Our heads in the clouds? A short history on Muncie City Council’s fiscal management and why we need new CFOs.

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In 2006, the city council approved 4% raises and 11% property tax hike. Of course, many property owners received a hefty increase in their property taxes for the 2007 pay 2006 property tax bill. For those of you that may not know, the tax bills you receive are for the previous year.

The 2007 pay 2006 tax bills can be considered the straw which broke the camel’s back and generated a movement in Delaware County which helped usher in the passage of property tax caps. That same year, Dennis Tyler, May 18th, was quoted “The property tax formula we put in place will have a huge impact for homeowners” As you may remember, his solution was a rebate on property taxes. It took several months for the checks to arrive and barely covered the current increase, let alone future tax bills.

On July 11th of that same year, Dennis Tyler opposed a special session addressing the tax hike citing there was no game plan. A few days later, City Council (which is ironic since they were partially responsible) and other fiscal and administrative bodies wrote the governor requesting a special session.

How can you have a game plan without meeting to formulate one?

Despite the increase in taxes, 2007 saw the city barely able to make ends meet. By the middle of 2007 the controller was warning the council the increase in spending could not continue with a decline in revenue. Addressing the city council (fiscal body) City Controller Mary Ann Kratovhvil, warned the city council

“We cannot continue to increase expenses while our revenue declines.”

 She admonished the city council to understand 2008 would see less revenue, too.

Alison Quirk, on behalf of the city council, had this to say about how the city would meet the pay raises

“We have not figured that out yet.”

 Wasn’t this something which should have been ”figured out” in 2006?

During the summer of 2007, concerned citizens formed a group called Citizens of Delaware County for Property Tax Repeal now known as Citizens of Delaware County for Good Government. They, too, addressed city council, imploring the council to begin budget cuts. No one listened.

Prairie Creek added an addition $150,000 to the spending that year. It went over budget. In 2007 we saw the federal investigation into the Community Development office. In 2008, Muncie was required to spend $1,.2 million dollars of non-federal money as a form of payback to HUD.

It’s not as if any of this should have been much of a surprise to Muncie City Council. Another federal investigation into a non-profit organization was completed in 2006. The violations cited included employing family members, renting a home to the daughter, not following by-laws, voting without a quorum, poor accounting of financial records, investing money into the Ryan House valued at $200,000, withholding financial information from board members.

 In fact, when a board member requested the financials, she received a letter from an attorney stating it “was none of your business”. The letter went on to say if the board member wanted copies it would come at a cost and the fee could only be paid with cash or money order. No checks allowed.  The attorney and the director didn;t understand the by-laws of the organization.  There was no fee for copies.

The organization saw quite a bit of internal fighting and resignations of board members.  It wasn’t pretty.

The house belonging to the director’s mother listed the director as part owner. HUD gave the director 10 days to file a quick-claim to have the director’s name removed.

2008, the Muncie Newspaper did a follow-up. The article states, JP Morgan Chase Bank obtained a $686,515 judgment against ECRC for defaulting on mortgage payments on 13 houses. The article goes on to explain what led up to the defaults.

HUD suspended funding in 2005 after investigating complaints. Targeted was the Community Development director, his wife her brother and her sister. The salaries were paid by HUD, for several years, but did not qualify under federal law. The position paid for included a contractor and a property manager.

Innercity sinking like a ship. Star Press October 5th, 2008

Of course, the cost of all this was passed on to the banks, the city of Muncie and Delaware County.

Muncie had what can only be called a blueprint for good fiscal management in the pages of the State Board of Accounts (SBA) audit. Within the pages you will find violations from late deposits, missing equipment, money not spent properly and various other violations from different taxing units. At least one city council member sat in on the exit interview, and yet despite everything, four of the council members were re-elected in 2007: Alison Quirk, Sam Marshall, Mary Jo Barton and Monte Murphy who was later indicted and removed from office.

2008 came and went, and still facing a budget shortfall, the finance committee had only met twice in 18 months. All attempts to bring the city under control were met with resistance. Something as simple as bringing Prairie Creek out from under the tax rolls to become self-sufficient became a political football.

2009 is when the house of cards came crashing down. Facing a $4 million dollar deficit, Mayor Sharon McShurely managed to find $2.5 in cuts. The city council, instead of feeling a sense of relief, held a press conference complaining about the mayor receiving credit. The LOIT tax introduced by then President Alison Quirk at the highest percentage was beginning to die a slow death.

Not to be undone, council sharpened their pencils and with much ado, Sam Marshall, almost gleefully listed each cut in November ’09 city council meeting. The cuts which were some of the most ridicules in nature, found us without street lights, animal shelter, less fuel for the MPD and an illegal rainy day fund.

These seasoned council members had no idea how the budget was structured and their position was to cut the budget not add as we saw with the rainy day fund. There was simply no rhyme or reason to the cuts and not one of the council members could answer any questions on how the cuts were derived. In fact, several of the council members had no idea about the cuts.

The cutting of the animal shelter full time employee was a political ploy to shut the shelter down. This would open a dialog for county-wide animal control. Unfortunately, the city council failed to notice Delaware County was broke, had no successful animal control experience. Yet, some of the council members were willing to give away all the assets and pay a fee to a county which would barely see an increase in their cost.

The sad part about the animal control was the city council failed to realize the amount of savings was inflated as the 2009 budget was used. Guess they forgot about the cut made just a month ago.

2011, here we are, into September and not one budget meeting has been held.

Last year a business asked for their abatement to be extended. Murphy said he didn’t believe the company had met it obligations, confirmed it with the clerks assistant, Joe Hunter hadn’t been following up and despite all of this, the city council still voted to continue the abatement

With all the tax abatements city grants to businesses, you would think there would be a tax abatement committee. Think again.

Folks, we have a Land & Traffic committee, though. Every person on the committee is asking for your vote this year. Yep, it’s got “political” written all over it.

In the four years that I have been attending city council meetings, I am hard pressed to remember more than a handful of committee reports. We have no reports because we have no committees. The city council hasn’t done much in four years. So, for fun, I have included the ordinances on Order of Business and Tax Abatements.

Had enough?

Please vote informed.

Please take a few minutes to look at the candidates’ bio and face book.  We have some fantastic candidates on the slate and on the ballot.  Sorry, I don’t have everyone’s listed.  I hope to get it Gavin Greene’s soon.

If it walks like a duck

Sec. 32.37. Order of business.

The order of business at every meeting of the

council shall be as follows:

(A) Calling the roll.

(B) Reading the journal of the preceding meeting.

(C) Hearing of petitions, memorials and remonstrances.

(D) Reports of standing committees.

(E) Reports of select committees.

(F) Reports of city officers.

(G) Ordinances on a second or third reading.

(H) Introduction of ordinances.

(I) Introduction of resolutions.

(J) Unfinished and miscellaneous business.

(Code 1968, § 31.18)

The ordinance for tax abatement is printed below. It looks as if the president of city council is the person to appoint committee members. The abatement committee is designed to monitor the abatement, which as everyone knows, is tax dollars averted from the city coffers.

Sec. 161.01. Tax abatement committee established.

The common council, City of Muncie, hereby

creates the Tax Abatement Committee (committee).

The committee shall be comprised of members

appointed by the presiding officer of the

council pursuant to section 32.35 of the Muncie

Code for the purpose of reviewing tax abatement

applications and monitoring property owner compliance.

The committee shall also make recommendations

to the common council concerning

property owner compliance, upon which the final

decision rests with the common council. The committee

may also make recommendations concerning

ordinance, resolution, application, and monitoring

revisions which can effect the tax abatement

program. Final decisions concerning the tax abatement

program rests with the common council.

(Ord. No. 32-97, § 1, 8-4-97)

*Editor’s note—Ord. No. 3297, §§ 1—4, adopted Aug. 4,

1997, amended Subchapter, Real Property Tax Abatement, of

Ch. 161 to read as herein set out. Formerly, said subchapter,

§§ 161.01, 161.02, pertained to similar subject matter and

derived from Ord. No. 85-89, adopted Feb. 5, 1990, and Ord.

No. 48-95, §§ 1—4, adopted Aug. 31, 1996.

Property owners receiving tax abatement

are required to file annual reports with

the tax abatement committee for review.

Also, property owners receiving a tax abatement,

after July 1, 1991, are required to

file an annual copy of compliance with the

statement of benefits form (CF-1) with

the Muncie city clerk’s office and the tax

abatement committee no later than June

15th of each year during which the abatement

is received. The committee will review

the CF-1 for compliance and forward

a recommendation to the common council

for review. If the property owner does not

file a CF-1, the committee may immediately

forward a recommendation of noncompliance

to the common council.

The tax abatement committee has the

authorization to develop a memorandum

of agreement as part of the application

process. The agreement will outline the

property owner’s commitment to the project

and outline the criteria for the possible

rescission of the tax abatement and

payback if the property owner is found to

be in noncompliance.

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2 thoughts on “Our heads in the clouds? A short history on Muncie City Council’s fiscal management and why we need new CFOs.

    Charles W. Perry said:
    September 4, 2011 at 9:19 pm

    Looks like they have been working hard to fulfill the scripture in Mt:15:14 [where Jesus said]Let them alone, they are blind leaders of the blind. And if the blind lead the blind, both shall fall into the ditch.

    They must be trying to help each other.

    Like

    The Beaver said:
    September 4, 2011 at 9:38 pm

    Excellent blog !

    Like

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