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Non-revenue revenue

September 29, 2012
Cape Coral Daily Breeze

To the editor.

A memo to City Council dated April 28, 2008 from then City Finance Director Mark Mason stated "Beginning with Fiscal Year 2009, estimated year-end balances, net of estimated accrued liabilities, will be included as part of the City Manager's proposed budget and will be part of the original budget as adopted by City Council."

That practice was established when Ordinance 55-08 brought forward $134,984,923 dollars after the 2008 budget was approved, yes $134.9 million dollars not disclosed in the original 2008 budget had been hidden (in plain view) from the taxpayers.

At this year's first Budget Public Input meeting, I asked if all available and anticipated (estimated) carry forward fund balances had been included in the 2013 budget which was being voted for approval on Sept. 20th. The answer after asking the same question for a second time at the second Budget Public Input meeting was "All balances available in the bank have been brought forward." Available in the bank is not necessarily all anticipated (estimated) carry forward balances as specified in the April 28, 2008 memo.

If there are other estimated carry forward balances not disclosed in the 2013 budget which has now been approved because they are not yet in the bank, will those funds show up later in the year in the city's first or second Budget Amendment and have the effect of increasing the city's budget with new "non-revenue revenue" for additional spending?

We have been through this drill before resulting most notably in Ordinances 55-08 and 126-08, which together increased the 2008 budget by an additional $227,103,000 million dollars, for a cumulative total amended budget of $721,702,000 dollars (rounded). Similarly undisclosed carry forward funds have also materialized in subsequent years, while not as large a sum as in 2008. Almost everything in the budget at the time it is approved is estimated, not cash in the bank. So why would there not be a best estimate of all carry forward funds included in the budget also?

Has it become standard practice to not include all estimated carry forward balances not yet in the bank in the original budget? If so, that perpetrates a deception on the public and City Council, and forces City Council to make decisions on approving the budget and setting the millage rate without being fully informed and seeing all the funds which will be available for the budget year. Failure to include all carry forward funds in the original budget is also a violation of FS 166.241(2), cited as finding #4 in the most recent State Auditor General's Audit of the City in 2006.

In that audit the State Auditor General's Office stated, "Failure to consider beginning net assets in preparing the budget diminishes the City's ability to determine appropriate increases or decreases in revenues or expenses that may be needed for the fiscal year for which the budget is adopted. If balances brought forward are significantly understated, the amount of revenue sources contemplated in the proposed budgets may be increased beyond those amounts necessary to carry out planned expenses."

Next the City Administration will be asking for additional, new taxes under the guise of "Revenue Diversification" when it appears all estimated prior year carry forward funds which are not yet available in the bank may not be included in the approved budget. But more on that topic in a future letter.

How unfortunate the new Budget Review Committee (BRC) chose not to review the 2013 Proposed Budget and provided no input to City Council. Was that by design and planned to avoid raising questions or issues about the budget?

I would like to thank Mayor Sullivan and Councilmember Leetz for insisting that my question was answered at the Second Budget Input meeting after initially being ignored at the first meeting, although the answer still leaves me with questions.

Lee Mars

Cape Coral



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