NY State’s “Super Control Board” idea and what it means to Amsterdam

I recently ran across an article from the NY Post, published last year that was interesting to me given the idea that’s been floating around in the news and in discussions lately of bringing in a state control board to sort out Amsterdam’s finances.

The Post reports that legislation is currently under review by state lawmakers to create one centralized “super control board” to handle a large number of cities, towns and counties in NY who are facing severe fiscal problems.

According to the Post, the key factor that control boards have is this…

[The control board] wouldn’t completely replace the locally elected officials. But it would provide them with the political “cover’’ many privately say they need to stand up to the powerful unions, which have consistently resisted spending cuts.

So in the context of the traditional battle between labor vs management, it’s not hard to see why Republicans (and Republican leaning pundits) might favor this type of intervention. According to the Post, control boards have proven to be an effective union-busting method.

Personally, I am neutral as far as unions go. I think they are beneficial in balancing the power of big business, however big unions can also make it difficult for small cities like Amsterdam to cut costs when it needs to. And I think right now, the city needs to cut costs in order to stay healthy long-term.

However, I believe that calling for a control board at this point is premature. Deputy Controller David Mitchell has – in fact – made good progress in correcting the city’s finances in the nine months that he has been at the job so far. He’s reconciled nearly half the accounts and has succeeded in finally getting our AUD report out the door. Additional accountants were also hired in October to work on the project.

I agree with the critics who say that both the Mayor and Common Council should have started a lot sooner on tackling this problem. But you’d have to have blinders on (or maybe have an agenda?) to not acknowledge the progress that has been made this past year. 

Furthermore, I believe the current Controller-elect and Aldermen-elect have a clear mandate to fix things, not throw up their hands and give up. Obviously, if a control board turns out to be the best option, then they have to do what’s right. But if they don’t even to try to fix the problems they’ve been tasked to solve, then I think they will have failed the voters who elected them. I think the current plan of action, along with the new council and controller, need at least another year before a decision is made on asking for a control board.

Also worth checking out is a widely circulated AP story on the reactions of some NY state mayors to the idea of a “super control board.” The article reveals some bleak statistics quoted from State Controller DiNapoli on the state of NY municipalities. In short, Amsterdam is by no means alone in our financial plight. This doesn’t absolve any of our leaders of their responsibility, but for me, it puts the problem into a larger perspective;  our economic troubles are intrinsically tied to the performance of NY State.

Crunching the numbers: take two

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.

Year	2000	2001	2002	2003	2004	2005
Revenue	$20,108,331	$19,233,815	$18,409,146	$20,033,367	$21,733,043	$21,554,052
Expenditure*	$21,640,008	$23,740,494	$20,139,283	$21,452,114	$22,292,403	$22,311,288
Debt Service	$1,385,506	$2,816,708	$1,331,817	$1,521,294	$1,626,424	$1,989,216
	-$146,171	-$1,689,971	-$398,320	$102,547	$1,067,064	$1,231,980
	Duchessi	Duchessi	Duchessi	Duchessi	Emanuele	Emanuele
Year	2006	2007	2008	2009	2010	2011
Revenue	$23,487,861	$23,846,756	$19,589,783	$25,285,206	$30,411,542	$28,643,909
Expenditure*	$28,811,482	$24,458,481	$25,664,099	$27,291,345	$34,802,682	$38,779,386
Debt Service	$1,660,134	$2,746,389	$2,491,959	$2,245,054	$2,739,152	$5,884,650
	-$3,663,487	$2,134,664	-$3,582,357	$238,915	-$1,651,988	-$4,250,827
	Emanuele	Emanuele	Thane	Thane	Thane	Thane

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 2^nd 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.

The $4M question every Amsterdam City candidate needs to answer before the election

I have to say, the interviews of the various candidates for common council that have appeared so far in the local media have been nearly to useless to me. I have no doubt the editorial response to the recent State Audit will be scathing. But when it comes to the candidate’s interviews, I’m reading softball answers to softball questions. Amsterdam’s financial difficulties have been well known for years now and have been underscored by the recent release of the State Audit. But I’ve read precious few details about how any of the candidates plan to cut expenses or raise revenue. Whether online or in print, I’m hearing a lot of rhetoric, vague ideas and finger pointing, but no solid proposals.

Please note, I’ve revised the table I had here before based on the advice from some of my commentors. I’ve posted the new table with an explanation here.
The pie charts are still good though!

The fact is the city has outspent it’s revenues in every fiscal year since 2000. Here’s the stats compiled from the NY State Controller’s website

Over the past 12 years, on average the city has overspent by 3.2 million dollars per year.

I think voters need to task our local leaders with a simple and achievable  target that will get us back on track financially. I think that target should be to reduce expenditures and/or increase revenues by a total of at least $4M (or by about 11% of 2011’s expenditures) per year.

We’ve only got about a week left before the elections, but I believe that candidates (as well as the Mayor) need to provide some solid answers to the $4M question. Where do we cut? And where do we find new revenue? How do we bridge that $4M gap? Here’s the pie charts that show where the money comes from and where it gets spent. Tell me where we should slice or where we can increase…

City Expenses 2011

City Revenues 2011

It’s not like the data isn’t out there for candidates to do their homework. The current budget is available online. The state controller’s office also has a wealth of stats that document our finances over the years (h/t to Flippin for guiding me to this resource). You can also view the finances of every other city in NY for comparison.

I understand politicians don’t like to stake specific objectives – lest they be held accountable if they fail to reach them. But frankly, I don’t think we should continue to accept that.

Stipulation: I don’t accept a candidate pointing out a few minor expenses and then claiming “it all adds up.” If you’re sure it all adds up, show your math. Then I’ll believe you.

If you agree, feel free to share this challenge with your favorite (or least favorite) candidate.

Handing over control of the Controller

There is an important vote coming up for City of Amsterdam residents tomorrow to change the office of the Controller from an elected one to an appointed one, and to change the budget approval process.  The vote was announced back in April, and the issues have been discussed before. However given that the Amsterdam Blogsphere has been relatively dormant on political issues lately, we’ve seen little online discussion on this important issue. I have a hunch that this vote snuck up on many (ok, admittedly on me). So here it is, one last chance to cram-debate on this issue before the vote tomorrow.

The ballot proposition reads as follows:

Amendment to the Amsterdam City Charter
Shall Local Law Number 2 of 2013 be approved?

This local law will eliminate the elected office of Controller and replace it with a Controller appointed by the Mayor, subject to approval by the Common Council. This law will also amend the budget process; the new process provides that the Mayor shall submit a Proposed Operating Budget to the Common Council for approval. The Common Council may then make changes to the proposed budget. If the Mayor objects to the changes, then the Common Council could override the Mayor’s objections by a four-fifths super-majority vote.

The vote will be held Tuesday June 4, 2013 at City Hall, 61 Church Street, Amsterdam, NY. Polls will be open from 6:00 a.m. to 9:00 p.m. Source

I have yet to read one solid argument for keeping the current budget process, which was initiated under previous Mayor Joe Emanuele’s term. The current “cage match” style of crafting a budget by committee is wildly inefficient and it seems most people are ready to finally ditch this idea.

I believe the change to the Controller’s position, overall, is the right one. I have great faith in the public (probably more than most) to pick the best candidate among several choices. However, our choices are currently limited to those who are willing and able to execute a public campaign.  I think that handling a campaign is a fair test for people running for Mayor or Common Council. These people directly represent the public when it comes to creation of the laws we all live by and have to be able to respond to public opinion. However, keeping our city’s finances in order is a fairly objective task, not an ideological one.  I see the Controller’s position as a type of department head, similar to a police chief or fire chief, which have always been appointed positions for this very reason.

My only concern with an appointed Controller, is that the selection process may end up in political fighting and backroom deals. Of course, that type of stuff probably happens anyway within parties when it comes to supporting various candidates for any office. But at least now, when a Controller is elected, there is no further argument and the person can get to work knowing the public is behind them.

And I wouldn’t be as concerned about the politics of the situation if it weren’t for what went on back in January of 2012, when the Common Council voted down the appointment of Gerard DeCusatis, only to have the Mayor nominate him again and refuse to appoint anyone else. To me, this action undermined the basic principle of checks and balances which has been a foundational part of our nation’s system of government and which is modeled by all states and localities. The fact that DeCusatis is still in office and that the Common Council subsequently approved a whopping raise for him, is a dead giveaway that behind the scenes politics were in play on this.

One thing I would have liked to see on this proposal is something that would explicitly prohibit the Mayor from selecting the same person again after being voted down once by the Council.

If this proposal passes, we have to remember that as citizens, we still have a right to be heard on the issue of who gets appointed to the Controller’s position, as well as any of the other appointive officers. If this new arrangement goes into effect and doesn’t end up serving the public well, then we need to be ready to demand yet another change.

Thoughts on the proposed county government changes

Current weighted voting system
(click to enlarge)

The process to change the “weighted vote” system of  government that we’ve had in Montgomery County for some time now is finally moving forward . There’s been a series of initial public hearings recently (reported on here and here). The biggest opposition seems to be in regards to the county executive. Originally, the plan was to have eight legislative districts, and the executive office was proposed to have tie-breaker voting power as well as veto power.  After last night’s Charter Commission meeting, the plan was modified to create nine legislative districts in the county, removing the tie-breaking power for the executive, but leaving veto power in.

To me, the argument for the executive position seems fairly straightforward. Currently, county supervisors essentially act as executives for their areas of oversight. However, the stipend they are paid is less than a part-time job, which makes it necessary for most to work day jobs. The executive position would be a full-time position and would provide direction for county operations on a day-to-day basis. The idea of having a legislature that creates laws separate from an executive that carries them out while providing for checks and balances between the two, is the model of government our country was built on. This system is no different then what we currently have for our cities, towns, states and federal government. It’s hard for me to understand why anyone would think this system would be problematic for the county, but not for any other situation.

The current system of weighted voting is what flies in the face of what most people understand to be a fair representation. If I had a special interest and wanted to influence the vote on a certain issue, it would be much easier to spend my time lobbying the few highly weighted supervisors, rather than having to lobby them all.

The one area that concerns me is how the districts will be drawn. At first, the plan was for three of the eight districts to be completely within city borders. The revised plan with nine districts is to include areas of surrounding towns in these districts.

I’ve always maintained that the City of Amsterdam has specific needs and interests that are unique to the area.  In certain cases where the city is affected by county government actions, it’s important to me that the city’s interests are well-represented. I would venture to make the same argument for the towns as well. I’m not so sure it’s the best idea to draw districts that encompass areas with divergent interests. I think it may dilute the people’s ability to lobby for certain issues that pertain to where they live.

I take heart however because the county executive, who I assume is going to be elected by a county-wide election, is certainly going to have to pay particular attention to city issues in order to get elected. That’s because the city has roughly 37% of the county’s population and will most likely account for a similar percentage of a popular vote.

I think the proposed changes to the county government system are sensible and hopefully we will be able to vote on enacting them this November.