MODESTO IS IN VIOLATION OF IT'S CITY CHARTER

Dear Mr. Nyhoff,  we thank you for your response to our questions.  Of course, we are well aware of the sad history of our current budget.  The fact is, we are now 137 days into the fiscal year (that means 38% of the year has passed), but the budget is not even close to being balanced.  The STA considers the current “budget” simply a spending plan, with has no relation to the ability to find the revenues to match the “plan”.  However, if you believe we are incorrect, we are eager to meet with you, and learn what your plan really is.  I will await a call from your office to establish a convenient meeting time. 

                          We also appreciate your sending the time frame for the external audit.  We realize that you are new to the SOP in our City, and may not fully appreciate the history of our current external auditor.  I think it is safe to say that he has NEVER found any problems with the financial documents the City Staff has prepared.  Yet, the STA has brought many fiscal issues to Mayors and Councils, with data showing improper reporting, errors and plain “mistakes”.  In fact, the current external auditor does nothing more than an administrative look at the reports.  He performs a procedural inquiry, he does NOT look at actual financial dealings; he does NOT look at whether or not expenditures are proper or obey the rules (remember the “phantom building”); he does NOT balance the books.  The City Staff is content to hire him, knowing that he will rubber stamp any darn thing they report.  The Citizens deserve better.

                          We also appreciate your citing the City Charter regarding the audit.  However, we are much more concerned with the provisions of Article VIII, Section 801 (c), below, which establishes the duties of the City Manager.  It is clear that the City Manager is required to prepare a report to the people, and it should have been published 47 days ago.  This report has always been titled the “Consolidated Annual Financial Report” since the Charter has been in force.  Apparently, no one has mentioned this to you, so we understand the confusion.  Again, we have no faith in the external audit, so we do not particularly care when, or if, it is done.  It means nothing.  The CAFR, on the other hand, is supposed to be a faithful, accurate report on the City’s checkbook.  The CAFR is where we find out what the City says it received and where our money was spent.  It is late, once again.  We are not sure if the reason is incompetence in the Finance Department, or a reluctance to actually publish the report. 

                          The STA wants to ask a simple question; “How can a City Manager, or the Council or the People, judge if our collective money is being appropriately cared for?  How can we plan for the future, when we have no idea what happed in the most recent past?”  The fact that the Mayor and Council are content to make plans for the future when they are ignorant of the events of the past is greatly troubling.  Thus, we believe that the members of the STA must pursue the publishing of these most important financial reports.  We believe that if our elected officials will not do their job, we much leap into the breach.  City Manager, how can a responsible administration avoid this reporting?  And, how could a responsible civic group like the STA avoid its responsibility to require this City to obey the underlying law of the City, which is the Charter?

                          Again, we eagerly await a time and place to meet with you.  Sincerely, Dave Thomas, Co-Chair, Stanislaus Taxpayers Association.

 ARTICLE VIII. THE CITY MANAGER

SECTION 800. CITY MANAGER.

SECTION 801. POWERS AND DUTIES.

SECTION 800. CITY MANAGER.

There shall be a City Manager who shall be the chief executive officer and head of the Administrative Branch of the City government. The City Manager shall be chosen on the basis of the person’s executive and administrative qualifications with special reference to the person’s actual experience in, or the person’s knowledge of accepted practices with respect to the duties of the office as hereinafter set forth. No member of the Council shall be eligible for appointment to the office of City Manager during the term for which the member shall have been elected or appointed, nor within one (1) year thereafter. The City Manager need not be a resident of the City or State at the time of appointment, but during the City Manager’s tenure of office, the City Manager shall reside within the City.

When a vacancy occurs, the Mayor shall nominate at least two (2) candidates for Council consideration for appointment to the position of City Manager. The Mayor may express to the Council a preference among final candidates. The Council shall appoint the City Manager for an indefinite term and may remove the City Manager by a majority vote of its members; provided, however, that the City Manager shall not be removed from office during or within a period of ninety (90) days next succeeding the election of a member of the Council. The purpose of this provision is to allow any newly elected member of the Council to observe the actions and ability of the City Manager in the performance of powers and duties of this office.
(As amended November 7, 1989, and February 5, 2008)

SECTION 801. POWERS AND DUTIES.

The City Manager shall be the chief administrative officer and head of the administrative branch of the City government. The City Manager shall be responsible to the Council for the proper administration of all affairs of the City and to that end, subject to the personnel provisions of this Charter, the City Manager shall have power and shall be required to:

(a) Appoint and, when necessary for the good of the service, discipline and remove all officers and employees of the City except as otherwise provided by this Charter, and except as the City Manager may authorize the head of any department or office to appoint or remove subordinates in such department or office. The City Manager may also authorize the head of any department, including deputy directors, police captains and fire battalion chiefs, or other city employees as designated by ordinance, to recommend and impose discipline in accordance with this Charter.

(b) Prepare the draft budget annually and submit it to the Mayor and Council, prepare the proposed budget annually and submit it to the Mayor and Council and be responsible for its administration after its adoption by the Council, prepare all other necessary budget documents, and prepare and submit to the Mayor and Council the Capital and Operating Mid-Year Budget Report.

(c) Prepare and submit to the Council within ninety (90) days of the end of the fiscal year, a complete report on the finances and administrative activities of the City for the preceding year.

Dear Mr. Thomas,

You have made statements and comments regarding our lack of reporting the CAFR.  As you know from prior correspondence the City hires an independent audit firm to conduct the audit of our city’s finances.  The attachment outlines the timeline to perform the audit review, formulate the audit document and prepare it for publication. 

The City of Modesto adopted the 08-09 fiscal budget in June.  Soon after the budget was adopted the County Assessor’s Office announced that there would be a reduction in the tax assessment roles.   That in turn lowers the property tax revenue received by the City of Modesto.  With this announcement we reevaluated all sources of revenue and lowered our revenue projections by over 8 million dollars.  Once we established a baseline revenue projection we initiated the process of reducing costs or enhancing revenues.  We presented those options first to the Finance Committee for their comments.  That meeting was a public meeting.  Council then considered and formally adopted all amendments to the budget in October.   We recently reviewed with the City Finance Committee our first quarter revenue collections.  We will continue to provide the committee updated information at their monthly meetings.  

Our highest priority is to closely monitor our actual revenue receipts and prepare for a second round of budget reductions when necessary.  For over a year we have had a hiring freeze in place and that will continue.  The Mayor and City Council have made it a priority to hold at a 7% operating reserve and we fully intend on accomplishing that benchmark through the remainder of this fiscal year. 

Feel free to contact my office should you wish to sit down and discuss.

Greg 

                             Dear City Manager and Mayor, our 3 requests for our City’s financial information have gone unanswered.  The City is 45 days late in publishing a Comprehensive Annual Financial Report (CAFR).  The CAFR is required by Charter to be published no later than 90 days after the close of the fiscal year.  The fiscal year closed 135 days ago.

                             There can only be a couple of reasons for refusing to publish a CAFR; you can not publish it because you do not know how much money came in and how much you spent, or, you refuse to tell the Citizens of this City the truth.

                             We are 135 days into the current fiscal year, which starts on July 1^st, but we have no real budget!!  We have completed 37% of the year, and you have no financial plan?  Mayor, you wanted to be paid a large salary, and you wanted to be held accountable.  You have not even answered the 3 e-mailed requests I have sent.  What should I think about your accountability?  And, now that you have a high-priced Auditor, what is he doing? 

                             This failure to account for the financial condition of our City is more than troubling.  If our finance department simply cannot publish the checkbook because they have not done the work, then they should be fired.  If the finance department refuses to publish the information, they should be fired.  The sickest part of this failure is that the Mayor and Council obviously do not care that City Staff cannot do their jobs.

                             Last year, the CAFR was 230 days late, and it showed a City going into bankruptcy.  Hiding the current situation is absolutely unacceptable.  We read in today’s BEE that the State is going to increase our State income tax and the sales tax; the State is withholding funds from cities and counties; the Modesto spending plan (not a “budget”) is apparently $25 Million in deficit! 

                             The Stanislaus Taxpayers Association simply cannot accept the inability, or refusal, of the City to communicate with the Citizens.  The STA expects a quick and complete disclosure of the financial woes of our City.

                             Thank you very much for your consideration,  Dave Thomas, Co-chair of the STA.

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