Recently, I blogged about Richardson's proposed 2011-2012 budget and declared it not to be in balance. That is, expenditures exceeded revenues. The difference was covered by excess balances in reserve funds. Nothing wrong with doing that, I also declared.
Others were not satisfied. After the jump, new developments.
Cheri Duncan-Hubert, in a number of comments to my original blog posts, insisted that there was indeed something wrong with Richardson's finances. I won't put words in her mouth. She can speak for herself and did so in extensive comments.
I also won't speak for Bill McCalpin. He has just published a long article (four pages) on Rumorcheck.org investigating some of the points made by me and Duncan-Hubert. It's worth reading. Make sure you click on the links to see all four pages.
McCalpin introduces a concept that I do not remember anyone -- bloggers, commenters, city staff -- using to defend the proposed budget. That's the concept of a cyclically balanced budget. Say, one year the city's revenues exceed expenditures and the next year, expenditures exceed revenues by the same amount. The second year's budget, by itself, has a deficit, but cyclically, over the two year period, the combined budgets are in balance. I believe that this is the City of Richardson's practice, even if they just can't bring themselves to admit that second year budget is not, technically, balanced by itself.
McCalpin also goes into a lot of detail about the Consolidated Annual Financial Report (CAFR). My blog articles focused on the budget, not the CAFR, but in Duncan-Hubert's comments the CAFR played a prominent role. McCalpin points out that in key tables, "capital expenditures made with the bond money are listed under 'expenditures' ... but the incoming bond money itself that covered those expenditures is not listed under 'revenues' but under 'other financing sources'." This accounting practice makes it look like expenditures exceed revenues year after year. McCalpin claims that a more global view shows that is not the case.
Rumorcheck.org does not allow for reader comments (a serious shortcoming, in my opinion), so if anyone cares to challenge McCalpin's arguments here, comments are on.
The city council is set to formally adopt this (cyclically balanced) budget at its September 12 meeting. I recommend a "yes" vote. I don't anticipate any suspense. I expect the vote will be 7-0. Then, with any luck, you won't have to hear about budgets from me again until next year ... or until the 2011 CAFR is published. ;-)