City Cash Position is Far Less than Reported by the City Manager
At the August 16, 2022 City Council meeting, in her financial report, the City Manager stated that during her tenure with the city, accounts had gone from $800,000 to $3 million and was healthy. Specifically, she said:
“So again, we’re still sitting very healthy. Like I said when I started here our total like [sic] cumulative net balance between everything was about $800,000. And, right now we are at that three million, so, [sic] and still remain 100% debt free.”
The $3 million dollars reported by the City Manager appears to be remarkably misleading. This, considering that her statement made it appear that just three years prior, the City had $800 thousand dollars (implied available as cash) and now had a “net” of $3 million dollars (implied available as cash). Upon analysis, she was apparently actually stating a combination of the city’s (gross) total assets, and added in a significant amount of money – $882,025.47 – which the city does not even own.
As demonstrated by an information received through a recent information request, the city’s actual available capital (cash) balances is almost half of what the City Manager reported to the City Council in her financial report.
Here is the breakdown of the actual fund balances:
Balances: Cash or Cash Equivalent
% of $3 Million Reported
|City of Simonton Cash||$1,586,939.66||52.90%||IS a City Asset|
|EDC “A” Cash||$216,378.15||7.21%||IS an ESD Asset|
|EDC “B” Cash||$665,647.32||22.19%||IS an ESD Asset|
|TOTAL Cash||$2,468,965.13||82.30%||of the $3 Million reported|
What items were included in the $3 million dollars?
The City Manager appears to have included the money that is not even owned by the city, but simply held on account, because the funds are actually owned by our two EDC’s, which are independent corporations, with boards of directors appointed by the City Council. None of the EDC assets, including their cash, contribute in any way to the city’s own cash balances.
Further, in order to achieve the $3 million dollar mark, it appears that the City Manager must have included the value of our City Hall along with value of miscellaneous assets such as the flood pumps, furnishings and office equipment because otherwise it is impossible to arrive at the $3 million dollar number.
As the city manager stated in her remarks, “So again, we’re still sitting very healthy.” And so, even with this misreporting of the City’s cash assets, the bottom line appears to be that the City is still in a relatively “healthy” position, especially considering that, sales tax revenues are up and property values continue to provide the greatest momentum for increasing revenue for the city.
Important questions remain to be answered:
- Why did the City Manager misreport the city’s financial status as $3 million dollars instead of 1.57 million?
- Was the misreporting a simple oversight or was it intentional?
- When the 2022 budget was considered, did the City Council know how much money was actually available?
- While preparing the 2022 annual budget, did the City Council consider limiting their operational expectations prior to proposing such a drastic increase in property taxes?
- While the 2022 annual budget was being finalized, did the City Council scrutinize their discretionary expenditures and consider cutting them in order to operate within their means?
It is clear that the entirety of the capital (cash) assets reported don’t fully belong to the City and so, they are not fully available for budgeting purposes. This, because the actual amount of available dollars, $1,589,939.32 falls well below the amount that was reported by the City Manager as $3 million dollars.
Even if the (almost) $900,000 held by the two EDC’s had been correctly included along with the city’s own cash, the only way that the $3 million dollar number can be achieved, would be by also adding in the value of the real estate value of City Hall as well as the value of other property such as the flood pumps and the trailer – none of which are considered in any way as liquid.
This further calls into question the manner of calculation of the $800,000 amount that was mentioned in the City Manager’s statement that, “…when I started here our total like [sic] cumulative net balance between everything was about $800,000.” Where did this number come from?
At the end of the day, the City Council as well as the Citizens deserve to have finances reported in a detailed and factual way so that everyone knows our true financial position.
Had greater and more accurate disclosure of the city’s financial position been provided for the last few years, perhaps there would have been greater public support for the recent incredibly large tax increase.