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Author Topic: Supreme Court rules against "slush funds" in City budgets  (Read 1855 times)
Marty Tennant
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« on: February 29, 2016, 12:19:13 PM »

This SC Supreme Court ruling occurred back in September, but it is worth noting as its logic applies to what still goes on in the City of Georgetown.

We have routinely taken profits from our utilities (water/sewer/electric) and spent the money on things unrelated to the utility itself.

This opinion pretty much says this isn't allowed.

See: http://masc.sc/SiteCollectionDocuments/Municipal%20Court/Azar%20v%20City%20of%20Columbia%20Handout%202.pdf

"Simply put, the statutes do not allow these revenues to be treated as a slush fund."

If that doesn't explain what the City has been doing with our money from the utilities fee profits we pay them, I don't know what does.

For example, the Eagle Electric purchase and routine transfers of profits to balance the budget.

What has happened with the Eagle Electric property?  Does the City still have grand plans for a new fire station there, or did Joey Tanner leave the City because he simply got tired of the empty promises and lies?
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Notice:  All posts made by me are my OPINION.  I am not responsible for any comments by others!  The Citizens' Report is provided as a public service to the citizens of Georgetown County for them to report and comment on the news.
Marty Tennant
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« Reply #1 on: February 29, 2016, 01:03:46 PM »

Here is a story from a real Columbia paper that discusses the practice of using utility funds as slush funds.

http://www.free-times.com/news/baddourah-wants-a-swift-end-to-water-sewer-transfer-021016

What if the City of Georgetown actually took the money in the existing utility profits fund (slush fund if you wish) and applied it to something that would benefit the City?

For example, how about investing in solar power that would generate electricity and REDUCE our electric bills?
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Notice:  All posts made by me are my OPINION.  I am not responsible for any comments by others!  The Citizens' Report is provided as a public service to the citizens of Georgetown County for them to report and comment on the news.
Lee Padgett
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« Reply #2 on: March 03, 2016, 08:04:01 AM »

Since the City is down to about 3.5 million in these reserves it may be a moot point. In the next couple of years they will have to pay the piper and actually create a budget that is self funding and can't be padded by misappropriated funds!!!
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"The death of objectivism and small government can be attributed to emotional politics." Liberty Laura
Marty Tennant
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« Reply #3 on: March 03, 2016, 10:29:07 AM »

Where has all the money gone, long time passing?  Sung to the tune "Where have all the flowers gone."

According to the City's last Comprehensive Annual Financial Report, it still has $18 million invested in the Local Government Investment Pool at the SC Treasurer's Office.

"As of June 30, 2015, the City had the following investments and maturities:   LGIP $18,316,539"
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Notice:  All posts made by me are my OPINION.  I am not responsible for any comments by others!  The Citizens' Report is provided as a public service to the citizens of Georgetown County for them to report and comment on the news.
Marty Tennant
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« Reply #4 on: March 03, 2016, 04:43:43 PM »

http://citizensreport.com/smf/index.php?topic=4421.0

Here is the list of cash money invested by the City and County.

I don't understand how the City could have spent $15 mil since June 30, 2015.

I don't accept that number Lee.
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Notice:  All posts made by me are my OPINION.  I am not responsible for any comments by others!  The Citizens' Report is provided as a public service to the citizens of Georgetown County for them to report and comment on the news.
Lee Padgett
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« Reply #5 on: March 03, 2016, 05:24:57 PM »

The "reserves" or emergency fund as Jack called which he said had 10.6 million (I quote that amount since it is the only thing they would own up to. That amount was quoted in 2013 during the mayoral race or it was the 2012 budget season, the rest of the unrestricted net assets remains a mystery, that fund is totally separate from the LGIP, is still a mystery as the City has not explained it. Well that 10.6 safety net is now down to 3.5+|-. When the City spends over the 28 million it takes in, the remainder has to come from somewhere. That somewhere is the unrestricted net assets fund. Since Jack said I had no basic comprehension of mathematics this entire post is probably wrong. I am basing this off Debra Bivens warning to Council and the auditor's report this year.
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"The death of objectivism and small government can be attributed to emotional politics." Liberty Laura
Marty Tennant
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« Reply #6 on: March 03, 2016, 06:38:10 PM »

If the city is spending money generated from the enterprise funds (electric/water/sewer) on things not related to those funds (having a nexis per the Supreme Court decision) then they are illegally using a slush fund to pay bills that should be paid for from taxes.

Am I wrong on that?
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Notice:  All posts made by me are my OPINION.  I am not responsible for any comments by others!  The Citizens' Report is provided as a public service to the citizens of Georgetown County for them to report and comment on the news.
Lee Padgett
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« Reply #7 on: March 03, 2016, 08:46:26 PM »

You are right on that, the City--by state law--should not be using the enterprise funds as an ATM. And I don't think I will post from my phone again. That previous post was jumbled. Here is what I have found regarding the Unrestricted net assets in the SSN.

http://www.southstrandnews.com/article/20110228/GTT01/302289994

http://www.southstrandnews.com/article/20130524/GTT01/305249998

http://www.southstrandnews.com/article/20130528/GTT3203/305289996

http://www.southstrandnews.com/article/20110221/GTT3203/302219996

Perhaps the general public cannot fathom the ridiculous spin put on Government finances.
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"The death of objectivism and small government can be attributed to emotional politics." Liberty Laura
Redstone
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« Reply #8 on: June 08, 2016, 10:01:48 AM »

Everyone should keep a very close eye on whether these sorts of transfers appear in the final version of the upcoming budget.  The SC Supreme Court has said they are unlawful.  The question will be whether the Mayor will defy that ruing and present a final budget for Council approval that defies (or attempts to weasel its way around) how the State Supreme Court has interpreted the law.  That would be a very perilous game for anyone to play, and especially so for a lawyer. 
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Marty Tennant
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« Reply #9 on: June 08, 2016, 12:32:44 PM »

I fully expect the "weasel" to try and weasel his way around anything he thinks he can.

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Redstone
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« Reply #10 on: June 12, 2016, 12:23:53 AM »

Keep your eye on what happens.  If there is a fund transfer from the Enterprise Funds (Electric, Water/Sewer) to the General Fund to cover ordinary operating expenses, call Gene Connell.   He's the attorney that won the case on this issue against the City of Columbia in the Supreme Court.  He'll know what to do.  He's an excellent attorney and, unless I miss my guess completely, will be able to sucessfully (and profitably for him) deal with the situation.
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Lee Padgett
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« Reply #11 on: June 12, 2016, 07:27:38 AM »

Based on this language the City is not following the applicable laws governing utilities. The layers are laid out specifically as to how the money is to be spent and only after certain designations are met can they use profits from utilities as "free money" to spend as they like.

SECTION 6-21-440. Segregation of revenues to several funds.

In the authorizing ordinance the governing body of the borrower shall set aside monthly (or more often if deemed advisable) and shall pledge either the gross revenues or net revenues of the system, project, or combined system, as the governing body of the borrower may determine, into separate and special funds as follows: Out of the revenues there shall be set aside a sum sufficient to pay the principal of and the interest upon the bonds as and when they become due and payable. If the revenues of any calendar, operating, or fiscal year shall be insufficient to pay the principal of and interest on the bonds maturing in any such calendar, operating, or fiscal year, an additional amount sufficient to pay the principal of and interest on such bonds outstanding and unpaid shall be set aside out of the revenues of the next succeeding calendar, operating, or fiscal year and applied to the payment of the principal of and interest on such outstanding and unpaid bonds. This fund shall be designated the "bond and interest redemption fund". Out of the revenues there also shall be set aside a sum sufficient to provide for the payment of all expenses of administration and operation and such expenses for maintenance as may be necessary to preserve the system, project or combined system in good repair and working order. This fund shall be designated the "operation and maintenance fund". If the pledge made is of gross revenues, the order of the foregoing set asides shall be first to the bond and interest redemption fund and next to the operation and maintenance fund; if the pledge is of net revenues, the order of the foregoing set asides shall be first to the operation and maintenance fund and next to the bond and interest redemption fund. Out of the remaining revenues there shall be next set aside a sum sufficient to build up a reserve for depreciation of the existing system or combined system. This fund shall be designated the "depreciation fund". Out of the remaining revenues there shall be next set aside a sum sufficient to build up a reserve for improvements, betterments, and extensions to the existing system, project, or combined system, other than those necessary to maintain it in good repair and working order as herein provided. This fund shall be designated the "contingent fund". Any surplus revenues thereafter remaining shall be disposed of by the governing body of the borrower as it may determine from time to time to be for the best interest of the borrower.

In the event the proceedings for the issuance of bonds provide for their repayment in whole or in part from front-foot assessments, the borrower need not make the payments provided for in this section for application for the payment of principal and interest on a monthly basis but may make them at least annually, provided that the payments shall be in such amounts and at such times that sufficient funds will be available to pay the principal and interest upon the bonds as and when they become due and payable
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"The death of objectivism and small government can be attributed to emotional politics." Liberty Laura
Marty Tennant
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« Reply #12 on: April 08, 2017, 08:41:25 AM »

I am resurrecting this post in light of recent revelations that have just turned a light on in my head.

More later.
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Notice:  All posts made by me are my OPINION.  I am not responsible for any comments by others!  The Citizens' Report is provided as a public service to the citizens of Georgetown County for them to report and comment on the news.
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