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The Rinaldi Report by Peter Rinaldi
Vidalia’s true state
For years, the talk was Vidalia was up and coming, while
For the air-headed and dreamy-minded, the revelation that Vidalia’s
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.
Vidalia’s 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 Vidalia’s 2012 finances (for year ending
Here’s 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 city’s 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 city’s 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 city’s 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 city’s 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
didn’t 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 Vidalia’s always been a small town and
these reports haven’t been done. But when you’re spending $32
million a year, you’d better know where you stand financially. Part
of the reason Vidalia slipped so precipitously is because city
officials didn’t 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. There’s 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 Vidalia’s customer
utility deposits are underfunded by $95,000. That means that during
bleak times, the city transferred customers’ 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 “internal” 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 city’s 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.
Management’s new response is that the town clerk will fix many of
these problems. And clearly, that hasn’t been done in past years and
doesn’t appear will be done because the town clerk doesn’t have the
professional background.
Also, for those familiar with Vidalia city politics, Mayor Copeland
is more or less the elected dictator. I don’t mean to be harsh. But
he’s been in office so long, everyone defers to him. He makes the
major decisions and the aldermen often endorse those decisions long
after they’ve 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 it’s 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. I’ve written about this subject before, that the day of
reckoning was coming. Of course, now it’s here, but it’s going to be
several years of reckoning. The moral of the story is – you should
pay attention to your government’s money, because it’s 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 can’t assume the
mayor and aldermen are doing their jobs well, because sometimes
they’re not.
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