[André Wallace]
Wallace: “the prior administration drove the City’s bond rating into “junk bond” territory. What you should know is that it’s still there. The current administration hasn’t made a dent in that problem. That means that Mount Vernon has effectively no ability to borrow.”
Photo: André Wallace
The following commentary was written by former Mount Vernon acting Mayor Andre Wallace–who ran the city after Mayor Richard Thomas was forced out of office after he plead guilty, in 2019, to misusing campaign funds. The current Mount Vernon is Shawyn Patterson-Howard.
It’s budget season again. Time for your elected leaders to put on their annual “theatre of the absurd” to try to explain to you why they can’t live within their means (again), why expenses are out of control (again), why nothing can get done in the City (again), and most importantly, why they need more of your money this year to do as little or even less than they did last year (again).
There will be a lot of finger pointing at the Comptroller, past administrations, the County, the State, and current events: everyone and everything but the current administration. You’re not going to see anyone in City Hall taking responsibility for another year of financial mismanagement.
I want to explain how and why the budget process is the most important thing our government does every year. Let’s also dive a little bit into why they mess it up every single year.
In one of my earliest columns, I wrote, “If we are going to change our circumstance, we have to change our thinking and educate ourselves. We need to start with the financial basics and understand how to avoid the traps of poor spending habits to better prepare ourselves for wealth creation.”
On the government level, that statement is even more important than on the individual level. Unfortunately, that message never seems to get through to City Hall.
Fresh off of a lockdown and a pandemic, with nearly half or more small businesses in the City staying closed for good, we’ve got a full-fledged fiscal emergency on our hands. City Hall is about to publish its budget and you’re not going to see any progress made toward solving that crisis when it finally does come out. The stakes are high because the financial viability of our City teeters on the edge of collapse if not handled properly. This of course will lead us into some serious financial pain for the next few years.
Here’s what you should be looking out for from this year’s City budget:
MASSIVE SPENDING REDUCTIONS: Unlike a business, if a government spends more than it makes, it can go to its taxpayers and get more money from them. No one is ever happy paying more taxes, especially when their government cannot control its spending. Revenue for 2020 was completely destroyed by COVID-19 and the lockdown. Sales tax, parking revenue, ticket revenue, court fees, permit issuance, real estate sales, and event revenue has all been gutted.
There is no reliable data that 2021 is going to be much different with businesses closed and not returning. That leaves the government with only one option: tighten its belt and spend a lot less. It needs to start with furloughs of City employees, reduction in outside spending on things that should be done internally (e.g., legal fees), and better oversight and management of spending by departments that are notorious for blowing through their annual budgets (e.g., DPW, Law Department, Mayor’s Office, etc.).
BORROWING LIMITS: You may remember that the prior administration drove the City’s bond rating into “junk bond” territory. What you should know is that it’s still there. The current administration hasn’t made a dent in that problem. That means that Mount Vernon has effectively no ability to borrow money from the open market from PUBLIC sources like the bond market. Forget bad credit. Where we are is worse. We’ve got no credit!
With revenue numbers so low, our spending is going to be completely out of line with our revenue, there’s going to be a lot of pressure on this administration to borrow money – at outrageous cost – from PRIVATE sources like local banks and shady finance companies. Remember, no matter how broke you are, you can always find someone willing to loan you money you cannot ever afford to pay back. Sometimes, they break legs in the process. You know what I’m talking about.
The City Council must place a moratorium on all new borrowing – from any source – until such time as the administration reduces spending to reasonable levels.
INFLATED REVENUE SOURCES: It happens every year, but it’s going to be worse this year. The way the budget generally works is that, for example, a department head will say, “we made $XXX in parking ticket revenue last year, so we think we’ll make at least that much next year, plus a little more.”
The budget line item will be set to that number on the revenue side. We can’t do that this year unless City Hall publishes the actual revenue numbers from 2020. To say that things will go back to 2019 levels is bad science fiction policy, completely not based in reality. Remember that things like tickets, parking fees, and license revenue all come out of your pocket making them just “shadow taxes.” Pay attention to the details, because that’s where the Devil lives.
Why does City Hall inflate projected revenue numbers? So they can avoid making spending cuts, of course. Not all of the things a City spends money on are in the budget. These are what I call “off the book” expenses. Legal settlements are not budgeted, but they cost millions of dollars every year. Outside lawyers are always incredibly under-budgeted at far less than is actually spent. Tax certiorari (property tax disputes) settlements are always millions over budget and the courts are going to start holding the City contempt if past settlements aren’t paid.
Cases involving the Kela Tennis bubble, corruption by the Mount Vernon Police Department, employment issues, and defending our former Mayor Thomas and former Corporation Counsel Porcari in lawsuits brought against them by former employees will all cost this city millions of dollars this year alone. Not one nickel of that money will be included in the budget in any meaningful way. And there’s much more out there, which is just the tip of the iceberg.
UNPRECEDENTED TAX INCREASES: If you ran your household or your business like this, you’d be out on the street. It’s irresponsible, unsustainable, and outright criminal. This City is getting fleeced by its own government, and there’s no words to describe it other than shameful.
And it’s about to get worse.
Because the City will have to ask for a HUGE tax hike to pay for what it is incapable of managing or cutting. Forget 1% or 2% increases; be prepared for double-digit increases. For a City that is ALREADY the highest taxed municipality in the highest taxed county in America, another increase to cover this level of shoddy service should make you furious.
The budget process is supposed to be one that involves active public input. Demand that you have your say in this year’s budget. Getting involved is the single best way to hold this government accountable. Don’t fall for the trickery or the Ponzi-like-accounting that will one day bring our City down. Demand the truth, if they’re unwilling to give you that, tell them you’ll settle for their resignation, instead.
Never forget that you’re the BOSS in this City. It’s your government; not theirs.
If you have thoughts or comments about this issue or any other, reach out to me at [email protected]. For previous articles visit andrewallace.com
