|Online Edition Natchez, MS|
The Rinaldi Report
by Peter Rinaldi
Vidaliaís true state
For years, the talk was Vidalia was up and coming, while
For the air-headed and dreamy-minded, the revelation that Vidaliaís
finances had turned upside down came as a shock. Over the years,
employees were added by the dozens, tens of millions were spent on
facilities improvements and services expanded, even though the
economy and the population were shrinking. It was all being paid by
grants and hydro monies, so it was thought.
Reality hit fast, when the 2011 flood siphoned off several millions of dollars in emergency response, and then low water cut hydro revenues significantly. Vidalia residents awoke to a departing city manager, IRS troubles and assertions by the mayor and aldermen that things were under control.
Things were not under control.
Vidaliaís 2011 Silas Simmons audit showed a pattern of excessive spending and lack of bookkeeping controls that had nothing to do with floods or hydro monies. Quite frankly, it was surprising that city management could be so inept. The CPA audit pointed out a number of illegalities that needed rectification.
Near the end of March of this year, Silas Simmons released its audit
of Vidaliaís 2012 finances (for year ending
Hereís the good news. Once the mayor and board finally determined they were losing money by the bushel load, they trimmed expenses. That pattern has continued into the current 2013 budget year and has included layoffs.
After suffering a $1.1 million net loss (revenues v. expenses) in 2011, the cityís fortunes rebounded, earning a $445,000 positive net gain for 2012, a significant turnaround. Even the most notable loser, the riverfront and convention center expenses, were cut from $2.8 million in 2011 to $2.0 million in 2012, an $800,000 savings.
Yet, the bad news has to be told. The convention center continues to be a total drain on the cityís finances, the center earning only $138,000 in revenues for all of 2012, miniscule when you consider its $2 million annual costs. The riverfront and center are pretty to look at. The numbers are ugly as heck.
As Silas Simons points out, the cityís hydro revenues are supporting both the utility fund as well as general government operations. While the city should be earning significant positive cash flow from its electric, gas and water sales, it is not, in part because Vidalia government has employed too many people to generate those utility revenues over the past decade. While the cityís debt is modest, a bare $10 million considering city size and the revenue picture, most of that debt has a short term maturation, which will require additional refinancing. The city does not have the money to pay the short term notes in their entirety.
A few weeks ago, I called Mayor Copeland saying I wanted to do a story on the 2012 audit and update readers on how finances had changed from 2011-2013. He was very willing to help with information. I specifically asked for year-to-date revenues and expenditures, the latest monthly report. I was surprised to find that there is no such report, which is one reason why the city got into trouble. All this time, I thought the mayor and aldermen knew how things were sliding downhill. And it turned out, they really didnít know. Of course, not knowing does not absolve the mayor, aldermen and former city manager from blame. They should have been collating and reviewing these reports for years.
Copeland said to me that Vidaliaís always been a small town and these reports havenít been done. But when youíre spending $32 million a year, youíd better know where you stand financially. Part of the reason Vidalia slipped so precipitously is because city officials didnít have good information to act on. Specifically, Silas Simmons recommends monthly reporting as part of the current audit. Mayor Copeland said such data should be available to staff and the public within 45-60 days.
We have received many calls at our office, asking where the hydro monies go.
That $14 million goes to support general government, public safety, economic development, public works and other ongoing expenses. In the past five years, the city has lost money on utility operations and hydro monies have supported city utility services, too. The overblown police and fire departments are still spending more than $4.3 million a year, ridiculously expensive considering Vidalia has only 4,300 people and a very limited city environs.
For now and in the future, Vidalia will be extremely dependent on hydro revenues to stay solvent. Property taxes amount to only $164,000 a year, sales taxes $2.7 million and occupational licenses $224,000. Thereís no place else to go to get money other than from the hydro plant or utilities operations. Vidalia residents already pay extremely high electric bills.
While you could point out that Vidalia underfunds its water operations and property taxes are mighty low, the real problem has not been too little revenues, but too much spending with few controls or oversight.
The most recent Silas Simons audit continues to point out
illegalities that remain uncured.
The auditors note that Vidaliaís customer utility deposits are underfunded by $95,000. That means that during bleak times, the city transferred customersí utility deposits to pay bills, a real sign of desperation as well as gross mismanagement. As Silas Simmons points out, these funds should be restricted and not subject to ďinternalĒ borrowing.
There are more problems. The city does not keep a good list of fixed assets, adding items as purchased and rolling forward balances. There should be a new inventory of all fixed assets, the audit says. Additionally, the cityís bookkeeping is so sloppy, it often pays invoices more than once. There are also major errors in bank reconciliation.
As you may know, when the auditor makes a finding, he usually makes a recommendation. Management then responds in writing by saying what it will do to correct the problem. A lot of the financial mismanagement has been placed at the feet of the former city manager, who was a CPA. That blame is deservedly there. Managementís new response is that the town clerk will fix many of these problems. And clearly, that hasnít been done in past years and doesnít appear will be done because the town clerk doesnít have the professional background.
Also, for those familiar with Vidalia city politics, Mayor Copeland is more or less the elected dictator. I donít mean to be harsh. But heís been in office so long, everyone defers to him. He makes the major decisions and the aldermen often endorse those decisions long after theyíve been put in practice. This includes projects, budgeting, spending and personnel decisions. Vidalia obviously feels comfortable with this approach. The good part of this one-man show style is that things get done. The bad part is that playing politics with millions of dollars has cost the city dearly and put the city in the mess itís in.
Some credit is also due. Mayor Copeland and the Board of Aldermen have responded positively to the financial meltdown with budget trimming, layoffs, reducing expenses, embracing a new view as to how things should be more professionally run. However, their long-term and casual interest in finances and their failure to supervise the city is certainly a sign of incompetence. As an outsider-insider, I have to question whether the people of Vidalia played a bit of a role, too. Iíve written about this subject before, that the day of reckoning was coming. Of course, now itís here, but itís going to be several years of reckoning. The moral of the story is Ė you should pay attention to your governmentís money, because itís your money and its misspending will affect your life (like high utility bills).
Plainly and clearly, the conclusion should be drawn that citizens should be more involved in Vidalia government. You canít assume the mayor and aldermen are doing their jobs well, because sometimes theyíre not.
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