July of 2012?
  6. Secondary property taxes are projected to drop to $4.4 million per year but Goodyear’s General Obligation bonds require $9.6 million per year to avoid default and secondary property taxes are supposed to pay for that?

At the meeting Monday at 6 pm in the Justice Center citizens will have 3 minutes each to give their input.  Immediately thereafter, city council will vote to approve the budget.  How much chance do you think there is that they’ll change anything based upon what you have to say?

In this post, I’ll focus on the nonsense that passes for Goodyear’s 2011-12 projected  revenues which city council claims will increase by 75% over what they’ll collect this year.

In summary, Goodyear is increasing revenues by passing on to taxpayers about $7.6 million in tax increases, utilities over charges, and wishful thinking about auto registration tax increases and new revenues from Maricopa County. I searched for changes in the auto registration taxes as well as anything that Maricopa County has offered to increase grants to cities and I didn’t find anything so I don’t think they’ll see either of those last two revenues.  But by adding them in now it allows them to claim that everything is so much better than the last few years.

Revenues

Forget the $213 million pie chart labeled “Where the Money Comes From” in the “In Focus” magazine you got in the mail from Goodyear last week.  In that chart they mix projected revenues with existing fund balances and capital spending all in one. It’s allowed, but it’s still baloney. That’s because cities do their accounting based upon cash balances.  Saying they have $47 million of “Fund Balance” money available is like you saying, “I can afford a $97 pair of shoes even though I only earn $50 per month because my check book balance is $47 dollars”.  We all know you can’t afford those shoes with that monthly income. Goodyear’s Fund Balance has dropped from $101 million in 2010 to $68 million in $2011 to $21 million in the 2012 budget.  I’ll write more on that in a future blog post.

Last year (2010-11) Goodyear’s projected revenues were $121 million, pg 285 2011 budget book.  How much did they get?  Only $103 million or 20% less than projected pg 75.  In this new budget (2011-12), they ask you to believe that revenues will magically increase to $172 million from $103 million, a 75% INCREASE!  Let’s look at where they think that additional $69 million (almost equal to the entire General Fund) will come from.

The following table summarizes.

2011 Budget Revenues

2011 Estimated Revenues

2011 Shortfall

2012 Budget Revenues

Budgeted Revenue Growth

$ 121

$103

$18

$172

$69

$61.209

$0?

“proposed” ID

$55

$55

$12

$0

“Misc” Grants

$9

$9

Prop tax increase

$0.2

$0.2

$27.7

$29.3

Increased Sales Tax

$30.6

$1.3

$1.6

$1.58

Auto Lieu

$4.9

$3.3

$7.13

$7.13

2nd Prop Tx

$4.4

$(2.6)

$0

$0

MAG

$0.906

$0.906

Utilities overcharge

$3.448

$3.448

Using the table above as reference, there are eight (8) areas that define Goodyear’s 75% revenue increase magic.  Everything else is either insignificant or a wash meaning, other revenues are at best flat year over year.  Here is how the $69 million wishful revenue increase breaks down;

  1. $55 million pg 73. Never happen.
    Last year Goodyear put a $61.209 million  “placeholder” in the sources and uses table on page 279 of the budget book and called it “Bond and Loan Fund (Special Project)”.  That never happened.  This year they’ve put $55 mil in revenue in a newly invented line item called “CIP Developer Contribution/ Proposed Improvement District, Reimbursement Expense” pg 73.  I believe if there really were a developer out there ready to give Goodyear $55 million in the next 12 months don’t you think we would have heard something about it in the last election cycle?
  2. $9 million pg 72. Never happen.
    In February (Feb 13 post, item 4) I told you about the $12 million in “Miscellaneous Grants” that had been wished into last year’s budget revenue.  Exactly ZERO of that materialized.  This year they toned it down to only $9 million pg 72.
    Now we’re only looking for a $5 million revenue difference.
  3. Add $2.6 million to that pg 72.  Secondaryproperty taxes dropping.
    Secondary Property Taxes, which are supposed to only be used to pay down General Obligation Bonds approved by voters, is falling by $2.6 million pg 72. This is revenue that Goodyear has to make up from somewhere because they don’t want to default on their bonds. The drop in secondary property taxes is as a result of property values dropping and the resultant loss of equity value of our homes.  Separate but related; Goodyear needs $9.6 million to pay their existing GO Bonds in the coming year pg 82. But they only expect revenues of $4.4 million pg 72. Ouch, over 100% shortfall.  How long can that continue until they want to more than double your secondary property taxes?
    Now we’re back up to looking for $7.6 million.
  4. $3.3 million, Auto Lieu Tax pg 70.  Smoke and mirrors.  Auto Lieu Tax is the annual registration fee you pay for your car.
    In this budget year, Goodyear thinks that the taxes they collect from your car registration are going to  INCREASE by $3.3 million or nearly 200%! The past two years the city only collected about $1.6 mil, but this year’s budget expects nearly $5.0 million.  Perhaps all of Georgia’s supporters have agreed to buy new Rolls Royces.  As I said above, I’ve looked for any evidence of a major change in this and could find nothing and the only info I can get from city hall anymore is from the Records Requests folks.
  5. $1.3 million in Sales Tax collections pg 70. OK.
    I’ll agree with that. And if we have significant inflation, it could be as good as last year’s budget under-call of $1.6.
  6. $3.4 million in utilities over charges applied to the General Fund pg 69, Transfers out of Enterprise, Transfers In to General Fund.
    As Georgia admitted in her recent email to a resident asking about one of my posts, Goodyear has been overcharging you for your utilities for years now and spending the money in the General Fund.
  7. $0.906 million MAG Grant pg 73.  Dream on.
    Another new line item. Do you think Maricopa County is going to hand us nearly a million dollars that we’ve never seen before?  Maybe there is some deal out there but based upon Goodyear’s track record of projecting phantom grants I doubt it.
  8. $0.200 million Primary Property Tax increase pg 70 first revenue item.
    Despite Georgia’s insistence that this is not a property tax rate increase, they are increasing your rate.  I repeat, and the AZ Republic agrees AZ Rep calls it a tax rate increase0001.

Once you strip away all the nonsense, that’s all there is, folks. $7.6 million in year over year revenue increases all coming as a result of your taxes and utility fees going up and some wishful thinking. And all so that the Goodyear City Council can continue to feel good about themselves, keep on spending, (which is what they do), deliver for their developer and city employee friends, and thereby get re-elected.

But you don’t have to believe me.  Just go to the taxpayer meeting on June 27 where citizens are finally allowed to ask questions and make comments about this budget.  Only problem is, as I said above, the taxpayer meeting is scheduled at 6 pm and council is planning on adopting this budget IN THAT SAME MEETING.  How many changes to you think they’re planning to make based upon what you or I have to say?

In my next blog post, I’ll show you how in the past year Goodyear borrowed another $20 million dollars, increasing your debt by $7 million while your city council keeps telling you how great a year we’ve had, that we’ve “turned the corner”, and that soon we’ll be able to build new libraries, raise salaries, and all manner of “visionary” spending that they dreamed up at their catered retreat last week.

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2 Responses

  1. OK, balanced means that revenues – expenses = 0. The spreadsheet shows it so it must be true!! You have it right, the city is on it’s way to bankruptcy and every year they borrow more, increasing debt. The only way you will EVER be able to tell how they bury expense and spend money is to have a presentation line by line of budget vs actual, not some crazy budget book where you have to flip pages to find numbers and be an accountant to add everything up. But the accountants come in EVERY year, look at whatever Larry puts in front of them and bless the books – another smoke screen to say that it looks “OK”. The auditors don’t look into the books, they look at them.

    BUDGET ACTUAL VARIATION
    18m
    line, by pretty little line – then make them explain the variation… that would be entertaining.

    • Good comments, Mary. It seems to me that what you describe is exactly what I would expect every city council person to do. Otherwise, who is representing the taxpayers in this budget negotiation?

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