Crisis of Confidence

Well, ladies and gentlemen of Fall River,  it appears it has taken a mere 6 months for City Government to almost rid itself of all those involved in "The Great Lie" of the Correia Administration, the withholding of information about the $3.5 million deficit in the Sewer Enterprise Fund. Only Mr. Sullivan, head of Public Works and intimately involved with every aspect of Water and Sewer Enterprise Fund operations remains. I, for one, hope he stays put....at least until the tax rate for FY2011 is set!

In what most objective observers could recognize as a petulant and inexperienced "politics first" reaction to the recent news that the City Tax Collector Shannon Lyonnaise allowed $2 million in various tax and fee payments to sit on a clerk's desk for TWO MONTHS without being deposited, Mayor Flanagan fired both the Tax Collector and the City's Tax Assessor in a fit of pique. The Tax Assessor had previously been called on the carpet by the City Council for a very large number of controversial property assessments during the last property revaluation in the City.

Surely, in a community in dire need of every possible penny of additional self produced revenue, the loss of interest earnings is, in a word, inexcusable. The reasoning given by the Collector that staffing patterns within her office were insufficient to allow timely processing of all payments into the office just do not wash. She stated that her office was swamped by a surge of Motor Vehicle Excise (MVE) tax payments, water and sewer bill payments, and residential and personal property tax payments. She said she simply did not have enough staff to process the payments.

This is, of course, a ridiculous explanation. Every municipal Tax Collector in MA knows a few very basic facts. Not to know these facts means the person was never qualified to hold the Tax Collector's job. What else is new in Fall River!

Those basic facts are as follows:

     #1- By state statute, ALL monies, regardless of type (cash, check, wire transfer, money order, for example) MUST be deposited on the day they are collected. That's one day. Not two months.
  Admittedly, depending on peak periods and staffing patterns, especially after 30 years of Prop 2 1/2, clerical staff in service departments like the Tax Collectors Office have been reduced year after year. So one day has been stretched into  a three day maximum period for all practical purposes. Anything over three days indicates that a Tax Collector's office is simply incompetent, barring extreme circumstance.
  Most communities now have weathered  reduced staffs by utilizing bank LOCK BOX services where most payments are sent to a particular bank and deposited as they come into the bank, whether as mailed payments or by use of credit cards online, and are immediately processed and recorded on electronic medium and posted by the City or Town into tax receipts records, by account number, for ledger and reconciliation purposes. No reasonably sized community does not use a LOCK BOX service. It records deposits immediately, and more accurately, than human hands. And it's relatively cheap. For example, the Town of Brookline, with the same size annual operating budget as Fall River, and similar number of MVE bills and property parcels, spends only $20,000 per year for the service, and a few thousand more for a separate service to process MVE payments in the same way. $20,000! ( In terms of immediate interest earnings it practically pays for itself over the course of the fiscal year.) That's less than a full-time clerk's position, costs no benefits,works all year round, and never takes a vacation or sick time or files for workers comp. Century Bank is considered the best provider of such services. In a functional area like this, you really want to utilize a bank with extensive experience.

#2- Every Tax Collector in MA knows that the first MVE tax bills, the largest single MVE tax commitment by far ,  are received from the Registry of Motor Vehicles in March of each year. They are due thirty days after mailing. This year, because of the late approval of the FY 2010 tax rate to allow the City to satisfy DOR's requirements with regard to paying for the Sewer Enterprise Fund deficit, Property Tax bills went out late, and the City's taxpayers were allowed this additional 30 day period the send payments. Unfortunately, the Tax Collector, and apparently the Finance Director as well, did not think or plan for this extraordinary contingency. A simple knowledge of the dates when bills were due, of simple municipal collection procedures,  would have dictated the need for additional staff to timely process all payments from all sources, given Fall River's prehistoric insistence to maintain a hands-on, labor intensive method of depositing and recording tax and other payments. The Finance Department dropped the ball entirely. Both the Tax Collector AND the new Treasurer/Finance Director, Mr. Grab, should have adequately planned for all collections to be deposited at the end of each day they were delivered to the Collector's office.  Even with sole prior experience as a municipal accounting officer, Finance Director Mr. Grab has no excuse. He should have been aware of the timing of payment collections if for no other reason  than to chart actual cash receipts versus projected cash receipts by month, especially with the importance of FY2011 revenue estimates. As we all know, the very first step in planning a municipal budget is first to determine realistic estimated revenues. You cannot plan to spend more than you can prove to DOR you will bring in for the next twelve months. It is literally impossible to do that appropriately without keeping a month by month tracking of receipts by every source of revenue. I now believe the City's revenues being used to plan the FY 2011 operating budget are way off, which means that the proposed budget cannot be accurate at all.
  There are some very serious problems with controls over the City's cash and check payments. And as we all know, shoddy controls in these areas have been a much commented upon Fall River failing by DOR. They will not be pleased by what has transpired.

#3 - Without timely deposit of receipts and associated reconciliation of ledger accounts, the closing of a fiscal years financials becomes a long, drawn out and nightmarish procedure for not very talented Municipal Finance staffs, the kind that exist in Fall River. The job of the Collector does not end with depositing receipts. That's merely the beginning of the process, yet proper recording and tracking of receipts by account number and bill number establishes true financial control, from a Tax Collector's perspective.
  The danger in Fall River is that with no one in the City Auditor's position and no one in the City Collector or Tax Assessors Offices running things, how will the City's financial books for FY2010 be closed on a timely basis? How? It will not be without much greater added expense, probably by using the very expensive hourly rate of Hague and Sahady to accomplish much of the work that should routinely be performed by each department well in advance of June 30. We now know that work will not take place for quite some time, probably 3 months at best.

Mayor Flanagan's knee jerk reaction to fire admittedly very questionable employees came not primarily for poor performance, but, quite predictably based on his brief but voluminous track record so far, on popular voiced outcry from the voting public. In this instance, Flanagan's concern for looking good, as opposed to BEING good in  making sure things are running smoothly, is going to cost Fall River dearly. This was always the danger of electing as Mayor a person who has absolutely NO CLUE about public finance. I do. He cannot make the argument he does. And that's going to lead to forthcoming disaster for Fall River.

Sorry Will...you are lost now....and every tax payer will literally pay for it...and there's no way to avoid that .

Great job ROOKIE!