It's also way below the six months reserve recommended by the Government Finance Officers Association as a "best practice."
This is no shocker. Acting Fiscal Affairs Director Doran Hamann has been warning that we are dipping into reserves at an unhealthy pace for several years. But he's been ignored by a Council with its head in the sand, unwilling to face reality, especially when a Council member and Controller claim all is well.
The Barron Budgets
Two years ago, when Hamann first started raising red flags, Barron derided what he called the "the Chicken Little theory of budgeting," Barron insisted that the fund balance would be fine no matter how gloomy a forecast is provided. "If you're going to raise taxes and do that, I wouldn't swallow it very well as a taxpayer," he advised.
Because there are few things Barron von Footinmouth won't swallow, Council was only all too happy to go along.
Barron predicted there would actually be an $8 million increase in the County's fund balance, in contrast to Hamann's more somber forecast that the balance would drop.
Fast forward a few months later, and it turned out that Barron had been dead wrong. Instead of the $8 million increased fund balance that Barron had promised, it decreased by $2.25 million.
Barron was only off by $10.2 million.
Then Executive John Stoffa told Council,
"If I were to die tonight, my words of wisdom to you would be don't ever accept numbers from anyone in this County other than Doran Hamann. When it comes to numbers, Doran is our most valuable player. There is no one in the County who understands our financial situation better, and it is unfortunate that our Controller made this erroneous prediction without understanding the difference between a cash system of accounting and modified accrual."
Stoffa, of course, was ignored, along with Hamann. That was evident by Council member Ken Kraft's reaction to an independent CPA's gloomy financial assessment last week. He repeatedly tried to claim that she had missed $25 million.
What happened to $25 million stabilization fund?
Kraft insisted that the $11.1 million figure quoted by Gunza is in addition to the County's $25 million stabilization, or rainy day, fund. In fact, he was sure that $25 million is there "to keep this ship going" in the event of a catastrophe.
It's not there.
"We have a $25 million stabilization fund that we're not allowed to touch," he argued.
"You had $25 million," responded the County's Fiscal Director, Doran Hamann. "I think the word is you 'had' 25." The MVP added that last year, "We spent $14 million in excess of our revenues," which brought the stabilization fund down from a healthy $25 million to an unhealthy $11.1 million. Hamann also warned Council last year, during budget hearings, that the County would need to dip heavily into reserves because it was spending more than it was taking in.
Gunza added that the total fund balance at the end of last year was just $28 million.
Still perplexed, Kraft asked Controller Steve Barron to name the $25 million rainy day fund. Barron stumbled for words, while Gunza and Hamann both explained a second time that it is called a stabilization fund.
To be fair, Northampton County is by no means unique. Gunza later told Council member Bob Werner that "quite a few" other municipalities are "struggling" with low fund balances.
McClure denied deficit prior to audit report
Council member Lamont McClure unsuccessfully ran for Executive last year on a no-tax pledge. Barron, who endorsed McClure several times, introduced him to AFSCME supporters and told people around the courthouse that he would be the next Director of Fiscal Affairs, replacing Hamann. Kraft was at McClure's announcement, too, though he claimed to be neutral.
According to McClure, everything's fine. We even have the money to bail out millionaire golf course developers whose businesses have tanked. We might need to stop spending money on treating inmates, though.
They don't vote.
A few weeks ago, Council member Hayden Phillips opposed open space projects that include a defunct golf course because "[w]e don't have the money. We shouldn't be spending it."
Council member Lamont McClure, however, denied a deficit even exists. "We are not deficit spending," he asservated.. "The money from the fund balance was over taxation."
"We won't be paying our expenses this year with this year's revenue," noted Phillips. "Isn't that the definition of deficit spending?"
According to McClure, the answer is No. But to the County's independent auditor, the answer seems to be Yes.
McClure would not know this because he was absent from the Finance Committee meeting in which the independent auditor revealed exactly what is going on. He missed it the last time she came, too. .
To anyone willing to look at County finances objectively, it's obvious that Controller Steve Barron and Lamont McClure have been more than willing to spend the rainy day fund. It's an old tactic that has been employed time and again by politicians who lack the political will to do what is right.
It's how you end up with a 70% tax hike, which happened in Lehigh County. It's how you end up with a 63% tax hike, which happened in Northampton County during the Glenn Reibman era.
It's also how you end up with 11 unions when workers start getting laid off.
Barron, McClure and Kraft all deny there's even a problem. While Kraft has demonstrated an ability to read union and vendor contracts in his years on Council, he has just betrayed a disturbing ignorance of County finances.
Well, there's no way you can sweep that audit under the rug. So what they have done instead is try very hard to switch the subject.
They now are really, really, really, really upset that someone has been stealing knickknacks from the new centralized human services building, and are demanding answers. It must be those damn nonunion custodial workers.
If any of you have ever worked for a big employer, you know that petty thefts occur. It's as inevitable as the rain. If you leave something on your desk or in an unlocked drawer, it might not be there the next day. The cleaning staff is always blamed, though I suspect that sometimes, people are just forgetful.
Instead of addressing a $14 million in deficit spending, Controller Steve Barron has his magnifying glass out, and is hot on the trail of these thefts. He made three unsolicited reports to Council last week, hoping they forget about that nasty audit.
What makes this great for Barron, who likes to advise union agents on whether they are getting the best bang for their buck with proposed union contracts, is that he can blame a nonunion company for stealing. He's honed in on a privatized, $51,000 custodial contract with ServiceMaster, a nonunion outfit, for the new centralized human services building. "The AFSCME union that does the cleaning in the building didn't necessarily sign off on this," he warned. He also has raised privacy concerns, and wants a confidentially agreement signed.
Now ServiceMaster does criminal background checks on everyone who works at that building. The Sheriff's Department and DA's office were apprised that someone might have sticky fingers. I doubt the Sheriff is notified when someone steals knickknacs at Gracedale. I know it does not happen at the courthouse, where small thefts sometime occur.
An indignant Lamont McClure feigned shock, absolute shock, that Council was not told.
"This is the first time I'm hearing of this," he disingenuously stated.
"Were we made aware of this?" asked Bob Werner
Eventually, both Executive John Brown and Acting Sheriff Chris Ziegler had to explain that a few human services employees experienced some petty thefts.
I was unaware that County Council doubles as an Investigating Grand Jury.
Of course, it does not. McClure and Barron don't give a rat's ass about missing knickknacks, or they would have convened an Inquisition by now about the petty thefts at the courthouse alone.
The purpose here was to deflect attention away from a bad audit, and muddy up a privatized nonunion business.
The ole switcheroo.