Deja Vu: The Common Council's Fiscal Mismanagement

From the Mohawk Valley Compass article on the Common Council crafting the City Budget:

“Well then I’m taking a shot. I’m going to take a half a million out of fund balance,” said Barone.

Later, Agresta said, “I can’t go with using general fund balance to balance the budget.”

“Before I raise the taxes, I’ll deplete the the fund balance, I don’t care what the state says,” said Barone later in the meeting, “I’m not going to raise taxes and I’m not going over the 2% tax cap.”

If this ‘technique’ to fiscal discipline and management sounds familiar, it should be. Here’s what the NY State Auditors said when precisely this ‘raid the fund balance’ technique was used:

The Board did not adopt realistic and structurally balanced budgets and instead consistently relied on appropriating fund balance, a non-recurring revenue, to finance recurring expenditures. Further, in two of the last three years, the County incurred operating deficits. As a result, the financial condition of the general fund has diminished in recent years. As of December 31, 2012 the County reported a total fund balance of $11.4 million in the general fund, a decline of 41 percent from the January 1, 2010 total fund balance of $19.2 million. We also found that the County’s cash-on-hand declined from twice its average monthly expenditures in 2010 to about $324,000 less than the average monthly expenditures in 2012, and the County’s contingency appropriation is not adequate for current financial conditions. The County’s declining financial condition is the result of poor budgeting and financial management practices and the Board’s failure to develop and use long-term financial plans.

If you’re a confused, and concerned taxpayer like me, you might wonder how the very same Council that touts its fiscal responsibility along with the legion of Council supporters who want the state to come in and basically take over the city all in the name of ‘running things like a business’ and ‘making tough choices’ , can actually proceed with such a plan.

A plan that without question is wholly fiscally irresponsible.  And a plan that runs counter to every single talking point on financials and budgets from the Council and their proponents.

It’s simple really: politics first, financials last.

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