Something is bothering you, dear, what is it?

No big deal. Well, yes, I guess it is. I got invited to a fund raiser today for Councilman Smith’s reelection?

Why does that bother you, although you were never invited before this election season?

It’s a dilemma for me. Remember when he was on the Community Development Corporation Board? He was very nice to me when I approached the Board for $20,000 in funds for my non-profit organization. It was Smith who encouraged me to apply when we were at the same table at a Chamber luncheon a month earlier. He was very enthusiastic and actuall rallied the cause on my behalf with the other Board members. The vote was unanimous. I later thanked him for taking the lead, championing my request.

So, what is wrong with that? Your non-profit serves the community well.

There’s a couple of problems that bother my conscious. The first is that if I had a $1,000 to give, I should be contributing to my non-profit. They could use the funds.

What is the second problem?

Well, I feel obligated to make a contribution. In a way, I owe him. There is no obligation for the amount to be $1,000. I could contribute less. But then I would feel ungrateful and probably be viewed by him as unappreciative. It was a large amount of taxpayer money I received.

And weren’t you thinking of approaching the CDC Board again this year for a comparable amount?

Yes, that adds to my dilemma.

I can see why. But he is not on the CDC Board any longer. Doesn’t that let you off the hook?

Not really. The CDC Board members are appointed by the City Council. In fact, Councilman Smith is one of the two Council Liaisons to the CDC Board. He would be there in the meeting if I asked for more money.

Gee. This IS a dilemma you have been put in. It just eases its way into the equation, doesn’t it? Is there no solution?

I see one solution, but it would take an action on the City Council’s part. And that is not likely to happen. Four of the seven council members were formerly on the CDC Board.

Tell me how this dilemma could be solved.

There are several ways, but the most effective way would be for the Council to require a recipient of any city funds to be disallowed from ever contributing money to a council candidate or council member.

My goodness. That would be a profound step of integrity on the City Council’s part. And that would remove the dilemma of dozens or maybe even hundreds of recipients from feeling an obligation to contribute, right?

Almost. Any time money is being doled out, it is impossible for Board or Council members to prevent building a potential political constituency. That is why all boards especially Money Boards are a natural springboard to running for City Council.

But doesn’t that happen all the time, like when the Council responds to youth athletic teams build or improve ball fields?

Yes, to some degree. It is natural to try to help an incumbent garner votes if they have done something for you. That is generally why it is so hard for an outsider to beat an incumbent. Nobody is doing anything wrong, it is just hard not to return a favor or to say thanks when you get public money or projects built from public money.

Wow! This is a big issue. Unfortunately, that’s the way it is. And is probably the reason former council and board members say they went from being highly popular to a nobody the day they left office. But what are you going to do about your invitation to Councilman Smith’s fund raiser.

I’m going. And I will make a contribution. I feel obligated to do so. However, I will be changing my mind on a related issue.

What’s that?

I am not going to be going to the CDC this year for a continuation of the funding for my non-profit.

I fully understand. A clear conscious is not worth it.

Exactly!

 

Introduction.

An interesting phenomenon exists when a school board or city council member gets elected. There is a good chance that a large percentage of the things on their agenda being dealt with were put in motion by past councils and boards. Similarly, many of the decisions while they are in the capacity of an elected official will not come to fruition for years after they have completed their terms. Nor will the financial impact.

For example, it is possible that a bond election could occur under one city council, the issuance of bonds and groundbreaking occur under a subsequent council and the full cost have to be assumed by yet a third generation of council members. The first two periods of time often come in a celebrative atmosphere. Photo ops and brass plaques. The last period, raising funds to cover the costs, may not be such a happy time.

If I were on the third generation of council members or school board, I would have two questions for my colleagues: 1) why are we acting surprised? And 2) why should we apologize for stepping up to our responsibility to take care of what was put in motion before we came on board?

This is where the “just say no” mindset of the current generation of elected officials across the country and across the state is simply wrong-headed. And this is where the deferral option of balancing local budgets is so popular. Especially when it comes to employee compensation, pension funding and infrastructure maintenance & repair.

A Report Card.

This is why communities should prepare a report card on council and school board decisions. And that includes the sitting council today as well as the councils of years past – often for a decade or two. A budget is not truly balanced unless it is spending sufficient funds to keep up with the expenses occurring right now that might not have checks written until the future.

But let’s face it, that is not happening and is not likely to happen by the governing body itself. Often the race isn’t the election battle to get seated. With the clock ticking, how many things can a current elected body initiate knowing it will be a future council who has to figure out how to pay? Every professional manager knows that the single most effective way to balance a budget is to not start any program or project you can’t afford to fund now and in the future. Perhaps that is why so many things are approved with only a partial year’s costs shown.

A Multi-Year Financial Plan.

An honest MYFP produces some interesting revelations. A one-year budget can be and is often structurally imbalanced even through it appears to be balanced. Police cars with 100,000 miles on them can be pushed out at least one more year, perhaps. However, in a MYFP, you are faced with balancing the subsequent years, too. In the end, you can easily spot the gaps on the horizon. That is why the Tax Rate Equivalent (TRE) I wrote about is so important. You can’t raise taxes in advance – and may not even have to.

However, it is extremely valuable to know that a gap with a TRE of, say 3 to 5 cents can’t be ignored. A MYFP can give you a heads up on the challenge. The logical order of budget balancing steps are:

Improve Productivity.
Trim Expenditures.
Use Reserves.
Reduce Program Service Levels.
Eliminate Programs & Services.
Raise User Fees.
Raise Taxes.

There are a few other ways, but they are generally gimmicks and short-term fixes. Only five of those on the list really make a difference when balancing a budget. Trimming expenditures, like cutting travel expenses by 30%, really does not translate into sufficient moneys to balance a budget. Using reserves is a temporary solution.

If the last four are used, these can create huge negative reactions if discussed in the heat of the budget workshops. They require much discussion and planning steps to execute.

You will notice that the Deferral option is not shown on the balancing list even though it is the Number One annual budget choice, a bad choice. Even a deceitful choice. If you Defer to the following year, the impact starts to show up in a MYFP. You can replace 5 police cars a year, as needed, or 25-30 in a single year if you wait long enough and let your maintenance costs eat you alive.

The Look Back.

It is even possible to do this in reverse. I would not be an elected official for a million bucks, but the first thing I would do if I were is to go back at least five years to determine how the budget was balanced in those years. I would do this using my seven options above plus Deferrals and Non-Recurring Revenues like a big bump in sales taxes due to a positive audit adjustment that created a windfall.

What would I do with this historical information? I would put out a report card on the decisions of the past councils and boards that might be responsible for laying in my lap the obligation to balance the current year plus the past gaps pushed forward.

But there could be a good report card here. If I had been in office for a term or two and was leaving, I would want to do my own report card showing how my colleagues and I had taken care of business. Perhaps even established some reserves to recognize Depreciation.

The Political Report Card.

I believe in McKinney this is much more important report card than the budget since the resources have been rich for a number of years.

I’m interested in where the money went for the MEDC/MCDC $millions since inception. Who were the board members and their relationships to the recipients of those moneys? Who received money and then later became city council candidate contributors? Which council members built their political constituency by playing Santa Claus?

What were the bigger land deals and how were those decisions made? Why are there so many lawsuits involved? What are those about? Why were some council members so involved in some staff issues and terminations that their actions led to the FBI being called in?

There’s no political historian in McKinney. There needs to be one. Actually, there needs to be an independent team preparing report cards without a statute of limitations. LFM

 

From most accounts, Robbie Clark is a nice guy. In a 2007 local newspaper story, Mr. Clark is referred as “Mr. McKinney.” He was the star quarterback of the McKinney High School football team in the 1960s. A search of Mr. Clark’s service on the City of McKinney Boards and other community boards shows he is highly involved. I would say he qualifies as being part of the McKinney Good Ole Boy Network – or the Underground Government, as I call it.

You might recall my Rumors vs Fact blog a few days ago. I had heard rumors from more than one person that Robbie Clark goes a little overboard in representing his bank while he sits on the McKinney Economic Development Corporation. The rumor included pushing for the MEDC to give Mr. Clark’s friend or customer some extra consideration on a piece of property the MEDC was selling. So I did an Open Records Request. After three attempts I finally got the email MEDC Executive Director about which I was hearing. It is dated November 27,2013. I suggest you read carefully.

“I have been aware for over a year that Larry Crosby has put a group of investors together to purchase land in East McKinney. The Group started with the purchase of the Cotton Compress property. I understand they are trying to put property together to make significant investments in new construction projects in East McKinney. If at all possible, I would like to see us give them every consideration that we can for the purchase of the old Emerson Building. I know nothing of the other offers, when they came in, if the purchasers have the capacity to buy or what the intended uses are. I understand that it is difficult to run to board members for approval. I understand your intentions to talk to the Executive Committee, but this seems like an odd way of selling City owned property valued at over $3MM. Why would we not bring all three proposals along with the back up information on each proposal to the board for approval of one. I don’t think you want to take the risk yourself if there is political fall out over the selection process.

I apologize for being new to the process and don’t want to be a trouble maker or second guesser, but I think you can use your board to see that you are negotiating the swamp. I have always thought that reasonable business thinkers, given all the information, will tend to come to the same conclusions except when politics are involved.

Mr. Crosby has gone to considerable expense for a while to assemble property. I understand that he may be interested in buying some property in East McKinney along the railroad track that would significantly clean up a blighted area. I think this is someone we want to work with and will help us. Please let me know if you would like to discuss further. I am in Friday and will be available most of the day.

 Thanks,

Robbie”

The MEDC Executive Director responded that he was trying to keep politics completely out of the process and that all three prospects were “clients” of MEDC.

The Brush Off.

I contacted the Mayor and Interim City Manager (ICM) as was told they would check into this incident. A week or so later I was invited back to talk to the ICM. The response was exactly what a few people told me would happen, as if some of my colleagues had seen the script. Mr. Clark shouldn’t have done that, but he meant well as a representative of the City. His choice was not awarded the contract, so no harm was done. He probably just wasn’t thinking and wasn’t likely to do it again. I assumed somebody at the City had talked to him. In fact, the City Council at that point had already made the move to place the Money Boards (MEDC/MCDC) administrative oversight under the City Manager. I expressed my great disappointment with the response and left fairly quickly. I sensed a circling of the wagons going on.

The McKinney Way.

I sincerely believe Mr. Clark is a good man. I also believe he may have behaved not realizing he was doing something wrong. But then why would someone have that perspective? I feel fairly confident in saying Mr. Clark is a product of what he has seen being done over the years by others. That is exactly the way we humans rationalize and lower the bar on behavior. “Nothing I did or am doing is much worse than others have done before me.”  That is how a culture gets established. Left unchecked, the inevitable laxness settles in. The bar is lowered. McKinney has a ton of examples I will be writing about in the future.

So, What Should Happen?

I believe Mr. Clark should be removed from the MEDC Board by the City Council. They have removed another MEDC Board member at least once to my knowledge not due to a conflict, real or  perceived but for a potential conflict of interest. This is the real thing, concrete,  with Robbie Clark. If Mr. Clark was anything but a hometown football hero, this might have already been done.

Actually, I am calling on Robbie Clark himself to resign. It is the honorable thing to do. I am quite sure that this is not the first time he has used his influence, although it is hopefully the most flagrant. In my ORR emails I received from the City, I found it interesting that he lobbied the MEDC to look favorably toward his good bank client: Servergy. It may have been before he joined the MEDC Board, but there was another time when he recommended his good friend, the ex-CFO of Servergy, to be the Compliance Auditor for the MEDC to monitor contracts. All you have to do is Google “Servergy” to be reminded it is the company Ken Paxton is connected to and part of Mr. Paxton’s current indictment. And if you were to go to the offices of Servergy, you walk past the adjoining neighboring offices of the MEDC/MCDC.

The City Council should raise the standard and live by the highest standards of all. The two Money Boards (MEDC/MCDC) receive $10,000,000 each in sales taxes every single year.

Reversing The Culture.

In just one generation of elected City Council members, The McKinney Way could be reversed. They could do that by living within a high code of ethics, written or unwritten. They could convey a message that conflicts of interest, real or perceived, will not be tolerated. They would make it known to a board violator that they stepped over a line. The standards would be fully understood if the example exuded from every Council member themselves.

If there is one single achievement that would match the best of just about everything I’ve seen from recent City Councils, it would be this: Change the culture. This monumental act would survive them and mold the most honest future possible for the City of McKinney. I have many more examples to write about this week. LFM