You and GY City Council Get Buffaloed (Again)


Editor’s note;

  1. If you are going to read this article, don’t omit the examples toward the end of the article, they are the best part and if you only have a short time and want to really get upset, just read the examples.  Specific examples are always good.
  2. Goodyear will have a budget meeting for citizen comments on May 2 at 6 pm.  If you want to hear more misleading, unimportant, and mostly irrelevant political advertising about GY budgets you will hear it there.

In an article Sat, April 21, about Goodyear’s current budget discussions, the AZ Republic’s John Yantis recently reported that;

“While the operating budget is higher than fiscal 2012, it is $12 million less than in 2008, when the city had $78 million to spend.”

In reality, in 2008 including borrowing over $60 million, Goodyear had $205 million in total ‘revenue’, $82.5 million of it in General Fund revenues, and spent about $72 million on operating expenses. How does any of that reality translate into the “$78 million to spend” number that Yantis reported from presentations that were given at Goodyear’s budget meeting?  It does not translate at all.  It is apples and oranges, because what Goodyear reports in these meetings are current and past budget or planning numbers, just made up, imaginary, not based in reality in any way, shape, or form.  Are budget numbers useful when they are developed? Of course they are, but that still does not make them REAL or actual in any way.

But $12 million less, sounds pretty good, doesn’t it? And that is why city of Goodyear reports it to you, the AZ Republic, and GY city council. It is meaningless and irrelevant but it still sounds good. While it may not be an untrue statement, as I have said before*, it is at least misleading and in this case an irrelevant statement because it is based upon figures that are simply unimportant. Those figures are IMAGINARY.  Like Harvey the rabbit. Who cares about what was planned in a budget in 2008 vs what is being planned in 2012?  What is important is how much was SPENT in 2008 vs what is planned to be spent in 2012 or any other year.

Can you tell me how much you planned to save in your household three years ago around the kitchen table when you tried to decide if you could afford to buy a new car?  Of course not.  You look at how you are actually doing now vs how much you actually spent then.  Then you check your bank account (cash on hand) to see how you’re doing. Goodyear’s not doing so well.  They have so much debt that they can’t even sell bonds anymore to borrow money.

This is not about the newspaper doing its job. I don’t blame AZ Republic reporter, John Yantis.  I’m sure he has deadlines, editors, other stories, lots of things to do, and like most reporters he will report to you what the city of Goodyear tells him.  I presume that is what he has done here.  What is unfortunate is that how our city tells us and our city council what is going on financially appears to me to be designed to present the most favorable view possible, rather than to be informative.  And what is even more unfortunate, is that the people who are supposed to represent the taxpayers and demand to have reported clearly what is going on (city council) either do not know how to or are not interested in doing it.

What you see and what AZ Republic and others write about is simply the most favorable representation that Brian Dalke and others can dream up instead of telling you information that will give you a realistic picture of what is going on with city SPENDING, not BUDGETS.

It should be easy, you say, to understand Goodyear’s financial position, and whether or not spending is being managed properly, just look at the myriad of city publications on their website with catchy names like, “Transparency in Government“, or the last ten years of “Annual Budgets“, or “Comprehensive Annual Finance Report” (CAFR).

A few specific examples will show why this is not the case.

Examples

  1. Operating Budget
    By “Operating Budget”, John Yantis is referring to slide number six of a 23 page slide presentation that was given to GY council April 16.  This slide presentation is the most detailed information so far that the public has on the current budget expense deliberations.  If you want more you have to send in a records request.  Slide six shows “Operating Budget” history since 2008 and that is where the $12 million reduction info comes from.  It should be easy to look in the financial data section of each year’s budget book and find out what the “Operating Budget”  was in each year and compare it to what the actual spending was in that year on a line by line basis if need be, in order to get a realistic idea if only budgets have gone down or if actual spending went down too.  The problem is, there is NO line item in the financial data portion of ANY GY budget book called “Operating Budget”.  One would think that since that is the term being used to give council a feel for city spending going forward vs what the city has been spending that Dalke would use something understandable, clear, and easily referenced. Not Goodyear.  “Grand Total All Funds” is in there, “Total Operating Departments” is in there, even “Total General Fund Revenues” is in there, but not “Operating Budget”.  On page 51 of the 2010-11 budget book there is an entire page that is titled, “Department Summary FY 2011 Operating Budget”. But can you find there any number that corresponds to the FY 2011 $61 million number on slide six?  I can’t find it either.  On page 6 of the same FY 2010-11 budget book Fischbach writes that the “Operating Budget totals $70.8 million”, not the $61 million in Dalke’s slide.  Isn’t that curious?
  2. Comparable 2011 Spending? Wait Two Years.
    How about comparing what was actually spent in FY2011, which ended in June 2011, or nearly a year ago, to what is estimated will be spent for the current year (FY2012) and especially compared to what GY wants to spend next year in the FY2013 budget?  The problem here is that in all the reports I reference above there is nowhere where one can find the total actual spend for 2011 on the same basis as the budget books.  That is because the CAFR is on a different basis than the budget book and the quarterly financial statements are NOT published in the 4th quarter (only the CAFR). What that means is that the 2011 actual spend will not be reported on the same basis as the budget book until the next year’s budget book is published.  Nearly two years later.
  3. Budget Book Estimates Should be Good Enough, After All GY Wins Awards for Financial Reporting
    So what if actual spend is only reported on the same basis as the budget book two years after the fact. We and city council can use the previous year estimates in the budget book for what end of year spend will be. Let’s check if that would work.  Page 293 of the FY2010-11 budget book reports “Total Operating Departments” spending FY2010 Estimate at $71.735 million.  One year later, on page 232 of the FY2011-12 budget book it reports “Total Operating Departments” spending FY2010 Actual at $66.107 millionA $5.63 million difference or nearly 9%!  That is not even good enough for government work, as the saying goes. When a private business reports it’s financial accounts and they are off by nearly 9% somebody usually goes to jail.

Conclusion

Goodyear financial reporting at budget time is no more than a political advertisement. The people on city council do not have reliable, meaningful information in front of them in order to make decisions about spending your money.

What City Council Should Do

The problem with city council is that the only one who may understand what is going on is Pizzillo and he seldom asks any questions. Gelzer talks a lot but it is usually to just tell you how much he (thinks he) knows. Lauritano may be smart but she’s a lawyer and with the exception of tax lawyers, I have rarely found an attorney who was a financial genius.  Wally and Joanne?  I don’t think they even know what they are looking at.  Same with Georgia. Stipp asks questions sometimes, but if he or anyone else tries to really ask questions that either challenge, clarify, or try to understand what they are seeing Georgia usually cuts off discussion.

The city manager and finance department are presenting information in a way that is designed to confuse and the members of city council are probably fearful of looking stupid in public by asking enough questions.  We need to get people on council who are financially capable, who don’t have city ties, and who are willing to demand that the data be presented in a form where real spending comparisons can be made before future spending decisions are made.

*I’ve told you this before, (the last time was June of last year, here is a link to that article. LINK.

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2 Responses

  1. Great job Howard… Nice to see that someone else understands financial reporting and how misleading Goodyear’s is… and Joe Pizzillo, you should be ashamed of yourself. You know EXACTLY what is going on. How do you sleep at night? Actual vs Budget = VARIANCE ~ Which Should ALWAYS Be Explained…

  2. You really hit a sore spot Howard… 🙂

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