Tuesday, August 13, 2013

Why Money Never Seems To Go Where It Should - Or Why You Can't Trust The Government

There is a general misconception about what City Budgets do.  Yes they give an idea of where the money is supposed to go; however, it only is required to stay in those accounts if it is restricted.  

An example of a restricted fund would be Utilities.  According to State Statute Utility fees must pay for all the costs of the utility.  That includes Capital Funds (for replacing equipment or infrastructure), operating expenses (salaries, gas, electricity, general bills), and any other costs directly related to the utility.  The Utility can pay the City for services rendered, for instance and hourly fee for the Treasurer's time to advise on financial matters, or technical services provided to the utility through the City Staff.  The Utility can also make a profit of up to 15% and that profit can be transferred to the general fund.

The main point is that this type of account has to be fully funded before any money can go anywhere else.

These funds are in effect safe from pilferage due to the way law is written concerning them.

Now the General Fund is a different matter.  Although the budget is set up to apportion money to certain departments to cover expenses, the only funds that have to go where they are apportioned are the PERSI funds, Insurance Funds, and Salaries. If the City runs short in one department it can take the money from another department.  This is one reason street maintenance doesn't get done.  The only way you could make sure the funds absolutely went to the street maintenance is to take a revenue bond out for the repairs.  The revenue is secured through property tax so the money has to be spent for what the bond is for.  An example of this would be the North Chubbuck/Bannock County Sewer.  That money can only be spent for sewer so no stealing from Peter to pay Paul.

Another thing to understand, no City Council can bind a future City Councils to anything other than paying bonds that have been acquired.  Future Councils can set up different priorities, for instance parks may be the priority for one council while updating sewer systems may be a priority for another.

Anyway, when Councilman Marshall expressed his doubts, he actually has some basis for his concern.  We have included the video from his comments at the July 30, 2013 Public Meeting on the Chubbuck FY 2014 Budget.

Also, the City of Chubbuck will be voting on the final budget on August 13, 2013 at 7:00 pm, Chubbuck City Hall.