Thurber's Thoughts is back!

photo via Wikia.com

First, please accept my apologies for being gone from regular blog posts for so long.

While writing for Ohio Watchdog, I channeled much of my "thoughts" into those articles. When that assignment concluded at the end of 2015, I decided to take a break. However, I accepted work on another project that had absolutely nothing to do with politics.

That commitment prevented me from devoting time to my blog, but that is also concluded so...

I'm back.

And boy is there a lot to say.

We can start with everyone's favorite complaint:  potholes and the state of Toledo's roads.

For over a decade, I've been warning anyone who would listen that transferring money out of the Capital Improvements Plan (CIP) fund and into the General Fund to pay for every day expenses was a bad idea.

Eventually, I explained, we'd run out of money in the CIP and wouldn't have anything left for capital items - like roads and other expenses with a life of five years or more.

Wouldn't you know it, I was right and that mess erupted in the first part of the year when Mayor Paula Hicks-Hudson and Toledo City Council decided to ask voters to approve an increase in the payroll income tax.

Fortunately, that measure went down to defeat - resoundingly.

But it hasn't solved the problem that the city doesn't have enough money for capital items because they've raided more than $110 million out of the CIP fund.

And it's not just this mayor. Every "strong" mayor had a hand in creating the problem: spending more than what they took in and spending money on non-essential items.

Want to know just how ridiculous things got?

In February 2012, Toledo City Council *discovered* they had about $1 million more in revenue than they budgeted. But they were planning to transfer nearly $12 million out of the CIP to balance the budget. So instead of reducing the amount of the transfer to $11 million, they decided to spend that $1 million extra instead.

And what did they spend it on? A new filing system for city council and a temporary employee; additional funds for demolition of houses; additional inspectors in code enforcement, even though the department said it didn't need any; an executive director to run the previously discontinued Toledo Youth Commission; and a consultant to create an Historic Preservation Plan.

The irresponsible spending continues while former Council finance committee chairman and current City Treasurer George Sarantou, Toledo City Council and the mayor try to find a way to come up with more income rather than find a way to cut spending.

You see, there's no where else they can cut.

(At least, that's the story.)

So that's how we started the year and now we're looking at a sweetheart deal for Promedica, the city and the Metroparks.

Prime waterfront property on the East Side across from The Docks has been sitting undeveloped for decades.  Various developers have come and gone and finally, Dashing Pacific Group bought it.

Their plan was to develop it with shops and housing and take advantage of the wonderful waterfront and the new road and light posts the city installed to help with development.  But they haven't done anything on it yet and the city had a clause in the sale that said it could buy back the property after five years.

And it should tell you something about Toledo when all the developers who've had a chance at this have failed to actually *develop* prime waterfront property.

We must be the only city in the entire country that can't make a go of prime waterfront property.

But back to the sweetheart deal...

The city really doesn't have the cash to buy back the property, so Promedica has agreed to purchase the property from Dashing Pacific.  They will hold it for a bit and then sell it (for the purchase price) to the Metroparks.

The Metroparks will then make this prime waterfront property a park.

Never mind that the Metroparks has two levies that property owners pay.  In fact, the most recent one in 2012 was a 10-year levy that was supposed to generate funds for developing new parks, maintaining existing ones and preventing budget cuts. How much do you want to bet that they'll need another increase when they purchase about 100 more acres and then want to make this prime waterfront property into a park area?

Something about this isn't quite right. Why does Promedica want to purchase the land only to sell it to the Metroparks?

Can't Dashing Pacific sell it to the Metroparks without a go-between?

If the city has the ability to buy back the land, why don't they do so, especially if they've got a willing buyer in the Metroparks?

Are there some restrictions with the funding sources used to clean up the property and install roads and street lamps that prevents it from going directly to another governmental entity like the Metroparks?

Inquiring minds....

And then there is the Southwyck property.  The mall sat unused for - well, no one really remembers how long because it was such a long time.  The city finally got the property from the owner, tore down the buildings and decided to market it as an open area for development.

Oh - and they borrowed money to do the demolition.

Now there is a buyer but the city is looking at a loss on the project. As one city councilman said - they didn't buy the land in order to make a profit...

But here's the thing.  They still have a loan and, according to various media reports, they (or rather you and I) are paying about $70,000 in interest every year on that loan.

So the city is going to pay off the loan with the income from the sale, right?

No - this is Toledo, so wrong!

The city isn't planning on paying off the loan but putting the money into the CIP fund. So you and I and every other taxpayer is going to continue to pay about $70,000 in interest so the city can spend that income elsewhere.

If you're wondering what they're thinking at city hall, see above story about the 2012 budget.

Sadly, this is par for the course.

So that's the start. Coming up I'll take a look at the absolutely insane Toledo ordinance that forces any company doing business with the city to have a union contract - even if they're a non-union company. Talk about forced unionization!  Here I thought it was the union's job to organize but Toledo's Project Labor Agreement ordinance actually puts the city at the bargaining table with project bidders and forces them to adopt a union contract.

That'll be a long post so I'll save it for Monday.

Taxing visitors not very hospitable

This post went up yesterday at Ohio Watchdog:

It was only a matter of time before local politicians figured out a way to get even more money from the newly established casinos in Ohio.

It’s become a standard practice for municipalities to tax the income of their residents, including income earned from gambling. Many also tax individuals who work within the jurisdiction, regardless of where they live, since the income is earned and paid inside the city limits. But imposing an income tax on tourists who come to a city to gamble is new for Ohio.

Columbus recently approved an ordinance to impose its local income tax on any non-resident who hits it big at the new Hollywood Casino. The measure, which will be retroactive to June 1, was passed unanimously.

The Toledo Council has a pending ordinance that will allow the city to impose its income tax on “lottery, gambling winnings, lotteries, raffles, as well as the fair market value of bonds, cars, houses, and other noncash prizes” won or earned by non-residents within the city limits. And yes, this would include various raffles and bingo.

Both ordinances allow only “professional gamblers,” as defined by the Internal Revenue Service, to deduct losses before calculating the amount of income tax owed.

The summary of the Toledo legislation states the taxation is “desirable, because doing so increases General Fund revenue.” In other words, imposing new or additional taxes is good because it increases the amount of money government has.

But will it really give local governments more money — or will the new taxes be offset by people who will make other choices?

Read more

The final straw?

The Toledo Public School Board decided to put a .75% payroll income tax on the May ballot to help them with a $30 million deficit. The City of Toledo is still considering a .25% increase to their payroll income tax to help with their $40 million (or so) deficit.

Will these people never learn?

Probably not - this is Toledo, which never met a tax increase it didn't like.

Maybe this time the voters will let these idiots know that enough is enough.

The problem is that the politicians in TPS and One Government Center are looking only at what THEY need - not at what WE need. They keep saying they need the money. In doing so, they're saying they need our money more than we do.

The TPS payroll tax will only apply to people who live in the TPS district. Do the politicians understand that people who live in Toledo actually have a choice and can maintain a Toledo address outside the TPS district? Washington Local Schools are perceived as a better school system, so if you could, why not move into their jurisdiction and instantly save money in your paycheck?

Toledo's mayor and council fail to understand that the same consequences apply to them. Toledo is already losing residents and businesses. An increase in the payroll income tax is not going to help stop that loss. In fact, it's more likely to hasten it.

Families have cut expenses in order to meet today's obligations. We really haven't seen evidence of politicians doing the same. They'll claim that everything they do is 'needed.' But we know that's not true.

Here are the general fund expenses from the most recent version of the city's budget:

2006 $234,312,215.50
2007 $242,752,864.71
2008 $240,632,123.04
2009 $249,369,653.02 (projected - actual not yet available)
2010 $241,255,794.49

The city's spending increased $8.4 million in 2007. Then, despite facing huge deficits in 2008, they only reduced spending by $2.1 million dollars in 2008. In 2009, again facing huge deficits, their budget had an additional $9 million in spending. For 2010, they're projecting much less than in 2009, but it's still more than what they spent in 2008.

The politicians will tell you they did cut spending, but if that's true, where is the evidence that the spending is truly less?

Well, they say, they cut over what it could have been. That's like you and me saying we cut our expenses because we didn't take that round-the-world trip we wanted to take, even though we really didn't have the funds to pay for the trip in the first place. Some 'savings'!

As for TPS, they can't possible have a good handle on their spending or budget. If they did, they would have known about one of their administrators (allegedly) stealing money. Yet these same people who had no idea about the thefts are now telling us they need more money from us? Talk about zero credibility.

And just how many people in the TPS district and the city of Toledo will actually be paying these taxes versus the ones who don't have any income or who are exempted? And how many who won't pay the taxes will vote for them because they have no costs associated with doing so?

Despite claims of 'feeling the pain' of their constituents, these politicians obviously don't care that Toledo has the highest unemployment of all the urban areas in the state, record foreclosures, records amounts of people on welfare, record requests for help from various non-profit and social service agencies, record amounts of requests to food banks for help, etc... etc... etc...

They still want you to pay more.

This may be more than we can take. While I was born in Nashville, I've lived here almost all my life. My husband was born in Toledo, though he grew up in Lasalle, MI. I went to Toledo Public Schools. We both were graduated from the University of Toledo. We chose to stay here. We started both our businesses here. We've purchased two homes and spent a lot of money renovating them, making both homes better than what we bought. We've invested time, money and effort in local charitable organizations. We buy things here. We hire people who live here. We've paid our taxes on time.

We're two college-educated entrepreneurs - the very type of people Toledo says it wants to attract. And if these taxes pass, we're ready to chuck it all and leave. And we're not the only ones who are considering this option. I guarantee there are others for whom this will be the final straw.

This is not because we don't want to pay to support the services we receive or because we don't love the city, the people, the location - even the weather. We really don't mind if we're getting value for the dollar. But Toledo is no longer providing that value.

Our property value is decreased because we live in the TPS district. TPS is a drain on the potential selling price of our property - yet they want even more money for their operations.

The city seems to understand nothing when it comes to growth, except the growth of government. Even Mayor Mike Bell fails to understand that giving some people raises, though the budget for the mayor's office is less than last year, doesn't sit well with people who've had no pay increases for a couple of years.

(Yes, I understand that the city has established pay rates for commissioners, directors and managers and that putting someone into those positions on a permanent basis (as opposed to 'acting') requires that they be paid according to the established rates or it gets you in trouble with the civil service commission. But they completely failed on the PR aspect, especially when asking for concessions from unions and tax increases from citizens.)

So while saying they want to have an environment that leads to growth and prosperity in the city, their actions prove they want the exact opposite - or that they are completely clueless as to what leads to success. Either way, these are not the people we want in charge of making decisions for us - and elections only give us more of the same philosophy, even when the faces are different.

So what is left? Continue bashing your head against the brick wall or leave, like so many others have already done?

The politicians are making the choice easier every day. Hopefully, voters will recognize the downward spiral and say NO!

'Not business friendly' Post #18 - raising Toledo's payroll income tax

It's been a while since I dedicated a post to the 'not business friendly' category but the latest from the Toledo Mayor's office certainly qualifies.

Toledo is facing a huge budget deficit. The amount seems to vary daily ($38-44 million), but let's just pick an even number in the middle and call it $40 million.

The reason we have a deficit is because the city spends more than it takes in. (DUH!) They blame revenues that didn't meet projections. I blame the individuals who projected revenues greater than were logical.

One of the biggest culprits in the mess is income tax collections - the payroll tax deducted from the paychecks of all Toledo residents (regardless of what city they work in) and all Toledo workers (regardless of where they live) - which are down significantly.

The solution being presented? Raise the payroll tax!

No, I'm not kidding! They have a decrease in both the number of people paying and in the amount collected from those who still are...and they want more! As if a temporary influx from raising the tax will somehow magically solve all the underlying problems that resulted in the decreased collections in the first place.

This is insanity! I can't say it any clearer.

If a company can give their employees an instant increase in pay by moving out of the City of Toledo, why wouldn't they consider it? If companies know that their employee compensation will be attacked by the local government, why would they want to come here?

On a national level, most people think the reason for deficits is because politicians spend too much - not that taxes aren't high enough. I'd wager that sentiment applies to local governments as well!

It's the tax-hiking, 'we've-cut-everywhere-we-can-there's-no-where-left-to-cut' type of thinking that got us into this mess in the first place. And the solution coming from Mayor Mike Bell's 'Citizens Special Investigation' task force is just more of the same - raise taxes. That's not 'out of the box' as the Mayor requested.

Oh, to be sure, the types of taxation they're suggesting (entertainment taxes) are a bit new - but they're still higher taxes. It's just more of the same failed philosophy that promotes the idea of government needing your money more than you do - and that's what got us into this mess in the first place.

But that's not the worst of it. Oh no!

The worst part is the hypocrisy of the elected officials when it comes to citizens paying more.

As a commissioner, I voted once to increase the amount of the dog license fee. The Dog Warden's operation was supposed to be self-sufficient and instead had been relying upon transfers from the County's general fund for meeting their budget. We had the department do some cuts and voted, 2-1, to raise the fee for the first time in years. Comm. Tina Skeldon-Wozniak voted against this saying that too many seniors relied upon dogs as companions in their old age and they might not be able to afford the extra $5 a year. But then Tina voted IN FAVOR of a new property tax that would have cost those very same seniors more than $5 a year!

It's contradictory - I know. But it's what passes for 'logic' in Toledo and Lucas County.

Why is this relevant? Because the same thing is going to happen in Toledo City Council.

Mayor Bell has drafted legislation to put an increase in the payroll income tax on the May ballot. It needs to be voted on by Council at their next meeting on Feb. 16th if it's going to make the May primary. The proposal is a 'temporary' increase of a quarter of a percent, raising the tax from the current 2.25% to 2.5%.

They say 'temporary' as they project it will expire in 2012. However, there is already .75% of the payroll tax that has been 'temporary' since the early 1980s...so much for the definition of 'temporary' in Toledo.

I have no doubt that a majority of council members will vote to put this on the ballot if it is presented to them. That's much easier than facing special interest groups packing council chambers to lobby for programs other than their own to be cut. They'll all get up and say how their program must continue and council should cut 'elsewhere.' But those groups are never asked by council what they'd do without in order to keep their funding...and if someone should challenge those groups on that point, their usual retort is 'that's council's job' to decide.

Which is why council will vote to increase taxes rather than upset all those special interests. Besides, they think they need your money more than you do. And they're hypocrites when it comes to your money.

Tuesday, council passed (with District 5 Councilman Tom Waniewski (R) as the sole 'no' vote) a resolution opposing two bills in the Ohio legislature. Amended Sub. Senate Bill 162 and House Bill 276 would allow phone companies in Ohio to raise monthly rates by $1.25 every year. Council suspended the rules requiring two readings of items before council and voted immediately - because they just couldn't wait to oppose what Columbus was considering.

In support of the resolution, At-Large Councilman George Sarantou (R) said the bills were "bad news for residential phone users." He said seniors and others who might not have any other type of phone service would be "severely affected" and that the bills were "absolutely very harmful."

Now, they're talking about $1.25 a month as being too much for Toledoans to be able to handle. Their resolution even states:

WHEREAS, historically, Toledo and Northwest Ohio residents have paid some of the highest utility costs in the state of Ohio and are challenged daily with uncertain economic conditions...(emphasis added)

But these same council members are going to ask for more money from you for THEIR purposes.

If you make $10 an hour and work a 40-hour week, you'll be paying $1 more per week if they raise the payroll tax.

They're going to tell Columbus not to pass an increase of $1.25 per month on to Toledo residents, but they're going to tell voters to pass an increase of $4 per month on those same individuals?

Can you say 'stuck on stupid'???

And they do this kind of crap all the time - telling others not to take pennies out of your right pocket while they take dollars out of your left.

Now, don't get me wrong. There may be other aspects of the phone bill legislation that would generate opposition, but the major selling point being used by the politicians is the monthly increase. They look like idiots when they, in effect, say that others can't rake your earnings over the coals - only they can.

They'll hide behind the whole 'I didn't raise the rate - voters did.' What a cop-out!

I'll predict right now that most, if not all, members of council will urge people to vote for the tax increase if it's on the ballot. You won't see them going out and telling people to vote no - that's for sure!

If they truly believe that Toledoans are having enough economic issues, they wouldn't even ask for the support of the voters. They'd just vote no to putting the measure on the ballot and begin the difficult job of reducing the size of Toledo's government.

But don't hold your breath.

The sad part of all this is that I doubt anyone is going to hold these council members accountable for their contradiction in saying $1.25 a month to the phone companies is too much but (an estimated) $4 a month to the city coffers is just fine.

And they wonder why we have declining numbers of businesses, declining population, the highest unemployment of all the urban areas in the state, record foreclosures, record bankruptcies, record numbers of people on public assistance, etc... etc... etc...

This is why. And both politicians and voters have refused to admit that the same failed philosophy of government that got us into the mess is not going to get us out.

How is this a good deal for taxpayers?

According to the Journal of the City of Toledo, when city council approved Ordinance 373-09 (beginning on page 8), the contract with the Toledo Police Patrolmen's Association (TPPA), it also agreed to the following:

Other provisions - Grievance Settlement.
The City agrees to pay $25,000 to the TPPA to withdraw any and all outstanding grievances filed prior to June 24, 2009 with the exception of grievances on employee parking, eliminating of the tax officer position, on call compensation/payment for fuel, sergeant-at-arms position, permanent shifts, and layoff grievances.

Tax Payment. A one-time payment will be made by April 15, 2010 based on the sliding income tax collection schedule as follows: if the 2009 audited books reflect an income tax collection greater than $148 million, the employee receives 2% of his/her base rate; if the 2009 audited books reflect an income tax collection greater than $150 million, the employee receives 4.5% of his/her base rate; if the 2009 audited books reflect an income tax collection greater than $152.5 million, the employee receives 7% of his base rate; if the 2009 audited books reflect an income tax collection greater than $155 million employee receives 9% of his base rate.

So, let's get this straight: the city is going to pay the union - not the members, but the organization - $25,000 to get them to drop a bunch of grievances? Since when did taxpayer money get to be used to buy off settlement of grievances - many of which the union never should have had to file in the first place?

And how much are we really saving if the city has to pay up to 9% (based upon income tax collections) in a lump sum? Police - and firefighters who have the same terms in their contract - are going to be financially rewarded if the city collects more than it estimated? Of course, there is the chance that the city doesn't collect more than it budgeted in income, but history indicates the unions have a safe bet on this one. However, a lump sum is just a one-time payment so there is no cumulative effect on the base wage.

How 'bout if the city, after balancing the expenses based upon the project income, REFUNDS any extra income to the taxpayers who paid it in the first place, rather than pay off the unions????

Oh - but the city hasn't yet balanced the 2009 budget. Even with the 'savings' from these contracts, the mayor is still estimating an $8 million budget deficit for the remainder of the year - with no source of extra funds to the cover the shortfall.

And if the administration's projections for next year are even remotely accurate, there is no money to pay for 2010 basic services, much less a lump sum for police and fire fighters.

Yet council approved both these contracts with no idea whatsoever of how they were going to pay for the terms they agreed to.

Are taxpayers just supposed to hope that the city doesn't collect more than the budgeted $145 million in income taxes so we don't have to pay out the lump sum? And if we don't get more than that, we still have an $8 million budget deficit to pay for, which is why Carty Finkbeiner is asking council to increase the trash tax and eliminate reciprocity for people who live in Toledo but work in another city.

What it boils down to is this: the city has no money, but if it collects more money than it budgeted, police and fire will get lump sum payments (of up to 9% depending), reducing the amount of 'extra' money that could be used cover the deficit.

And city council and the mayor think this is a good deal for taxpayers???? I think we got screwed...

Finkbeiner proposes to raise taxes to balance the budget

Yesterday, Mayor Carty Finkbeiner made several suggestions to balance the city's budget.

I must admit to being confused about just how much is needed because the numbers coming from the administration change each time someone references the deficit. Last week, city council was told they needed another $8.1 million for 2008 - after closing out some Capital Improvement Projects to cover an $8 million hole.

Today, the mayor's power point presentation said $2 million was needed to close out 2008, but, despite having passed a balance 2009 budget, there is projected to be an $11-12 million hole yet this year.

According to today's paper,

Even though Mr. Finkbeiner proclaimed the city's budget as balanced, his plan only partially addresses an $8.1 million shortfall from 2008. Under the plan, the city will close the books on last year with about a $1.7 million deficit, which is in violation of the law.

I guess the 'bottom' line is that council still needs to find about $14 million in cuts between last year and this year.

So one of the ways Carty plans to cover that hole is by changing the way Toledo's payroll income tax is charged.

How it works:
The current rate of payroll income tax is 2-1/4%. A Toledoan who earns $50,000 owes the city $1,125 per year. Toledo has reciprocity on income taxes with surrounding communities.

If you live in Toledo, but work in another city, Toledo has allowed you to deduct whatever you pay in payroll tax to that other city from what you owe Toledo.

For instance, if you work in Maumee, you'd be paying them $750, so the only amount you would owe Toledo is $375 ($1,125 minus the $750). Under Carty's plan, you'd only be able to get credit for half the $750, so you'd now owe Toledo $750 ($1,125 minus $375).

If you work in Oregon, which has the same income tax rate as Toledo, you'd be paying them $1,125 and nothing to Toledo. Under Carty's plan, you'd get credit for half of that amount, which means you'd pay Oregon $1,125 and Toledo $750.

This is a tax increase for every person who decided to stay in Toledo even though they work in another city. Carty said this will raise $5.2 million per year.

I think it will make people want to move out of Toledo.

But that's not the only change he's suggesting.

On May 1, the garbage tax for people who recycle was supposed to go down from the $2 we're currently paying to the new rate of $1. He has proposed keeping the rate at $2 which will 'save' $175,000. Of course, it 'costs' citizens the same amount, but Carty seems to have a disconnect between the needs of the city versus the needs of the citizens.

A new fee he wants to create is a charge for Fire Department response to fires. He says that most insurance companies have a cost recovery provision of between $500 and $1,000. He plans to bill you and get that reimbursement from your insurance - the same way they bill for emergency response to a car accident.

Again, there is a disconnect. I think the mayor sees this as 'free' money to the city, failing to recognize that such public policies just end up raising the insurance rates of everyone in the area.

Carty does suggest some cost cutting: savings from the on-going contract negotiations with police unions, removing one fire engine from service, some layoffs for AFSCME Local 2058 - the supervisory union, going to four 9-hour work days for all exempt employees, automating garbage pickup.

But most of these cuts are across-the-board types of things. He has not, as far as I can ascertain, gone through an overall evaluation of current city services in order to eliminate the ones that are not mandated in the charter. According to the budget passed by council for 2009, we still have a youth commission, which might be nice, but is certainly not necessary.

So, the approach is to raise taxes. From all components of the plan he presented, the most money is generated by the change in income taxes - $5.2 million. Even Republican Councilman George Sarantou, who admitted the change may make some people want to leave Toledo, said he believes people realize the city's need for the funds. He has previously bragged about how much they've cut out of the budget over the past several years.

And Carty said the same thing during his presentation. One power point slide claimed:

"Over the past two years this administration has cut $25 million from the budget. This combined with the estimated $14 million we are cutting today equals $39 million, which is 15.6% of the total general fund budget."

Now, I didn't think this seemed accurate, so I used the link on the left to view the city's budget. Here's what I found for the General Fund expenditures:

2006: $234,312,215.50 (actual spent)
2007: $242,752,864.71 (actual spent)
2008: $254,098,779.08 (estimated - still don't have final numbers)
2009: $249,369,853.02 (approved by council)

According to these figures, spending from the General Fund has increased - not been reduced. I can only surmise that the 'cuts' being referred to aren't really cuts in spending, but 'cuts' in the amount of increase - kind of what Washington does...

Now, there is a decrease of $4,728,926.06 between 2008 and 2009 - and the mayor did propose more cuts totaling $10.3 million. It would be fair to say that if the mayor's cuts are approved, combined with the approved budget, there is a $15 million cut between last year and this year, if last year's spending was close to what was estimated.

But that's not $25 million over the last two years.

Regardless, the problem continues to be spending. The solution isn't to 'inflate revenue assumptions' or raise fees. The solution is to cut the budget of unnecessary expenditures, eliminate departments, boards and commissions that cost money but have no real purpose or enforcement, and develop a business-friendly environment by not taking over private business functions that, despite claims, really don't generate revenue.

Inconsistencies in Toledo's budget and a challenge to City Council

Earlier this week, I posted numerous questions about the 'assumptions' Mayor Carty Finkbeiner made in his 2008 budget for the city.

One of the questions I raised was about the revenue projections. Finkbeiner's estimated 2008 income tax revenue:

"Income Taxes are assumed to grow at 2.5% in 2008 over an estimated 2.6% growth rate for 2007 over the 2006 actual Income Taxes."

I questioned the income tax collections for the first two months of the year in relation to projections. Today, The Blade reports that income tax revenue for 2007 was lower than projected - 2.5% less, in fact.

In 2006, the city collected $168,421,993 in income tax, but gave out refunds totaling $3,704,749. Net collections were $164,717,264.

According to the above statement from Finkbeiner, 2007 projected income tax revenue was supposed to be 2.6% more than in 2006. The 2007 amount was budgeted at $173,967,203 which is actually 5.6% more than what the city got in 2006 - not 2.6%.

The discrepancy is in the refunds. While the city paid out refunds of $3.6 million in 2004, $3.5 million in 2005 and $3.7 million in 2006, there was nothing budgeted for refunds in 2007. They've not included refunds in the 2008 budget either.

By budgeting and referencing ONLY what they collected and ignoring any refunds, the city is over-projecting their actual revenue. And they are basing their spending on this over projection.

Some might say that this is okay, considering that even with actual collections of income tax being less and overtime being more, the city still ended up with about $1 million in carryover. However, hoping that revenues and expenditures will somehow balance out to the good, as they did in 2007, is not proper financial planning.

The city needs to budget for income tax refunds - as they will certainly occur - and budget the spending based upon the net income tax line items, not just upon collections alone.

Which leads us to 2008 and more questions in light of this just-released information about the 2007 collections.

* Does the $169.68 million income tax revenue amount include the refunds issued in 2007? Or is this just the amount collected?

* If the $169.68 million amount is before refunds, what was the net amount?

* Has the city revised their income tax projections for 2008 as a result of this new information - and, if so, how much?

According to several reports about the city council finance committee meeting on Thursday during which these new numbers were released, the city has actually INCREASED their revenue projections to $253,271,089, with the additional money coming from $1.1 million in unclaimed funds which can, by law, be deposited into the general fund, and about $400,000 which is half of the carry-over amount from 2007 (the other half is supposed to go into reserves - or the 'rainy day fund.')

So if this new revenue amount is based upon these two additions to the budget, the city has not reduced its income tax revenue projections. If they budget a 2.5% increase (which is certainly not a guarantee in light of the layoffs and lack of meeting projections in the first two months of the year), will we find ourselves short of income in 2008?

Sadly, the city did not publish a year-to-date actual budget when they published their 2008 projected budget. They list only the 2007 budgeted amounts, so citizens (and council members???) see only what was actually spent in 2006 and what they planned to spend in 2007. If we could see YTD figures as of the date of publication, we'd have a much better understanding of what was being planned for 2008. But perhaps that's the point?

On March 18, I sent an email to John Sherburne, the Finance Director, asking questions about the many assumptions in the 2008. No - I've not yet gotten a response, but it appears that some of the questions were addressed during the finance committee meeting Thursday.

Unfortunately, most citizens interested in the budget weren't at that afternoon committee meeting. And, while city council plans a committee of the whole meeting Monday at 2 p.m., it's not likely that citizens will be able to attend at that time, either. Council plans to vote on the budget during their regular meeting on Tuesday.

During my guest hosting stint for Brian Wilson on WSPD yesterday afternoon, Fred Lefebvre called in and made an excellent suggestion. To challenge city council members to refuse to vote on the budget until all questions are answered - satisfactorily. I agree.

Many council members are livid over just learning that the city has an unclaimed funds account that can be accessed (to the tune of $1.1 million) to help balance the budget. They should demand explanations about how long city administrators have known of the availability of these dollars and when they decided to transfer the monies to the general fund ... and why council wasn't informed of this earlier. They should also demand answers to the 'assumptions' originally made and whether or not the assumptions from November of 2007 are still valid and accurate today.

If you agree, call city council and tell them (419-245-1050). Government is supposed to work for us and they should not be allowed to get away with these types of inconsistencies and obfuscations with our money.