By Ron Roth: The finance director is the city’s accountant; as such, he owes the Council, the taxpayers and especially Ashland restaurant owners a complete accounting of where the meals tax dollars went.
Back in May I wrote a commentary concerning meals tax issues that was printed in the Daily Tidings and presented to the City Council. This is a follow up open letter to the City Council addressing the issue of "Where did the money go?"
Early in this decade, the wastewater fund made substantial inter-fund loans over four budget years to help keep the Ashland Fiber Network afloat. One set of city documents that I have reviewed places the total amount loaned at $6.9 million. Another set of documents places the amount at $4.3 million. In either case, that is real money.
Allegedly, the wastewater fund was "repaid with interest." I wrote a letter to Finance Director Lee Tuneberg which included several specific questions, some of which were answered adequately, some of which were not.
Mr. Tuneberg's response was five pages long, including the payment schedule for the Department of Environmental Quality loan, which shows an annual payment amount of $1.8 million dollars due in fiscal year 2003-04, decreasing slightly every year until the final payment of $1.7 million during fiscal year 2021-22.
The payment schedule does not reflect any principal reduction payment.
So, if the wastewater fund was indeed repaid in 2005 in the amount of $4.28 million, then there should be a corresponding amount as a wastewater fund balance.
Part of the finance director's job is creating a city budget.
Projections are tough, although in Ashland revenues have been quite predictable. The other part of the finance director's job is accounting. There is nothing inherently difficult about transparent accounting of public dollars. It is no different from a business financial statement of receipts and disbursements. It is not really that much different from balancing a personal checkbook. It just takes longer.
One of my questions was, "What is the dollar amount of funds repaid to the wastewater fund that were used to reduce the principal amount due on the wastewater plant debt service?" Mr. Tuneberg's response was: "The monies paid back to the wastewater fund in question No. 5 went back into fund balance. The end result is that some of those monies were probably used to pay for the shortfall between the DEQ loan and what was available from [food and beverage] proceeds over time. As of June 30, 2008, the shortfall was approximately $4.5 million."
What caught my attention, and I hope the attention of others, were the words "some" and "probably."
When you take the pile of papers to your accountant at tax time, you get back a pile of papers with real numbers: adjusted gross income, taxable income, tax owed, tax already paid and refund due or taxes owed. You do not get a letter saying, "You probably owe some taxes."
The finance director is the city's accountant. As such, he owes the council, the taxpayers and especially Ashland restaurant owners a complete accounting of where the meals tax dollars went.
In addition to written information received directly from Finance Director Tuneberg, I have also had conversations with members of the local print media and professional peers. Bear in mind this is third-hand information. By that I mean oral communication from city officials to my source to me and now written to you.
One city official claims the inter-fund loans were not meals tax money but fund balances. For four years, we just happened to have $1.5 million leftover in the wastewater fund. It is merely a coincidence that that amount is very close to the amount collected via the meals tax.
I have been searching for an analogy to this line of thinking that meals tax money became wastewater fund money and will never be meals tax money again. The best I've been able to come up with is a wine blending analogy. If you put 30 gallons of cabernet sauvignon and 30 gallons of merlot into a 60 gallon barrel, you will have 60 gallons of cab-merlot blend. Once blended, can you retrieve the individual components? No. Is half of the wine in the barrel merlot?
Another city official said wastewater fund money went into an interest-bearing account. This triggers five questions:
1) How much is in the account?
2) What is the interest rate?
3) Did taxpayers vote to put meals tax funds into a savings account?
4) Did the City Council approve this action?
5) If so, what was the date of council approval?
A local print media manager, in conversation with me, speculated that the money probably went into the general fund
The public has the right to know what happened to the money. I hereby request that the City Council make it a priority to clear up the confusion. This could be done by scheduling a public discussion at the council meeting on Tuesday.
Ron Roth has been in the restaurant business in Ashland for 32 years.