City audit spotlights areas of concern / LJWorld.com

Archive for Monday, August 25, 2008

High debt burden, low asset totals seen as troublesome

The city's finances are being put under the microscope as part of a new report by the city's performance auditor.

August 25, 2008

Financially, the city of Lawrence is in the same boat as many Americans: It needs to watch its rising debt levels and be more diligent in how it tracks some of its spending.

Those were the main conclusions in a new report put together by the city's recently hired performance auditor, who found the city's financial condition was still generally good but had worsened in the past five years.

"If you read newspapers from across the country, that is the story everywhere," said Michael Eglinski, the city's new performance auditor who was hired in February to help find efficiencies in City Hall. "You don't see any cities rolling in cash. It's all about how they're going to close budget gaps."

In Lawrence, however, some specific issues merit attention, the report found.

Lawrence's debt burden is higher than the median for 10 other university communities with demographics similar to Lawrence. But despite the higher-than-average debt levels, the city's asset totals are not growing rapidly.

Normally, higher debt levels would lead to higher asset totals because the money a city borrows generally is used to build roads, buildings, water mains and other structures that would increase the city's asset totals. Why Lawrence's ratio is somewhat off-kilter is a question city leaders should examine more closely, Eglinski said.

"Debt is not bad if you are issuing it to get what you need," Eglinski said. "But you want to avoid the classic trap of putting groceries on your credit card."

The report stopped short of saying that is what's happening - that the city is issuing debt for items that don't last as long as the debt payments do. But city leaders have acknowledged that has happened some. The city previously has issued some debt to do street maintenance - such as repaving - that likely will need to be redone before the city has paid off the debt.

"I think we're going to have to dig a little deeper on that issue," City Commissioner Rob Chestnut said of the debt issues.

City Manager David Corliss said the city in the past two years had cut down on the practice of debt-financing street maintenance operations but wasn't yet in a position to entirely eliminate the practice.

"We have difficult choices," Corliss said. "If we don't have the will to raise property taxes to maintain a street, how else are we going to maintain it?"

The report also found that more detailed documentation should be provided on how the city spends money generated by water, sewer and other user fees. In 2006, the city transferred $2.1 million from user fee funds to the city's general operating fund. In 2007, that amount grew to $4.2 million. Eglinski said the explanation for the large increase wasn't well documented.

Corliss said some of the increase did go to street maintenance activities. For example, the repaving of Massachusetts Street was paid for largely by water fees. Corliss said that was justified because the street pavement previously had been torn up by a waterline replacement project.

Corliss, though, said he agreed with the basic recommendations of the audit.

"I don't think the report had any surprises, but we appreciate the independent analysis," Corliss said. "It confirms a number of things that we need to more vigorously monitor."

Unlike other city employees, Eglinski does not work for Corliss. The city auditor position reports directly to the City Commission.

Commissioners will review details of the report at their 6:35 p.m. meeting on Tuesday at City Hall, Sixth and Massachusetts streets.

Discussion

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25 August 2008
at 6:18 a.m.

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KsTwister (Anonymous) says…

“Corliss said some of the increase did go to street maintenance activities. For example, the repaving of Massachusetts Street was paid for largely by water fees.”You know this was taken off the front page for a good reason. The city continues to rob Peter to pay Paul attitudes have to stop. And no, you can forget more property taxes to pull bad management out of the red. Two years ago they weren't doing much for the streets because they were holding back for a bigger library,funds to buy Farmland site,legal fees for Walmart,the “T”,and all those other projects(i.e. flowers and water sprinklers for downtown). Now tell us how intelligent and necessary it was to wildly spend doing studies,sidewalks,parks,lights and the expensive retaining wall on Kasold. Sad. Just because the city can't budget doesn't mean they need to take the whole population down the tube with them.
25 August 2008
at 6:20 a.m.

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merrill (Anonymous) says…

If Lawrence cannot afford what we have why add more streets,water and sewer lines etc etc which only expands our tax bills? Take care of the central business district which is downtown and fix older existing sidewalks. Our city's current budget crunch could easily be tied directly to infrastructure expenses needed to serve new residentail housing developments. Our community is way over extended in this regard. There is too much retail as well. Not enough retail dollars in town to support what we have.If residential growth paid for itself and was financially positive, we would not be in a budget crunch. But with increased numbers of houses you have increased demand on services, and historically the funding of revenues generated by residential housing does not pay for the services, they require from a municipality.Why not impact fees or excise taxes? Local real estate developers have had a great time laughing all of the way to the bank on the backs of taxpayers. This is the root of the problem.
25 August 2008
at 6:31 a.m.

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xbusguy (Anonymous) says…

The city of Lawrence has been “betting on the come” for a long time. Now, like all other gamblers… they want out of trouble. At least they still have the trash service/water bills!!!
25 August 2008
at 6:41 a.m.

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merrill (Anonymous) says…

This city commission has just laid the groundwork to spend a minimum of one million dollars in East Hills business park to move dirt to the 87-acre american eagle lot to begin to raise it seven feet to get it out of the 500-year floodplain? Shouldn't this be included in new contruction cost for a signed on tenant instead of stealing from the taxpayers?Why is Lawrence building in flood plains?East Hills business park owns a 9 year old 600,000 sq ft structure which has never had a tenant. How this structure was funded is like looking for a needlein a haystack. How many tax dollars might have been spent on this failed project? Do banks actually fund projects such as this with no tenant? A million dollars (and that's just the beginning) to put dirt on prime farmland to make it more attractive for “economic development”? Spending money on ground with no tenant is not economic development. Tax dollars should not be used on this venture at all!Rumor has it that an East Hills tax abatement receiver is moving on after 10 years. Coincidentally the 10 year tax abatement has expired. Another tax dollar rip off.This commission thinks it's just fine to spent a million dollars of the taxpayers' money to move dirt and then turns around and cuts city services and sets the T up to fail. This is an irresponsible business practice.Where is the money?Where are the dollars older north and east Lawrence neighborhoods have contributed over many decades forstreet and other infrastructure maintenace?
25 August 2008
at 6:45 a.m.

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merrill (Anonymous) says…

Still the best way to fund public transportation is to reinstate the 3 mil levy property tax that was stolen from the project.
25 August 2008
at 7:06 a.m.

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cowboy (Anonymous) says…

4.2 million from water revenue diverted to street repair , yet you raise our water rates again. Because the city staff are unwilling to manage a budget matched to revenues. Time to fire some commissioners and city staff !
25 August 2008
at 8:10 a.m.

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kusp8 (Anonymous) says…

Here, Here!

25 August 2008
at 8:12 a.m.

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LogicMan (Anonymous) says…

Report summarized into two plain-English sentences:You are spending like drunken sailors. Stop it.
25 August 2008
at 9:06 a.m.

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yellowhouse (Anonymous) says…

bankruptcy?
25 August 2008
at 9:10 a.m.

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doc1 (Anonymous) says…

We Don't need the T. This auditor is speaking upon deaf ears.
25 August 2008
at 9:26 a.m.

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xbusguy (Anonymous) says…

cowboy (Anonymous) says: 4.2 million from water revenue diverted to street repair , yet you raise our water rates again. Because the city staff are unwilling to manage a budget matched to revenues. Time to fire some commissioners and city staff !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!1I'll second that motion… lets Vote!!!
25 August 2008
at 11:05 a.m.

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Marion (Marion Lynn) says…

You guys should get that half-million bucks ponied up for the old ratty train station that even the railroad does not want.(Aside from railroad execs:”Psst! Hey, Charlie! Those fools are down there cleaning up our railroad station! Cut some maintainence expenses out of the budget for next year! Maybe we can keep them on the string for that long!”)
25 August 2008
at 12:13 p.m.

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WWoftheW (Anonymous) says…

iIf you actually check where the 17 milion dollars in special assessments still owed the city from debt burden you will find that it mostly belongs to benefit district financing for new development. We build the new infrastructure so developers can just pocket theirs.