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City Government

Eagle Tries “Credit Card” Transfer Scam

 August 1, 2009 ⋅  Post a comment

The City of Eagle is attempting to use a clause in Idaho municipal funding law to go into long term debt without a vote of the citizens–a philosophy that is common among local governments in the Gem State.

In the latest scheme, the city gets a loan known as a “Tax Anticipation Note” that is secured by future “anticipated revenues”–essentially the first half of property taxes which come in January. Cities generally have a budget year beginning in October, but property taxes are due in January and June, hence the lag time.

The city had previously obtained a $500,000 loan that exceeded revenues with a plan to pay it back when the June revenues came in. Now just like the deadbeat-in-over-their-heads credit card crowd, Eagle City wants to “transfer balance” into yet another TAN loan–this time for $700,000. It is ill advised and deceptive in the opinion of the GUARDIAN. But this is the city that works with foothills developers who also have no money!

The city is in dire financial straights and seems to think that as long as they can borrow money, and increase their debt–while still making payments–they can claim a balanced budget.

Meanwhile they have reduced their police force through the Ada County Sheriff contract and dismissed some city staffers.

Mayor Phil Bandy claims the city has cut as much as they can from the budget and will consider the TAN loan for the 2010 fiscal year. He SHOULD consider following the Idaho Constitution and asking permission of citizens to go into debt through sale of bonds and/or raise property taxes through an override of the 3% budget increase limit imposed by law.

A detailed description and debate of the issue can be seen at the VALLEY TIMES website on Sunday. You can also click MORE and see opinions of both sides below.

“Stop Another Bandy Sneak-A-Tax”
By GALE POOLEY
Eaglecitizens.com

Like Bill Clinton, Mayor Bandy says he “Feels our pain.” But like Bill Clinton, the Mayor is not telling the whole truth. The Mayor claims that those who alert the public about his fiscal irresponsibility or suggest that he should obey the law are “perpetuating a misinformation campaign” and “disseminating malicious and erroneous information.” This is why politicians dislike the First Amendment. Our Founders wisely protected us against the tyranny government ownership of the presses.

The facts speak for themselves. Last August a group of concerned Eagle citizens could see a major economic downturn coming. They warned Mayor Bandy and the City Council to expect significantly lower revenues. Instead of considering the facts, the Mayor chose to ridicule these citizens and ignore their warnings. The group then took out a full-page ad in a local newspaper alerting the community to expect huge financial problems due to the Mayor’s spending habits.

In December the City ran out of money. Mayor Bandy got a $500,000 loan to cover payroll, and promised to pay it back quickly. Mayor Bandy now wants to put Eagle taxpayers even deeper into debt. Instead of paying off the loan and reducing spending to balance the budget, he wants to roll-over the loan with $700,000 in new debt.

Does this sound like a Bernie Madoff scheme to you? How did Madoff fool so many people for so long? He said he did it essentially with “a lot of smoke and mirrors,” and “No one bothered to ask simple questions. People foolishly – including accountants and regulators – never looked in the right places.”

Mayor Bandy is hoping that citizens don’t notice his manipulation of the Idaho Constitution’s prohibition against cities going into debt without an election. Not only must an election be held, but at least two-thirds of voters must approve of his new debt.

Simple Question for the Mayor: Are you, or are you not planning on more debt for Eagle? On the City website he writes, “Although the City is doing everything practicable to reduce expenses both for the remainder of this fiscal year and next year, there will not be sufficient funds available to pay the City’s expenses through the end of January 2010. Therefore, the City Council will be considering another Tax Anticipation Note (TAN) for FY 09/10 in their budget discussions.”

The City Council must reject this scheme. If the Mayor wants to put us deeper into debt, he must hold an election. The Mayor must post his proposed budget on the City website and let voters decide what is really misinformation. If his spending plan is such a great idea, then he shouldn’t have any trouble convincing two-thirds of the voters that more debt is a wise decision. Only then can he keep spending for unnecessary city employees and projects for his friends.

WARNING: “CITIZEN IN YOUR MIDST SPREADING MISINFORMATION”
By PHIL BANDY
Eagle Mayor

Citizens of Eagle, you should be aware there is an individual in your midst perpetuating a misinformation campaign on you. For unknown reasons this person has taken it upon himself or herself to disseminate malicious and erroneous information about the City of Eagle through the Valley Times, a local weblog, and his or her own website.
During the past year and a half, the City has repeatedly asked this person to meet with Council, the City Clerk/Treasurer, Department Heads, the City Attorney, and/or me to discuss his or her concerns. Each time the individual has rebuffed the invitation.

As I did the last time this individual created a tempest in the community, I encourage the citizens of Eagle to contact City Hall should you have any questions or concerns about decisions made by the Council and me, or the activities conducted by City staff.

I hope the information provided below addresses some of the misstatements you may have read:

The FY 09/10 Budget Process Timeline:
Last month, Department Heads, the City Clerk/Treasurer and I developed and provided a draft budget to the Council that balanced anticipated revenue with anticipated expenditures. Since that time, two budget workshops have been held (7/21 and 7/28) during which the draft budget was reviewed by Council line item by line item.

Changes to the draft budget recommended by Council are being incorporated into an updated draft that will be reviewed by the Eagle City Council next Tuesday, August 4th, and Wednesday, August 5th, at 5:30 p.m. The Clerk/Treasurer will publish the updated draft on the City’s website by the end of this week.

The meetings next week are workshops during which Council will discuss the proposed draft budget with Department Heads, the City Clerk/Treasurer, and me. There will be representatives from entities who receive annual dues from the City who will discuss the cost/benefit of dues to their respective organizations. Although citizens are encouraged and welcome to attend the budget workshops next week, the workshops do not include opportunities for public comment.

Any modifications to the FY 09/10 Budget made by Council will be incorporated into a near final draft that will be published in the Valley Times August 10 and August 17. The near final draft budget will be made available on the City’s website as well.

Citizens are encouraged to provide testimony on the near final draft FY 09/10 Budget to City Council during the Public Hearing scheduled for August 25th at 5:30 p.m. Council may make additional changes to the FY 09/10 Budget based upon written and/or verbal testimony they receive from the public.
Council may adopt the budget at the conclusion of the public hearing on August 25 but may decide to continue the decision to a later date. However, Council cannot adopt the budget ordinance later than September 9, 2009.

Tax Anticipation Notes (TANs):
A Tax Anticipation Note (TAN) is used by the State of Idaho, various counties and cities as provided for under Idaho Code, Title 63, Chapter 31.

Although the municipal fiscal year begins October 1, Cities receive one of their primary sources of revenue, property tax receipts, the last week of January and the last week of July each year. Should a governmental entity not have sufficient revenue to cover its expenses for the first four months of the fiscal year, they can borrow against the revenues they anticipate receiving.

TAN’s are frequently used by government entities to fund their operations for the first quarter of the new fiscal year (October – January). Because TAN funds are guaranteed by forthcoming revenues, they are not considered debt. According to Idaho Code, TANs are required to be paid off by the end of the fiscal year in which they were issued.

The City Council passed Resolution No 08-37 on December 9, 2008 at their regular meeting authorizing the $500,000 TAN with a maturity date of September 30, 2009.

On September 1, 2009, the City of Eagle will pay the $500,000 TAN to Zions Bank in accordance with Resolution No. 08-37 and Idaho Code, i.e., repayment of these funds will be satisfied within the terms of Idaho Code.

Although the City is doing everything practicable to reduce expenses both for the remainder of this fiscal year and next year, there will not be sufficient funds available to pay the City’s expenses through the end of January 2010. Therefore, the City Council will be considering another Tax Anticipation Note (TAN) for FY 09/10 in their budget discussions.

Again, please don’t accept hearsay and gossip as fact. If you have questions or concerns, please address them to staff, Department Heads, the City Clerk/Treasurer, City Council or me.

Thank you!

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