Accounting changes from the 14 Jan 2013 council meeting

Update: The council meeting was not useful in understanding the $600,000 loan from the Fire Capital Fund to the Fire Operating Fund. It was also not useful in understanding the accounting change. However, I broke down and made personal inquiries. As always the city staff and the council members were helpful and the one on one information was informative.  But what good is it if only one person outside council knows "the reason" while the rest of the community has to guess?

Here is a link the Jan  14, 2013 agenda as posted on the city's website

Turns out according to the finance director the Fire Capital Fund is not restricted to capital expenditures. Therefore, borrowing from the capital fund for operations has no restrictions. In fact, if council wanted they could transfer the money out of the fire capital fund into the fire operating fund. This would mean the city would no longer have money in the bank to build a fire station up in the north end of town. It would also mean we wouldn't need a new "fire and police" income tax levy this May.

The logic behind the accounting change according to the finance director; Part of the income tax the city collects goes to the school district. Previously, the city paid the school using money from the general fund. The city decided to re-categorize the previous payments so they appear to come from the three capital funds. The way they decided to split the money was based on how much of the income tax would have been deposited into each of these capital funds. Thinking about our conversation as I write, there are still a lot of things that don't make sense - for instance, during this discussion we spent a lot of time talking about TIF funds. In fact, I know he said the "special assessment" we collected as TIF money was what the city was splitting up. But this would not fit the explanation because the TIF "special assessment" would never have gone into the general fund and so the schools could not have been paid their portion of the TIF from the general fund. Also, the school's five year forecast does not show any recent income tax revenues. Therefore, my brief "off the cuff" discussion after a meeting was an effective way to satisfy the concerns of one citizen. It would have continued to be effective if that were the last time I thought about it. So I am back to my original position of wishing items like this were available in the preparation material for committee meetings and then fully discussed during the committee meetings. By the way I could suppose that the "income tax" money the city gave to the schools in years past had something to do with the .25% the city decided to stop collecting a few years ago (remember we use to have a 2.25% income tax rate and council actually reduced that rate to 2%. I'm pretty sure the .25% that was dropped was shared between the school and the city). But that was not part of our discussion nor would it make sense in terms of this accounting change. And quite frankly, I don't believe I should have to be guessing.Because when I guess I write things like:  Will accounting tricks help keep city from bankruptcy? 

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Will accounting tricks help keep city from bankruptcy?

I was just reviewing the agenda items for the 14 Jan 2013 council meeting.  According to item D the city's finance director is planning to ask council members to approve transferring $501,219.14 from capital fund accounts to the general fund.  Two important items about these transfers: 1.  These transfers do not show up as agenda items of any committee meetings so an explanation of the accounting change council plans on using has not occurred within the public domain.  2.  The capital funds being raided have been established by a popular vote of the residents of Huber Heights via passed levy for the sole purpose of supporting the capital improvements for which they are named. 
 
Also, of interest is the finance director plans on asking council to borrow $600,000 from the fire capital fund in order to support operations.  This item also does not show up as an agenda item on the Public Services and Safety Committee or the Administration Committee.  Therefore, neither the citizens group responsible to address the public safety nor council members have publically discussed the ramifications, terms and conditions of this loan. 
 
Below is a reproduction of all the transfers the finance director plans to make according to agenda item D. 
 
These supplemental appropriations are for the following purposes:
 - $179,207.54 budget reduction due to January health insurance payment for our new provider paid in December 2012
 - $600,000 for a possible Advance from the Fire Capital Fund to the Fire Fund for liquidity needs prior to collection of tax dollars
 - $600,000 return of the Advance to the Fire Fund (if it was necessary)
 - $14,000 for County Auditor and Treasurer fees for tax collection
 - $5,000 additional for crime prevention expenses based on WalMart donation to the city
 - $250 for drug enforcement expenses
 - $232,546.36 reimbursement from Street Fund to General Fund for accounting procedure change
 - $268,145.51 for 9-1-1 Wireless project from funds received
 - $26,292.83 for accounting software not spent in 2012
 - $83,709.08 reimbursement from Fire Capital Fund to General Fund for accounting procedure change
 - $184,963.70 reimbursement from Street Capital Fund to General Fund for accounting procedure change
 - $11,282.55 for Federal Equity Sharing projects from funds received
 - $115,500 for Water Fund projects began in 2012
 - $9,000 for the Cash Surety Bond Fund
 - $18,000 for fire insurance expenses to be reimbursed from escrow deposit