Reader opinion by Chis Petlock
I am keenly interested in the budget of the City of Sonoma because I caught the city cheating–millions being bilked from Sonoma water ratepayers over the years. City officials play down the issue, calling it a “mistake” or suggesting it was “before my time.” The fact is this skimming is an illegal tax, a misappropriation of public funds and constitutes malfeasance. The City has all but publicly admitted to the malfeasance, but it hasn’t stopped.
In my lengthy career as a finance professional, I’ve seen managers sandbag their forecasts and pad their expenses. I’ve uncovered fast-tracked budgets, tricks and schemes to earn bonuses, make sales goals, get promoted, fool investors, trick the public or whatever. Comparatively the City of Sonoma’s budget process lumbers along; almost no one shows up to budget meetings and budgets are approved by the council quietly–few questions, no arguing or pounding the table.
The recently completed Water Rate Cost Study appeared well thought out, but suspiciously resulted in a large number requiring the city’s water rates to rise nearly 50% over five years. When I complained about water rates last year City officials suggested a cost study report “may all come out to be the same.” Amazingly, the blatantly illegal transfers of many millions from the Water Enterprise Fund without justification, documentation, or calculations, magically matched the figures in the new Cost Study.
Reviewing the study, I noticed some entries were not rounded to the nearest dollar as all the other numbers were. I compared these to the 17/18 budget, because the report stated that was the basis, but they didn’t match. I wrote to the City Manager explaining my concerns and asking for the data the report is based upon.
The City and its Consultant replied to my questions with a re-written Cost Study report a week later and presented this revised report to the City Council. The new report begins with the 17/18 budget as its basis, but the outcome is the same as the last because the city is using what accountants call “plug numbers” to fill-in the blanks–the gaps in the 17/18 budget–to match the 18/19 budget. It’s a neat trick, but the budget and cost allocation study do not work together properly; the city’s Consultant admitted as much at a public meeting.
Rather than assigning overhead costs based upon actual time spent by staff, the new Cost Allocation approach allocates costs proportionately; if a department generates more revenue, it’s assigned more overhead costs. For example, water is expensive so more costs get allocated; if the price of water from SCWA or the price of electricity to pump water out of the ground goes up, then more overhead costs get allocated, even though no additional staff time or administrative resources are required.
Meanwhile departments like planning that may not generate much revenue do not get much overhead assigned, even though they may require more actual overhead costs; the costing scheme is not based upon actual time spent! A portion of your water bill payment is used to pave roads, fix sidewalks and other city services that have nothing to do with water, inflating your water bill and illegal in California.
Using this shaky Cost Study, proposed water rates are scheduled to increase a whopping 50% over 5 years; this reflects improper financial management and just plain sloppiness–professional studies based upon make-believe piled upon fairy-tale. No business owner, civic leader or manager worth their salt would ever accept this nonsense and neither should the citizens of Sonoma.
— Chris Petlock, Sonoma
Chris petlock is incisively intelligent and completely ethical. If we had two more like him on City Council the city of Sonoma would be a dream of goodness!