Does It Really Matter?

GCOn March 20, 2013, Fox 5 news in Atlanta (and apparently, a number of FOX affiliates across the country) aired a story by investigative reporter Dale Russell dealing with repeated court actions by creditors who are attempting to collect payments on Kelly Kautz’s long past-due debts. The latest activity involves a garnishment against her mayor’s wages, which are paid by the City of Snellville.

Personal finances are just that—personal. Which has prompted questions about the relevance of personal debt to the city and its citizens. The most common question is, “Does it really matter?” Russell’s report addresses that question quite well; the over-riding concern is that an apparent pattern of personal financial irresponsibility could easily become a pattern of irresponsible city spending, and that has a direct—and negative—impact on taxpayers.

A few recent examples of questionable proposed and actual expenditures include:

*A last minute, “slide it in under the rug” proposal to add $50,000 to the budget to pay for four “Welcome to Snellville” signs

*A strong suggestion that the City spend almost $100,000 to make repairs on private property

*Payment (without Council knowledge) of over $30,000 in attorney fees that were identified as excessive and unjustified

*Irresponsible budgeting that would have added $16,000 in expenses that had already been paid in an insurance settlement

Fortunately, responsible fiscal decision-making prevailed, so Snellville’s current financial situation is excellent. Prudent budgeting, tight control of expenditures, and the Service Delivery Strategy (SDS) settlement with Gwinnett County has enabled the City to build an impressive cash reserve. A portion of that will be returned to taxpayers in the form of continued low property taxes, some will be used for physical improvements within the city and the balance will be kept on hand for emergency situations.

Had members of the City Council not rejected previous budgets, which contained what can best be described as irresponsible expenditures, Snellville’s financial condition would have been far different. It might have been similar to that of Woodstock, GA, where the consequences of excessive municipal spending in the past are apparent in a recent city audit, as reported in Woodstock Patch.

 Some of the city’s financial highlights include (by June 30, 2012):

  • The unassigned fund balance for the general fund was $1.24 million. The city’s general fund had a deficit of $601,960, which Whitaker proclaimed as a “serious situation.” That’s an improvement from the $827,478 in 2011 due to positive cash flow. 
  • The total 2012 actual revenues for the general fund were $15.6 million while expenditures were $15.4 million. 
  • The city’s long-term debt stands at $42 million, which represents $17 million in government activity related debt and $24 million related to “business-type activities.”

Like most people, cities typically have debt. However, like most people, cities should take on debt with a well-conceived plan—and the means—for repaying it. Woodstock’s problem is $42 million in debt compounded by a general fund deficit of over $600,000. It’s impossible to reduce debt when expenses continually equal or exceed revenue. Consequently, the citizens of Woodstock will most likely experience an increase in taxes, a reduction in services, or both.

Although they’re at opposite ends of the financial spectrum, Woodstock’s and Snellville’s current financial situations prove that spending policies do really matter.

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