The Council Auditor is out with a summary of the City’s finances for the most recent quarter (it’s Report #661)—December 31, 2009. The picture isn’t pretty. While the general fund has a projected favorable variance (the City’s Finance Director states that it’s $4 million while the Auditor states that he views it as $10.3 million), the overall outlook for many of the Sub-funds is quite troubling. In fact, the list is so extensive it’s hard to know exactly where to begin.
For starters, the Clerk of Court is projected to have a negative variance of $651,661. This is directly traceable to declining recording fees because of the current real estate slowdown.
The Building Inspections Sub-fund is facing a negative projected variance of $1,956,241. This is primarily due to a dramatic decrease in revenues—down nearly $3,000,000 from what was budgeted. In Fiscal Year 2007/2008, the City used a transfer from Fund Balance of nearly $3.6 million dollars to balance this fund. However, there was only $1.8 million appropriated this year to balance the fund, meaning that the City will need to increase revenue or dramatically cut expenses to balance out this fund. Of course, this is also traceable to the slowdown in the construction industry.
Perhaps the most troubling news; however, comes from the city venues managed by SMG. The language under each of these sub-funds is quite repetitive, and that’s not a positive thing. For starters, Memorial Arena…The Arena sub-fund has cash of $3.9 million, current liabilities of $6.4 million and negative fund equity of $1.9 million. The Council Auditor expresses grave concern as to “whether or not the Memorial Arena will have the financial capacity to meet its liabilities.”
The Baseball Stadium, another SMG-managed venue, has cash on hand of $390,815 and current liabilities of $832,083. It has negative fund equity of $982,635. Once again, the Council Auditor expresses grave concern as to “whether or not the Baseball Stadium will have the financial capacity to meet its liabilities.”
The Times-Union Performing Arts Center, another SMG-managed venue, is projecting a negative variance of $277,320 at year end.. It has negative cash of $669,668 and current liabilities of $525,766. And, yes, once again the Council Auditor expresses grave concern as to “whether or not the Times-Union Performing Arts Center will have the financial capacity to meet its liabilities.”
The Equestrian Center, yet again another SMG-managed venue, is projecting a negative variance of $313,754. It has negative cash of $65,824 and current liabilities of $70,474. Yet again, the Council Auditor expresses grave concern as to “whether or not the Equestrian Center will have the financial capacity to meet its liabilities.”
Of particular interest outside of the SMG-related venues is the situation in the Office of General Counsel. The Office of General Counsel is showing billing revenue $1.9 million in excess of budget. Even more curious, perhaps is the following statement: “There are additional budgetary variances beyond those commented upon here.” It seems that there is more to the story here. Perhaps additional scrutiny will be able to shed some light here in the future.
The list could go on and on and on. What is apparent in the report are a few things. First of all, the numbers aren’t adding up, something the Council Auditor readily alludes to. When the city’s report states that “there are additional budgetary variances beyond those commented upon here”, it becomes readily apparent that we aren’t getting the whole picture. What we are able to get; however, is disturbing, which brings us to the second point. We will expand on this in the next day or two, but notice the troubling fact that the City’s SMG-managed venues appear to be in dire financial straights. Ponder that thought for a day or two and we’ll come back to it. Finally, something that has the potential to cause considerable grief down the road is the method by which the independent agencies are balancing their budgets. JEA has cut its capital outlays considerably from what was budgeted to balance their budget. While this makes sense, it could create problems down the road—a problem JEA shares with the other independent agencies.
All in all, it’s not a pretty picture at all. Now, let’s see if the Mayor steps forward with a plan to address it.