On July 24th Councilman Bill Brownlee held a community forum on the financial situation of Maple Heights. The small group of residents that attended were greatly pleased with the depth of information presented. Most were shocked to learn things that night they had not known, even though the events had happened years ago.
Let the Facts Drive the Discussion
Councilman Brownlee started his presentation by pointing the audience to the various handouts they had received at the door. “These are all original documents,” said Brownlee, “I don’t want you to take my word for it; I want you to see it for yourself.” These city documents are a pivotal part of the presentation and have been provided for you online (link).
I don’t want you to take my word for it; I want you to see it for yourself.
He started by outlining the discussion for the evening. It sounded much like an article on MHN from February where Councilman Brownlee stated, “There may be problems outside, but the problem – financial irresponsibility – is within.” In this presentation, the facts drove the discussion much like they did in February’s article. The presentation was broken into two parts: 1. How We Got Here; 2.How We Get Out.
How We Got Here
Brownlee wasted no time diving into the first of the 4 handouts that night. At 1:15 into the meeting, he directs the audience to the June 17, 2013 Finance Committee Meeting handout. On the back side is a full report of the revenues for the General Fund for years 2008-2014. This is where Maple Heights started:
- General Fund Recurring Revenue: $15 million
- Treasury Funds (money in the bank): $7.3 million
Then the economic downturn came along and cut the City’s revenues by about $3 million:
- Property Taxes: down $1 million
- Local Government Funds (funding from the State): down $1 million
- Income Taxes: down $.5 million
- Other Losses: about $.5 million
These were all the of the external forces that reduced revenues of the City. These changes are nothing to thumb your nose at. So what did Maple Heights do about it?
This is where the internal forces and decisions made come forward. The City made a number of decisions a few years ago. The one good decision that was made was to reduce personnel costs (HANDOUT: “Why is the Levy Needed”). Mayor Lansky laid off or did not replace city employees. He also negotiated concessions from the unions for 2012.
However, there were many bad decisions made as we look back on the past few years. First, in 2008 and 2009, Mayor Lansky borrowed a total of $13 million. Some of it went to refinance older debt but most of it was spent on various improvements within the City (HANDOUT: Ordinance 2010-44):
- Road Construction: $6.2 million
- City Recreation Facilities and Pool: $1.8 million
- Vehicles for Service and Building Departments: $1.1 million
- Improving City Buildings: $1.3 million
Besides the lack of foresight, the most shocking part about this loan is that no one knew about it. At the meeting, only one person was aware of this $13 million loan the people of Maple Heights are required to pay off. The City will be paying roughly $1.2 million each year in loan payments until 2030. That is money gone from the budget before a single dime is spent to operate the City. When all is said and done, this loan will cost Maple Heights residents $21 million.
This is just the facts. I’m just giving you the the facts, the figures.
Other poor choices were outsourcing the Building Department and perpetually over-spending the budget. Outsourcing the Building Department has actually cost the City money (though it was touted as a money saving decision) and devastated that department’s services. The Mayor Lansky and City Council consistently overspent their budgets and revenues until there is almost no money left in the bank. Now, six years later, Maple Heights is sitting in a much different situation financially:
- General Fund Recurring Revenue: $12 million
- Treasury Funds (money in the bank): less than $1 million
Now Maple Heights is in Fiscal Watch with the State Auditor’s office. The City is truly teetering on the edge of Fiscal Emergency. Some of the causes were external, but some were internal.
How We Get Out
Before jumping into the next half-baked money saving/generating scheme, Brownlee encouraged the audience to take a moment to reflect on where we truly are (fast-forward to 15:58). “There have been people who have told me, ‘Bill, don’t look back, just look forward,” said Brownlee. “[But] those who don’t know history are doomed to repeat it. Do we want to repeat that history? No. So we better learn from it.”
Those who don’t know history are doomed to repeat it.
Looking back at what has brought Maple Heights to this point, there are a few things that stand out:
- Disregard for Generally Accepted Acounting Principles (GAAP)
- Disregard for State Laws
- Overspending the Certificate of Estimated Resources from the the County
- Negative Fund Balance Spending
- Rushing Decisions – not enough consideration; no public input
- Appropriations (the budget) was always chasing expenditures
- Wishful Thinking
Councilman Brownlee outlines each of these points and shows how they contributed to the financial situation of the City. Then he contends that the real problems are not the money problems, but how attempt to solve these problems.
Attitude: It’s Everything
After showing where Maple Heights started, what happened, and what caused it; Brownlee then asks a question, “What was actually happening behind the scenes that caused these [poor choices] to come to pass?” This is where the discussion becomes interesting. It becomes apparent that a source of many of the problems was not financial in nature, but a matter of attitudes.
What was actually happening behind the scenes?
Brownlee pulls out the Finance Committee Meeting handout and shows a concrete example. In the “2013 Estimate” column, there is a higlighted item at the bottom in the amount of $300,000. This money was “expected” to come from the buyout of a billboard lease. This money was figured into the budget and used to validate overspending the expected revenue of the City. However, the money never came – it was all wishful, and irresponsible, thinking.
This is just one example of the real problems contributing to the financial situation of Maple Heights. The solution may involve finding more money for the City, but it needs to start with an attitude adjustment. Rushing decisions and ignoring accounting principles have done more harm to Maple Heights than anything else.
Maple Heights is on the verge of Fiscal Emergency because of poor attitudes and practices, not financial strain.