Budget Deadline Looms

Tonight's regular city council meeting starts off with a public hearing on the 06-07 budget. This will be the second review of the city budget by city council. The city administrator finished this budget proposal on August 29th. This is in compliance with the state law that requires the proposed budget to be filed with the city clerk 30 days before the tax levy. The budget officer (mayor) is supposed to be the one who prepares the budget draft and files it with the clerk. Fortunately our city administrator, to his credit, took care of this important task and met the deadline. Unfortunately, the draft being reviewed by city council on September 28th is the same version as the draft filed on August 29th.

While there were many comments and suggestion at the September 21st budget hearing, no changes were made to the draft in preparation for tonight's meeting, so council will be discussing the same budget again tonight instead of an updated version. For example, a request was made to add funding for the Visionaries in Preservation program to survey historic structures in Marfa. This is part of the preservation program that started in 2002, and council agreed to pursue a $10,000 matching grant from the Texas Historic Commission to fund this survey. Marfa was awarded the grant and fund raising is in progress with donations and city money planned to be matched by the THC grant. Council has approved this project and been advised of the progress for a year. They discussed adding this to the budget a week ago, but Mr. Sauceda refused to add it to the budget for tonight's public hearing.

My August 29 printout of the proposed budget shows the city budget with a surplus of $35,000 for next year. Mr. Sauceda explained that he planned a four percent raise for all employees including himself with that surplus according to the Sentinel. Excuse me, didn't the administrator get a $15,000 raise last year while regular employees have gone years without? And if he plans to raise salaries, shouldn't that be in the budget instead of a verbal plan to spend the excesses? And for crying out loud, how can the city administrator be planning to spend the excesses when he has not made any of council's changes to his draft budget yet? We don't have a surplus until the budget is finished; don't go spending it already!

The 06-07 budget was on the agenda for the September 18th meeting but they never discussed it because of lengthy discussions on the tax increase and amending the 05-06 budget. The 06-07 budget was discussed for the first time at the September 21st city council meeting. This was listed as an agenda item and not a public hearing. Tonight's discussion of the 06-07 budget will satisfy the public hearing requirement in state law. By the way, the administrator did publish notices on the 14th and 21st for the budget hearing to satisfy budget hearing laws. He gets credit for that. Too bad we botched the tax hike notices so badly.

Let's review some of the budget laws as listed in Chapter 102 of the local government code on municipal budget:

• The budget officer must file the proposed budget with the clerk 30 days before the date of the tax levy.
  
• The city must hold a public hearing on the proposed budget. The public hearing must be scheduled before the tax levy but at least 15 days after the budget is filed with the clerk.
  
• The date, time and location of the budget hearing must be published in the paper. This notice must be published 10 to 30 days before the budget hearing.
  
• On final approval of the budget, the governing body must file it with the clerk.
  
• The governing body may only levy taxes in accordance with the budget. In other words, the city should prepare a budget, find out how much revenue comes from the various sources, and then determine what the tax rate needs to be to fund the budget. In our case, we are raising the rates to the highest level that avoids the possibility of a tax rollback election. This is being done before we have finished the budget.
  
• "After final approval of the budget, the governing body may spend municipal funds only in strict compliance with the budget, except in an emergency."
  
• "The governing body may authorize an emergency expenditure as an amendment to the original budget only in a case of grave public necessity to meet an unusual and unforeseen condition that could not have been included in the original budget through the use of reasonably diligent thought and attention. If the governing body amends the original budget to meet an emergency, the governing body shall file a copy of its order or resolution amending the budget with the municipal clerk, and the clerk shall attach the copy to the original budget."
  
• "This chapter does not prevent the governing body of the municipality from making changes in the budget for municipal purposes." This is a huge loophole to the emergency-only clause above. Through this hole drives the truck of end-of-year budget amendments

We are headed down the same budget path as last year except we haven't passed the October 1 deadline yet. City council is behind schedule on budgetary review. They will be holding a budget hearing on Thursday and voting on it Friday. We are still working from the August 29th draft of the budget. Last year, council approved the budget with a list of vague verbal changes. I say vague because there did not seem to be motion and votes on any changes so all we have is a tape recording of a conversation with verbal agreements of line item changes. Council did not have a final printout of the actual budget when they voted. As discussed earlier, the printed version did not appear for another ten months. By then it was edited with whiteout instead of being done on the computer. This is because ten months had gone by and it was too difficult to go back into the budget computer after so much time had gone by. There is nothing illegal about whiteout. But the use of whiteout instead of a computer led to 26 math errors on the official budget. More importantly, laws were broken by not filing the budget with the city and county clerks immediately after adoption.

Additional laws were broken. In August our independent auditor and management consultant, CPA Dan Painter, worked with Mr. Sauceda on ORCA grant accounting and budget consultation. The outcome of this consultation appeared to be the first and only paper version of the 05-06 budget, entry of the adopted 05-06 budget into the computer (we had been running off the proposed 05-06 budget all year), the recommended 05-06 budget amendment, and the proposed 06-07 budget. All these things happened in August. I want to repeat something I have mentioned before because it is very important and has not been adequately addressed by council. When the budget was finally entered into the computer for 05-06, it DID NOT correlate with the budget that council approved. A minor issue is that the gas company revenue was understated by $81,000. This was an accident.

The serious issue is that TEN LINE ITEMS appear to have been changed from what council approved ten months earlier. A line item for Sales/Tax Expense ($28,244) was added to public works to correct an omission. Three public works revenue line items were increased by about $15,000 to reflect higher revenue than planned. Six expense line items were reduced by $4,400. These items appear to be changes that reflect what was actually happening with the expenses ten months after the budget approval. By changing these line items to fit the actuals, it looks like more money is available for other line items. These changes appear to be illegal. Only council can change the budget. Budget changes must be made through an ordinance. The proper procedure is for the administrator to bring the items to the attention of council and let them approve them via ordinance. Instead the budget was changed behind the scenes.

One other minor point is the youth program. Council put only one month into the original budget a year ago. In the month or two following, they gave in to public outcry and decided to fund the entire year. Council never voted to amend the budget via ordinance, so the belated change to the budget in August to enter the full year of youth program was not legal.

The 05-06 budget is a mess. There is the version that council adopted with verbal changes. There is the paper copy ten months later. There is the copy in the computer. None of these are the same. This is contrary to state law and proper fiscal management. Now we have another version in the form of the proposed 05-06 budget amendment that council will consider on Friday. There is not enough time to sort out all these problems AND address the over budget items discussed in an earlier post. Our city attorney seems to say that if we amend the budget at the end of the year, all these infractions become legal. Is that like regaining your virginity?

The city council finds itself in another difficult position. Do they amend the 05-06 budget to fix known problems and also approve budget changes without proper consideration? This is essentially a whitewash of the whiteout. Or do they reject the amendment and end the year with a seriously flawed budget that reflects poorly on the city and will be a task to audit? They were elected to make these decisions. It is too late to turn the calendar back and deal with the budget properly throughout the year. What is best for Marfa? Amend the botched budget with a last minute amendment or let the auditor straighten it out?

No matter what, I would like to make a suggestion that was originally offered by Carl Robinson. The council should ask the auditor to do an additional task beyond the financial analysis. The auditor should also audit Marfa's fiscal practices and procedures for dealing with the budget, bank accounts and debts to help council do things right this year.

If the city fails to get the 06-07 budget approved by Friday, we repeat last year's fiasco and are stuck with the tax rate from two years ago for a second year.