Killeen’s interim city manager and city council seem to be in a big hurry to shore up the city’s finances.
Unfortunately, they don’t seem to have the same sense of urgency about initiating a promised forensic audit of those finances.
In a 5-1 vote Tuesday, council members tentatively approved a “one-time transfer” of more than $1.6 million from the city’s solid waste fund to the city’s general fund — a move that would place the general fund balance within city policy’s recommended range of 22 to 25 percent of operational expenditures.
The solid waste fund transfer isn’t the only means the city has identified to replenish the city’s dwindling fund balance, which stood at 18.7 percent of expenditures when the current budget was adopted. At city staff’s recommendation, the council also endorsed eliminating the fleet replacement program, freeing up funding across several departments; identifying “targeted cuts and revenue sources” and utilizing a multi-year approach to expenditures.
The net result is a $1.78 million increase in the fund balance over last year, but the solid waste fund transfer accounted for nearly all of that amount.
Councilman Richard “Dick” Young voted against the transfer, saying he didn’t think it was appropriate to move money from an enterprise fund to the general fund — likening it to moving money from one pocket to another.
Young has a point, and there’s an ethical question here as well. The vast majority of the money in the solid waste fund comes from ratepayers, so they should have reason to believe it is used for related equipment and services, rather than being disbursed for general use.
In addition, customers have a legitimate argument that if the city’s solid waste fund has the money for a sizeable cash transfer, the city is overcharging them — or should provide more services, like twice-weekly pickup or recycling.
The council is moving forward on outsourcing the city’s solid waste services. If Killeen contracts out its trash collection, the city will see a potential cash influx for the sale of its fleet of trucks, lower fuel and maintenance costs, a smaller payroll and lower employee benefit outlays. In short, the city stands to receive a major one-time revenue boost.
With that in mind, why did interim City Manager Dennis Baldwin see the need to rush money into the city’s general fund?
One possible reason is the city’s bond rating. With a declining general fund balance — one that was projected to fall to 13.9 percent of operating expenses in fiscal year 2018 — city officials may be trying to head off a possible downgrading of the rating, which would mean costlier borrowing for city projects.
Still, the solid waste fund shouldn’t be used as a piggy bank, as it has been frequently in the past. In 2014, for example, then-City Manager Glenn Morrison pushed for an $8.5 million transfer from three enterprise funds to shore up the sagging general fund. If the council signs off on this transfer, it will be legitimizing previous administrations’ questionable budget practices in this area — practices the upcoming city audit may scrutinize.
Unfortunately, council discussions about the audit haven’t reflected the same urgency as those involving the funds transfer.
Last week, Councilman Jim Kilpatrick, the audit committee chairman, presented a time line that would delay contract talks with an outside audit firm until the new city auditor starts work in mid-January, with contract approval set for Feb. 14. The first progress update isn’t scheduled until March 27 — just six weeks before the next city election.
And to date, the council is leaning toward hiring a firm that has proposed an investigation that falls short of a full forensic audit — though residents demanded one at several city budget hearings.
It’s time to stop commingling city funds and kicking the audit can down the road.
Killeen’s residents certainly deserve better.