The City has assured us that charges for staff administrative support services are based on their model that “allocates administrative overhead to each fund or department.” All City Funds are therefore subject to the model’s charges. Since Police, Parks, Non Department and Court are wholly funded by and within the General Fund, the City exempts them from the model’s overhead charges since there is no fund transfer opportunity available.
By the City’s own explanation and definitions, the City Hall project for the past three years should have been reimbursing City staff for their administrative support for the planning and construction of this project. During this period, the Water Operating Fund has been charged $558,707 while the City Hall Expansion Fund has been charged nothing.
In fact, according to the City’s model, the administrative support required for the City Hall project exceeds the same administrative support required by the Water Operating Fund during this time period.
We are told that best accounting practices require legitimate and necessary staff administrative costs for the Water Operating Fund must be charged and recovered. These same costs for the City Hall Expansion Fund however, are a political liability and were eliminated from both the project and City Budget. The City Manager admits that indirect transfers for administrative support of capital construction projects is appropriate and budgeted those costs as transfers to the General Fund for the water system portion of the recently completed Dorcus Lane construction project. Now that construction of City Hall is well underway, not a single dollar of administrative reimbursement has ever been charged to the project.
The City concluded that a vote on a new City Hall was not necessary. The Council would simply take out a loan as the General Fund would have adequate funds for both current services and be able to take on an additional annual $200,000 or more in loan debt for the next twenty years. Adding another $600,000 of staff administrative costs to the City Hall Expansion Fund these past three years for the planning and construction of this project would have complicated the “no vote necessary” marketing narrative that was presented to us for the City Hall project.
Any City policy that can not withstand fact checks and requires its officials to constantly engage in contradictory, confusing and ever changing explanations is simply bad policy. The City’s practice seems to be selective administrative cost reimbursement applying it almost exclusively in those instances where water utility revenue is present which then becomes available for transfer to the General Fund where it can then be spent on anything the City desires.
Manzanita has a problem with its General Fund. General Fund revenues have been and continue to be insufficient to keep pace with costs, particularly the explosive growth of costs of general Administration, short term rental management and Police services. When will this Council acknowledge this fact, stop the accounting gymnastics and raiding the City Water Funds to prop up the General Fund and start the conversation with citizens about how to solve this problem?
Randy Kugler
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