Report requires scrutiny
March 9, 2007
P.T. Barnum was a flamboyant founder of the famous Barnum & Bailey Circus. Some years ago in a Broadway musical Michael Crawford brilliantly portrayed Barnum defining himself as the master of “flim-flam” and “humbug.” Now you see it, now you don’t. What you see is not necessarily what is.
Lynn Hettrick has spoken at meetings and placed letters to the editor selling higher taxes hysteria on behalf of the Coalition for Smart Growth. The coalition’s case is based on a fiscal study they commissioned with Reno-based Meridian Business Advisors. Many basic assumptions of that study and methodology used (agreed by the county manager) are flim-flam. Most conclusions finding 16 county funds at 280-unit growth annually producing $123 million deficits by 2017 are humbug. After years working with the science of accounting, budgeting, and long-range planning I find that study deeply flawed. Flim-flam and humbug, in fact.
An example is their projection that the Town of Minden would have a $1 million deficit by 2017. Careful review revealed that to be humbug. I found at least 13 flaws, distortions, and errors in methodology, base assumptions, and applications. Value of errors with negative slant totals $8 million. Humbug. Well-managed debt-free Minden will be comfortably in the black.
The rest of the study is equally worthy of Barnum. The coalition points to the “sheer magnitude” of projected deficits. I am awed by the “sheer magnitude” of errors in beginning balances, revenue understatements, expense overstatements, and expanded programs not even approved by commissioners. This is not rocket science. The inaccuracies are glaring.
A few examples. It omits $16 million increased sales tax calculated by Meridian themselves from the Riverwood development which commissioners promised when they voted big bucks to subsidize that developer. Almost the entire analysis is based on the county 2006 fiscal year budget, basically reflecting 2004 actual results somewhat adjusted for known 2005 data. Consequently it omitted sharply increased sales taxes from the north county shopping center of $21 million. And $25 million increased property tax revenues and tax rate increases from exploding growth from 2004 to 2007. In all, $62 million of humbug.
Incorrect 2007 beginning fund balances alone understates 2017 by millions of dollars. They mysteriously included a 74 percent increase in social services spending in 2008 and 15 percent increase every year to 2017 while revenues grow around 6 percent, costing over $16 million. Humbug or county management secret?
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It doesn’t show repayment of the county’s $7 million loan to redevelopment. Do they know something we don’t? Or humbug?
County budgeting assumes 6.5 percent annual increases in all compensation plus 10 percent benefits, while revenues grow slower, basically reflected in 10-year projections. Truly a recipe for tax disaster. If you don’t like that kind of planning, contact your commissioners. The study also suggests taxpayers supporting the airport to the tune of $6 million. Flim-flam or humbug? Ask your commissioners. There is much more.
That study the coalition ballyhoos is an early warning raid on our collective wallets. That is not humbug.
Two hundred eighty more housing units will not cause $123 million in deficits. If there is any fiscal problem it is because the county mismanaged the growth that already occurred, such as diverting $24 million property tax revenue into redevelopment while the county pays to service the occupants of redevelopment areas. Growth has not paid for itself. It has paid developers. That is humbug. Tell your commissioners your opinion of their management. Don’t wait for the next election.
— Jack Van Dien is a Sunridge resident and a retired corporate executive.