Transcript of John Dyson’s Questions Regarding Beaumont’s Financial Update.
By: Libi Uremovic| Original Article at Patch.com
At the November 18, 2014 Beaumont City Council Meeting John Dyson asked questions about the Financial Update. I personally don’t read the Financial Update because I don’t appreciate ‘creative accounting’, but let’s look at the issues that were raised by Mr. Dyson.
OLD FINANCIAL DATA: The Financial Data presented at the November 18 Council meeting is dated August 31, 2014. Mr. Dyson is correct. The Financial Updates should reflect the previous month. Beaumont City Manager Alan Kapanicas rambled on about modified accrual procedures, which has nothing to do with providing timely financial documents.
Kapanicas also stated that in his Report; ‘his’ being the basis of the problem. This is a Report that should reflect the past month’s financial activities and should be compiled and reported to Council and the Public by the City Treasurer as directed in California Government Code 41004.
$8.2 MILLION SEWER BOND RECALL: The funds from the 2001 Wastewater Treatment Bond were embezzled to Urban Logic and Beaumont is on the verge of financial collapse, so the City’s 2001 Wastewater Treatment Bond has been revoked. Aylward lied and stated the City had $14 Million. Kapanicas lied and stated the City had $15 Million.
The City has yet to release the October bank statements, but September 2014 bank statements show $3.8 Million in the State LAIF Account, $2.78 Million in the Checking, and $4.28 Million in the Savings.
TAX COLLECTION: The transmission of property taxes is very clear:
Sales and Excise Taxes are paid by the Citizens every day. The State and County collect the various sales taxes throughout the month, close their books at the end of each month, and transfer the funds to the local agencies, usually by the third week of the month. The Bank statement clearly states which month the taxes were collected.
Kapanics stated that sales tax comes in three months late. Incorrect. The State and County collect the taxes, close their books at the end of each month, and transfer the funds to the local agencies by the end of the following month. The Bank statement clearly describes the month the taxes were collected.
Property Tax bills in Riverside County are issued in October and Property Owners pay their property taxes by December 10th and April 10th. The County transfers these funds to the City by the end of January and May, respectively.
Kapanicas repeatedly stated: “we wait 6 months for property taxes”. Incorrect. The City receives the first installment in the first month and the second installment of property taxes by the fifth month of the year. The City receives the citizen’s property taxes six months in advance, not six months in arrears.
Kapancias dangled the Mello Roos Property Taxes in front of Council and used words like ‘xmas’ and ‘cash money’ . Mello Roos taxes are free money to Beaumont City Staff and Council, but it’s a horrible burden to the Property Owners in the Beaumont Developments.
Below is the Transcript of Beaumont City Council Meeting: http://podcast.ci.beaumont.ca.us/CC_2014-11-18_agenda.htm
56:00 John Dyson: I had a question on the Financial Update. In reading the Financial Update available online and I guess available to the Council I’m surprised that the attached financial statements dated August 31st. These Reports are more than two months old. I wonder why we are not looking at October month-end data? The sewer fund and expense report shows an unfavorable variance of almost $1 Million for one month. I was wondering if this could be correct. Did the City not collect sewer fees in August? I know that I paid mine. The General Fund reflects a negative balance of more than $11 Million as of August. I wonder if this could be correct. The Sewer Service contains roughly $3.7 Million and yet our City Manager intends to pay off a $9 Million Sewer Bond. Will the remaining $6 Million needed to retire these bonds be taken CFD Bond Fund? Those are my questions.
58:20 Aylward: I’m not sure what he’s talking about. He’s talking about a deficit in the general fund? When the general fund shows a small surplus of $738 I don’t know where he got an $11 Million for the sewer fund. I don’t know where he came up with this. This shows that we’re in the positive by … In the sewer fund…
Castaldo: Low and behold.
Knight: Bill?
Aylward: Yes, I have that in front of me. I don’t know what you’re talking about. (mumblings ) That’s a Cash Balance. A negative Cash Balance. That’s correct. But when we look at our financial statements we do have a positive fund balance of $14 Million.
59:30: Kapanicas: As I’ve said during my Report; we wait six months for property tax. We don’t stop service from July 1 to December 31st. We run it on a cash basis where we use cash from before. We get a big check come right after xmas. The County sends us a; Bill, what’s expected on that County check in January?
Aylward: About $11 Million
Kapanicas: $11 Million Cash. Nice check. We do have an armored car so nobody in the audience think anything about it. (giggles from council) And same with sales tax. We don’t get our sales tax payment until September for three months. Again; we operate from January 1, people are just paying their taxes on December 2nd even though they’ve had six months worth of services by that time. Same with Sewer. The Billing goes out every other months so there’s a cash influx in the even months, in the odd months it’s the other way around. Bill, do you have any other ones?
60:30 Aylward: Yea, just the timing of it.
Berg: The County operates the same way, don’t they?
Aylward: Well, they have to.
Berg: Thank you for answering that question.
Kapanicas: Remind there’s on a modified accrual we’re to show revenues when we received and expenditures when incurred. So we spend for six months then we get our property tax of about $11 Million. Then we expend for another six months and about May we get the other $11 Million. So that’s the reason you’ll see cash flow back and forth, but as we said, we have assets at the end of August of $15 Million. The other item that was mentioned is paying off the Sewer Bond. Currently we could keep that going, but it’s going to be at a much higher interest and finance charges through Union Bank, so it’s better to pay it off and make it a city-held debt. It’s actually the Teachers’ Union that’s been getting the money over the last 13 years. And at this time we’re going to ask to have those retired, which you will see in a few minutes.
62:00 Nancy Carroll: I want to thank John Dyson for going through the report so carefully and coming up with really good questions. It’s very difficult sometimes when you’re in the public to come up here and to question a financial matter. And I’d like to hear the financial matters answered in a respectful way because when we speak to the Council we try to speak in a very respectful way. When we speak to the Staff we try also to also. I don’t want to make light ever of somebody going through the financial reports and coming up with questions. They may be right, they may be wrong. But the most important thing is that you do have the Public that takes the time to go through those financial reports, analyze them, and see if the City is doing the right thing by their own neighbors and by themselves and their families. So I don’t want to make light of armored cars and big checks and things like that. I want to answer the questions respectfully and I hope that we do that. Thank you.