According to the city’s own accounting system, Birmingham is running a $17 million deficit for 2009, not a $13 million surplus as projected in the mayor’s 2010 budget.
What’s happening at Birmingham City Hall is not a failure to communicate (despite what I read on the Birmingham News’ editorial page Sunday.) It’s not a difference of opinion between the council and Mayor Larry Langford. Rather, it is a difference between fantasy and reality — a $30 million difference. It’s a hole big enough to drive Mayor Langford’s Cadillac Escalade EXT through. And it’s a difference worth dealing with, despite what a handful of protestors on the City Hall steps said Monday morning.
The city of Birmingham is more than a week past the legal deadline for approving the fiscal 2010 budget. Birmingham’s fiscal year begins July 1 and ends June 30. Without a new budget, the city continues operating under the old one. In most years that wouldn’t be a big deal, because most years, the city takes in more money than it did the year before. By almost everyone’s estimates (besides, perhaps, the mayor’s) that won’t be the case in 2010. In fact, it might not have been the case in 2009.
Here’s what happened.
In May, the finance department drafted the city’s budget using the New World Accounting software the city took more than a year to install and get ready. Once in place it was supposed to provide real-time reporting for the city’s finances. From that financial data in May, the Finance Department projected a $13 million surplus. The budget was certified as balanced and sound as required by law by Finance Director Steve Sayler.
But things didn’t turn out that way. Rather than a $13 million surplus, that same accounting system is now reporting a $17 million deficit. The council’s financial consultant, Doug Turner, confronted Sayler with the data during a council budget session on Monday.
When confronted with the data, Sayler refused to stand by any of the numbers from the city’s accounting system. According to Sayler, the current financial data is incomplete and might remain that way until December.
“All the numbers are incorrect and we will never have an exact to the penny number that will be satisfactory to everybody,” Sayler said. “We can only go with our best estimates.”
For the councilors, the revelation confirmed suspicions that the city has been running a deficit.
The problem for the mayor’s office is that it has trapped itself in a paradox. Sayler argued Monday that the June 30, 2009, figures from the New World Accounting system were not accurate enough to make reliable assumptions for budgeting 2010, but the April 30 numbers were good enough for him to work with.
To put that in more simple terms, ask yourself this: Which bank statement would you use to best predict how much money would be in your checking account tomorrow? Your June bank statement or your April bank statement? Sayler is arguing April. The council, June.
Another issue makes all this even more tricky for the council: Langford’s administration has never given a clear or consistent definition for “encumbered” funds. For projects Langford likes, such as Fair Park, encumbered has meant merely funds allocated. For projects that have fallen through the cracks, such as trolleys and scholarships, those became unencumbered when he wanted to spend that money on other things.
At the same time, Langford’s administration has run a shell-game on the council, using dome money for Fair Park, using Fair Park money for other projects — all until the council has no idea what funds have money and which have been robbed to pay for Langford’s impulse purchases. It’s the municipal equivalent of using the mortgage money to pay the power bill, the power money to pay the credit card, the credit card payment to buy the groceries, and so on.
Meanwhile the council is adamant that the city preserve at least three months operating funds in the city’s savings fund balance. This has been a long-standing policy at City Hall, and that policy has preserved the city’s respectable bond rating. That, in turn, keeps the city from paying higher interest rates on its debt.
But that policy leaves more than $100 million sitting in the bank, and that’s driving Langford and Sayler crazy. But remember, these are the men — Langford as commission president and Sayler as county finance director — who helped spend nearly $400 million of fund balance at Jefferson County down to $14 million. Pinching pennies and fiscal conservatism is not in their nature.
When the administration presented its budget to the council, it labeled a line item “Excess of Revenue over Expenses.” But that excess was never there. In reality that meant, “Money we’re taking from savings to balance our budget.”
To recap, Sayler’s projections from mid-May are missing the target by $30 million. That’s a pretty significant difference, considering he was guessing year-end numbers only six weeks out. Langford’s shell game has the council’s heads spinning, and the council refuses to let Langford spend the city’s savings on his whims.
Finally, Monday, the council voted to give the budget back to the mayor for him to re-do it, but don’t count on the mayor to respond. Sayler said Monday that the council’s request was impossible.
That left Council Carole Smitherman shaking her head. She said something then that I never thought I’d hear.
“Even Kincaid would compromise with us,” she said, referring to Langford’s notoriously hard-headed predecessor. “He didn’t always implement the budget we passed, but he compromised with us.”
War on Dumb is a column about political culture. Write to email@example.com