Friday, January 26, 2007

Norco Council Members Want a Second Opinion

I told you earlier today that Northampton County Council is lucky to have Lenny Zito, a former judge, as its solicitor. Even Ron Angle listens to him.

But council members Charles Dertinger and Tony Branco don't like Zito's legal opinions, and actually want to hire an accountant to review them. Maybe even a CPA!

I've got a newsflash for Dertinger and Branco. It might save taxpayers a few bucks. Accountants, even CPAs, do not give legal opinions. What are these dudes smoking?

24 comments:

Anonymous said...

My God, how can you ignore Zito's expertise?

Bernie O'Hare said...

He's a good lawyer and has added some distinction to a council that badly needs it. Just two days ago, Wayne Grube told me they were very lucky to have him. It's time they listen and stop playing politics.

Anonymous said...

Just reading the article, only Branco comes out for hiring an accountant.

Bernie O'Hare said...

Anon, This is what the ET tells us about Dertinger: "Dertinger said he supports the idea of reviewing Zito's opinion and the proposal." If Branco and Dertinger want this, you can be sure that Neiper and McClure are on the bus, too. And the driver may be Wayne Grube. I express some hesitation about Grube because he just told me that he has high regard for Zito, and Branco's idea is a slap across Zito's face. My view is that Branco is joined by 4 and possibly 5 members of council.

LVDem said...

I find Angle's comments hilarious. Branco has said several times in public that he sees himself as a Ron Angle type: populist, call it as it is. I wonder if that is the case any more.

For the record, Branco is in a league of his own.

Bernie O'Hare said...

From my limited exposure to the guy, I have to agree. I never knew until I read your comment that Branco compares himself to Angle. I know Ron Angle. Ron Angle's a friend of mine. Branco is no Ron Angle.

I don't think he'll be around much longer.

Anonymous said...

Ok their fat and ugly too

Anonymous said...

why is anyone afraid the re-examine this issue? with lawyers, the answer is often directly related to how the question is phrased.

in this instance, the issue is whether the entire fund balance can be used to fund open space. the answer is "no". so, why not figure out what portion of the fund balance CAN be used to fund open space?

Bernie O'Hare said...

Anon 7:06, That was never the question. The question was whether cash reservbes can be invaded. They can't. That's not just bad fiscal policy. It's contrary to the Home Rule Charter. That's how the solicitor of Northampton County Council ruled. What Branco and Dertinger want is a second opinion. They want to shop around and get a different opinion from another lawyer because they don't like what he told them. A lawyer is not htere to tell you what you want to hear. He's there to tell you what the law says. And incidentally, accountants don't give legal opinions.

Anonymous said...

aren't there two issues-unrestricted reserve vs. the restricted reserve? the latter is sacrosanct, the former is not. the real issue would then be how much is really in both. this is accounting, as opposed to legal.

Bernie O'Hare said...

Anon 11:08, I understand the point you are trying to make. Unfortunately, we are only talking about restricted cash reserve, which is designated by the executive as two months operating expenses. Whatever amount he sets aside cannot be questioned by council under the terms of our Home Rule Charter. In fact, under that Charter (Section 704(b)), Council has no authority to interfere in any way with any estimate of revenue submitted by the executive. It doesn't matter whether it is restricted or unsrestricted. It can't be touched. This was inserted in the charter to prevent council from cooking the books. This is a legal determination.

Anonymous said...

actually, it can be. prudence and generally accepted accounting principals dictate two months expenditures as a reserve, but 704 doesn't address that. 704b provides that council can't mess line items required by law or indenture, with the exec's revenue estimates, or unbalance the budget. where does it say they can't do something with the unrestricted cash balance?

705 in fact gives them the authority to transfer unencumbered appropriations from one pot to another.

again, determining what funds are unencumbered and available is a financial vice legal, question. that is certainly within the power of council, no?

Bernie O'Hare said...

A cash balance, when it comes into a new budget, is no longer a cash balance. It is part of the revenue that makes up the new budget. And actually, the cash balance is never precisely known.

You and I both agree that 2 months of operating expense is a prudent cash reserve. That was the amount set aside by Stoffa and that is what council wished to invade. We both agree that is fiscally imprudent. In addition, I think we both agree it is illegal. That's what Zito determined, and I think you'd agree with that assessment.

It is unlawful to interfere in any way with any estimate of revenue under Section 704.

You're right about Section 705. But that only applies when the executive certifies revenues in excess to those estimated in the budget. That hasn't happened, so council has no authority to play with the money.

Had Stoffa certified there was money available that was not being spent, then Branco and Dertinger could try to find some use for it. But that's not what happened.

Anonymous said...

so they want to invade the cash reserve as opposed to the unrestricted cash reserve? and if the former, does this budget actually have an unrestricted cash reserve?

Anonymous said...

p.s.. if it's the former, then they're BAD, BAD councilmen. no biscuit. if the latter (unrestricted), well then no problem.

Bernie O'Hare said...

Anon, Council wanted to dip into the two month cash reserve balance, the rainy day funf set aside for unexpected expenditures or just paying bills if revenue slows up. It's not just bad accounting, although it is certainly that. It is also illegal.

Anonymous said...

what if they want the accountant to see if there are funds available beyond the restricted reserve? isn't that ok?

Bernie O'Hare said...

Anon, Under our Home Rule Charter, council can't decide independently what to do with an unrestricted reserve. The county exec must first certify that the revenues have exceeded those identified by the budget.

Anonymous said...

seems like you're going out of your way to say they can't examine the budget independently. i know you're fond of stoffa, but prior councils have been repeatedly crticised for being a rubber stamp for the executive branch.

if council wants an independent look at the county's finances, so that they can then negotiate with the executive over what to do with any unrestricted excess, that's good government.

Bernie O'Hare said...

Anon, Yes, I am kind of fond of Stoffa. It's a very rare and remarkable thing when a person can get elected to that position w/o taking ANY money from special interests. But council is there to serve as a check and balance against the executive. It is not a rubber stamp.

But it only has the power the Home Rule Charter gives it. Now I don't believe it can play with revenue estimates in any way unless the exec certifies that more money is coming in than he originally predicted. That's what Sectrion 705 says. You may not like it but there's no point wasting everyone's time with something that's illegal.

At the meeting when the budget was approved, Zito told council they couldn't play with the cash reserve presented by Stoffa. He gave no opinion and was not asked about other revenue. And that is, at least in the first instance, a legal question. Perhapss his view differs from mine, and it's his view that matters. But council should ask their own solicitor what he thinks before shopping around for a second opinion.

Anonymous said...

beacsue of your fondness for stoffa and distaste for council, you're missing or avoiding the point. it is perfectly within council's purview to examine the budgetary numbers and determine whether there is, in their opinion, money in the unrestricted cash reserve.

if they determine the question in the affirmative, then they can begin meaningful debate with the executive as to what could be done with it. nothing illegal about it. they simply enter the debate with the executive armed with information.

Bernie O'Hare said...

Anon, you're right. I am fond of Stoffa. I don't have great regard for council. And I am missing your point. Like I said, council is ideally a check against excesses by the executive. But it's power is delineated in the Home Rule Charter. Under Section 704 of the HRC, you and I both agree that Council had no business tring to invade the restriced cash reserve.
At least I think we agree.

Now you're saying that after having adopted the budget, council has the right to revisit it and play games with the unrestricted revenue. Under Section 705, it may only do so if the exec first "certifies that there are available for appropriation revenues in excess of those estimated in the budget." He has to agree to this review or it can't happen.

As I told you earlier today, my opinion is NOT the opinion that Zito gave. He dealt spolely with restricted reserve. So it seems to me that council does not need a second opinion. They need to ask their own lawyer if they can do as you propose and still comply w/ the Charter. I say NO, but as I told you, Zito may have a different view.

If council can legally do this, then I say full steam ahead. But I think they'll be interfering with the exec's role under our HRC form of government.

Anonymous said...

my point:

there is something called a fund balance. very simply, it is made up, in whole or in part, by the restricted cash reserve. it may also be made up of the unrestricted cash reserve, which is the fund balance minus the restricted cash reserve. it could be millions, or it could be zero.

council can't play with the restricted reserve. council CAN play with the UNrestricted cash reserve, with the concurrence of the executive.

council can certainly examine the overall fund balance to determine if the UNrestricted reserve exists, and if so, how much is there.


let's say the fund balance it ten dollars. an accountant determines that the restricted cash reserve PLUS otherwise unecumbered obligations = ten dollars. there is then no unrestricted cash reserve. in the alternative, the accountant determines the fund balance is actually twelve dollars-we now have an unrestricted cash reserve of 2 dollars.

you getting me?

Bernie O'Hare said...

Anon 8:04, I think I understand you. And actually, I think we agree. Fund balance - restricted reserve = unrestricted reserve. As I recall from the meeting in which the budget wass adopted no one can never be sure exactly what that figurs is because so much is going ion and out and there are numerous accounts.

I agree that council can play with the unrestricted reserve, assuming they can determine what it is, so long as it has the assent of the county executive. I believe we are both in agreement on this point.

Now the next question is whether you want to hire an accountant or CPA to determine whether there are such funds. Here we may agree or disagree. We have an accountant. I'm not referring to a cabinet official or the controller. I';m referring specifically to Doran Hamann, who does a terrific job with the county's finances. I believe he would be the person to ask in the first instance. But this is something to be very careful about. Tonight, the county just learned it needs to spend at least $2.7 million to replace 160 windows at Gracedale. These unforeseen expenses are why the exec's certification is necessary.

I actually think we are on the same page here.