I received some very good feedback from former Alderman Bill Wills and Flippin on my previous post that attempted to show a “balance sheet” of sorts for the city finances. Wills pointed out that any money spent from borrowed funds was included in the reported expenditures. Being that the debt service (ie money spent paying back the borrowed funds) is also included in the expenditure figures, my math showed a greater imbalance than there really was.
So with that in mind, I’ve created another table which simply takes the debt service figures out. This method is essentially how I create my own profit and loss figures for my business. If I borrow money to pay for something, I record the expense. However I do not record the payments on that debt, otherwise I would essentially be doubling that expense. I certainly record the payment in my checkbook, just not on my profit and loss statement.
The numbers are from the NY State Controller’s website. *Please note, the expenditure figures from the state include the debt service amount. I am listing the debt service amount separately for reference.
This method is still not perfect. Obviously municipal finances are lot more complicated than a small business. One aspect I know is missing is that interest paid should be listed as an expense. However I don’t have figures as to what percentage of the debt service amount is principal and what is interest. I also know that the figures as reported to the State Controller’s office are not 100% correct – although I would argue that the fact that the city is not bouncing checks means that they probably aren’t that far off. I think the numbers are still usable. I think it’s better to get a fuzzy picture than no picture at all.
So why do this at all? It’s because what passes for debate on the city’s finances around here is complete garbage. The dialogue coming from elected officials, former elected officials, residents or the local media establishment boils down to over generalizations, flat out inaccuracies, emotionally driven invective and politically motivated finger pointing. And none of this serves the public at all. It pains me personally that things like historical preservation, the arts, city beautification efforts, community volunteer efforts, all things which I and many Amsterdam residents value have been dragged through the mud in this election as the alleged “cause” of our financial woes when nothing could be further from the truth.
I’ll include one more graph that sheds some additional light our city’s debt situation.
Why am I including the former mayor’s names here? Because more than one person has drawn comparisons between Joe Emanuele and Ann Thane, portraying Emanuele as some sort of financial savior who always kept us in the black (which he did not) and somehow kept us out of debt (also incorrect). The fact is that in 2006, during Emanuele’s term, we saw the 2nd biggest jump in debt in the past 11 years.
I am stating that for the sake of perspective. I’m not trying to detract from the very large increases in debt under Thane’s term. The numbers show that the debt problem is getting worse. I think the Mayor bears her share of the responsibility for the financial situation. To be fair, one has to recognize that there was a major recession in 2008 and that operating costs (like energy and health care costs) have been soaring. It should also be pointed out that Thane, along with the common council, has found significant budget savings by cutting benefits costs, as well as increased revenue from sales tax and water fees. Without these measures, we’d be in a much worse situation. However, it’s obvious more needs to be done. I think if we could understand why we saw such huge jumps in our debt in 2006, 2009 and 2011, we would be a lot closer to understanding what is going wrong.
I have no doubt that there are individuals in Amsterdam who are far more knowledgeable and qualified to analyze and communicate the financial situation for us folks with an average understanding of such things. So if you’re looking at these charts and thinking they miss the mark, I’d be glad to hear how you would do it differently. I’ll gladly accept informed criticism here – anything to get us discussing the real issues rather than slinging mud around like crazy people.