Hurricane Katrina revisited

<p>Fairhope&amp;#8217;s going through its own private Hurricane Katrina. At least that&amp;#8217;s the view of City Council President Debbie Quinn.

"This will be a larger mess than Hurricane Katrina was for the City of Fairhope," she observed during a recent council meeting. The "This" she referred to is the city’s financial state. And she said it after the council unanimously approved the proposed FY 2009 operating budget for another quarter (through the end of March). And after the council incorporated in this approval a prohibition on any capital expenditures over $7,500 (a pittance when you look at what the city routinely spends); a continued freeze on new hires, the filling of vacancies and promotions (tough on the workers but sure better than being laid off as is happening in other local communities); and a requirement for tight control of overtime (at least one department head has announced that there won’t be any). Since being sworn in last fall, the council under President Quinn’s leadership has been struggling both to understand the actual state of Fairhope’s finances and to put some order and discipline into the planning, budgeting and execution processes. They’re making progress on both fronts, but what they are faced with is a bit like trying to build an airplane while in flight. The city can’t shut down while they are creating fiscal reality out of Mayor Kant’s ethereal assurances that all is rosy with Fairhope’s finances – hence the incremental approvals with the restrictions on spending by the mayor and his staff. But they also cannot accept letting budget execution continue on autopilot as the city’s cash (the money that’s available to pay salaries, bills, interest and all that necessary stuff) declines at the rate of about a million dollars a month. While most of the council, as well as those private citizens involved in trying to lift the fog that surrounds the city’s fiscal state, express alarm at what is finally being exposed, the financial Bobbsey twins – Rose Fogarty (Finance Director) and Nancy Wilson (Treasurer) – seem comfortable with how things are going. Neither of them reflected alarm on the present situation, nor did either provide thoughts on how to improve on the current financial procedures during their recent PowerPoint presentation to the council. And why should they? Their boss, Mayor Tim "Everything’s Great" Kant successfully ran his re-election campaign on the platform of, "What Financial Problems?" Sort of reminded me of Alfred E. Newman’s, "What, me worry?" So Dean Mosher railed ineffectively about purported financial problems, accounting irregularities, poor business practices and even failure to pay bills on time. The incumbent responded by treating Dean like a sincere but ill-informed and misguided soul who just fails to see the light: Fairhope’s finances are fine. And neither Dean nor anybody else proved otherwise. The citizenry listened and voted for another four years of Kant. But fortunately they also voted for some fresh faces on the council (and not the ones allied with the mayor). Fortunately too, the council selected Debbie Quinn as their leader. So no matter how much spin the mayor and his minions try to put on the fragile financial state of Fairhope, the council is finally beginning to pierce the fiscal fog and discover the realities of the situation. It is discouraging that for four years the previous city council headed by unsuccessful mayoral candidate Bob Gentle failed to assert the authority granted them under the Alabama Constitution. Four years of allowing the Kant to operate, in Bob’s own words, as an "Imperial Mayor." Four years of lost opportunities to bring transparency and best practices to Fairhope’s City Hall. It’s clear that all that is past and the city council is acting with vigor and is exercising new found muscles in operating the city as was always intended. Once the enabling ordinances were passed, the first order of business was getting the city’s finances under control. I have great hopes for the work that Lonnie Mixon and his financial committee have taken on. I expect them to establish the absolute and definitive truth concerning Fairhope’s financial status. Further, regardless of what they find, they must enact controls and reporting procedures that will ensure utter transparency in all financial dealings of the city. One thing that needs to be done quickly, given the current recession, is the examination of the assumptions that were used in developing the budget. Comparing the proposed FY09 budget (the one that has been approved piecemeal, by quarters) to the previous year, reveals little change in revenue collections. Maybe the decline in real estate tax revenues will lag the real decline in real estate values, but clearly building permit and inspection fees will drop, as will development impact fees. The city’s utilities, Fairhope’s cash-cows, cannot be expected to make up for losses elsewhere in the revenue stream. At best operating revenues will remain level, but most likely revenues are going to decline in lock-step with the slowdown in economic activity and consumer spending. Historically utility rates have increased annually – except in 2008 (election year). A quick way to increase revenues would be a rate increase, but that is exactly the wrong thing to do as unemployment and business closings are on the rise. While the council and the finance committee have just started their work and few specifics are available, things certainly look nothing like what the optimistic (perhaps oblivious) mayor has consistently proclaimed. While it’s not yet clear how bad things really are, it is clear that Mayor Kant’s financial policies and stewardship of municipal resources are the cause of Fairhope’s current fiscal mess – the one described as "worse than Hurricane Katrina."