BY DAN VALENTI

PLANET VALENTI NEWS AND COMMENTARY

(FORTRESS OF SOLITUDE, THURSDAY, MARCH 24, 2016 — Get the panic button handy.

As of the fiscal year that ended on June 30, 2015, “The City’s liabilities exceeded its assets … by $44,990,750. This compares to the previous year[,] when liabilities exceeded assets by $38,586,112.” For those keeping score at home, the additional $6,404,638 of debt amounted to a 17% hit.

THE PLANET doesn’t have to get all Adam Smith, Milton Friedman, or Charles Trczinka on you to point out the obvious: When liabilities exceed assets, you are in debt. As the most recent audit revealed, Pittsfield has run up massive overruns.

Before we get to other interesting nuggets that you won’t likely hear about otherwise, we need to say something about the nature of the audit itself.

Mathematical Review Alone Doesn’t Add Up

The city of Pittsfield just received and released yet another “Independent Auditor’s Report” from Scanlon & Associates.

Stop us if you’ve heard this one before.

Scanlon has been doing the city’s reports for years. It writes, “Our responsibility is to express opinions on [the city’s] financial statements based on our audit.” True enough. Scanlon performs a mathematical review of the city’s books. It will take expenditures and receipts and check if the numbers add up. It does not perform a management audit or a forensic audit.

Here’s the difference:

Let’s say the Maintenance Department shows an expenditure of $10,000 for plastic flowers. The auditors come in, see the expense, check the paperwork, and pronounce that it all adds up. The city receives an A+. You can see the problem. What about the question of whether or not it was wise for Maintenance to buy $10,000 of plastic flowers. A management audit asks that question. It will investigate and conclude that while the numbers adds up, the expense makes no sense. The city receives an F.

Locked and Loaded

THE PLANET shares this information so that you are armed. When the city sends out its press release about how great they did in the Scanlon audit, and when the Mainstream Media (MM) lops it all up and runs the glowing story under headlines of praise, you will know what the real deal. You will know that simple math has nothing to do with the question of  if the city is spending (and and receiving) money wisely. What? You say the MM actually reported some of the truth? Well, yes it did. From one of colleagues at The Boring Broadsheet, our coverage of this last week forced The BB‘s hand.

Other Findings in the Audit

Here are some other “highlights” of the Scanlon audit:

• Pittsfield had a total net pension liability of $120,222,899. This obligation is but a fraction of the OPEB liabilities. Time to get home rule and restructure all pension and OPEB deals. Same with current contracts with the teacher’s union.
• Total liabilities increased by 12%, or $33,248,098, to $315,939,095. Let that figure sink in, especially when you realize this doesn’t include what will be a minimum of $121 million in borrowing for a new school (likely to hit $200 million once overruns, work orders, and other charges are added. As if you need reminding, your “representatives” denied you a vote on this unneeded expense).
• Scanlon attributed the alarming increase in debt “to increases in warrants,” bond anticipation notes, and “in the other post employment benefit (OPEB) liability.”
• Pittsfield had $5,045,476 in certified free cash — the amount the city overtaxed citizens. Instead of returning the funds to taxpayers, the city keeps the money in reserve as a slush fund.
• Revenues from “operating grants and contributions” were down $9,493,964.
• Other key indicators of revenue drops document the continued deterioration of the Pittsfield economy — Motor vehicle taxes, other excise taxes, hotel room occupancy tax, and meals tax income were all down.
• More ominously, the penalty revenue Pittsfield collects from taxpayers who fall behind in payments were up more than 100% — from $487,620 in FY’14 to FY’15’s $979,522. This provides indisputable confirmation of something you first read about (and only read about) on THE PLANET. People are being taxed out of house and home.

What Mayor Linda Tyer, the city council, and the Pittsfield School Committee (PSC) learn from the documented shocking state of Pittsfield economy shall be revealed in the first budget presentations of the mayor and the PSC.

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“So runs my dreams, but what am I? / An infant crying in the night; / An infant crying for the light, / And with no language but a cry.” — Alfred Lord Tennyson, Stanza 54, lines 17-20, In Memoriam, (1850).

“OPEN THE WINDOW, AUNT MILLIE.”

LOVE TO ALL.

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