OPINION: Fear the LACK of FAAB
My colleague George Bromley is nicer than I am. He says the City of Falls Church has nothing to fear from the proposed “Financial Affairs Advisory Board.” I say that not only does the City have nothing to fear from such a body, we should fear not having one.
Recent decisions by City officials indicate a clear need for input from independent voices with financial experience. From the sloppy affordable housing arrangement, to opaque City presentations, to a hurried Green Labs proposal we still don’t understand, plenty of examples exist of situations where a second set of experienced eyeballs could make a positive difference.
Criticism of a financial advisory group “controlling” the City is a misdirection play. No one is suggesting taking away the decision making power of the City Council. As its title indicates, we’re talking about an advisory board, and as George Bromley points out, we already have lots of those. The Council would be free to reject anything the group has to say, but the Council should not reject the receipt of information. Information is good. Discussion is good. Especially in areas where our track record could use improvement.
No one is suggesting taking away the decision-making power of the City Council.
Two City Council members have been quoted in opposition to the idea, but their comments are unfounded. Vice Mayor Lippman has raised concerns that a financial advisory group could be controlled by those with a “political agenda.” That remark is astounding. For an elected political figure to complain of others having a political agenda is to devalue himself and the very process he participates in. Mr. Lippman and his colleagues are inherently political and are expected to work within a political framework in order to develop good policy. They cannot do that by shutting out information, but rather they should consider information presented, understand the agendas of those who present it, and make the best decision possible.
Councilman Maller goes further, dismissing financial advisors as “bean counters.” In a single phrase, he insults a whole field of experts who might help him make better decisions. This, out of concern that they would “determine the future of the City.” But, again, he overlooks the fact that an advisory board would have no legislative vote. Perhaps they could convince a majority of the City Council to take or not take a specific action, but that would mean their information has proved valuable. That is persuasion, not determination.
Moreover, if we followed George Bromley’s excellent suggestion, appointees to the board would be selected by different City bodies, providing balance of views and avoiding control by a single agenda.
What would the Fiscal Affairs Advisory Board accomplish specifically? Here are some contributions it could make.
- Attention to Detail. Last year the City Council approved a poorly-structured loan that is now costing the taxpayers money for no reason. Specifically, they gave a $2 million interest-free loan to the Falls Church Housing Corporation for the purchase of property for its proposed affordable housing project. Whether one agrees or disagrees with the project itself, the City clearly did not pay attention to detail on the loan. Specifically, City officials failed to require timely repayment of the loan when the deal fell apart. Even though FCHC has dropped the subject property from its proposal, and even though the property owner has put the property up for sale, the $2 million has not been repaid. Every day that the money sits in the property owner’s account, the City loses interest income. An outside group would help remind City officials of their obligation to take greater care of taxpayer dollars.
- Scrutiny. As the City considered how to balance its budget earlier this year, elimination of the GEORGE bus service was proposed in order to save $600,000. In fact, the move would have saved only half that because the state pays the other half. Only an analysis by the Northern Virginia Transportation Commission brought the error to light, showing the value of third party review.
- Asking Important Questions. Consider the “Green Labs” proposal to request $25 million of federal stimulus money for what would effectively be a huge energy efficiency R&D project in the City. Potentially a good idea, but one which was rammed through the City Council in one week’s time, all because of a fictitious requirement to submit paperwork to the federal government right away. As it turns out, the “deadline” was miraculously extended, and the proposal ultimately was filed with the feds weeks later. The Council got snookered by sky-is-falling tactics, even on a night in which they clearly struggled even to know what questions to ask. At minimum, an outside advisory group could help the Council pose important questions in such situations, and hopefully help them understand the answers.
- Clarity and Transparency. Financial information released by the City is often opaque. One week, the City Manager’s budget presentation shows debt service numbers, and the next week those numbers disappear, having been folded into some other category — making a comparison of earlier and later presentations impossible. Another example: The City’s Capital Improvement Plan has $30 million for school construction. Is that the cost of a new high school? “No, that’s what we can show without exceeding the 12% debt service limit.” In other words, a plugged figure providing no insight into real school costs. An independent body of citizens with financial experience could point out areas where greater clarity and transparency are in order.
The Financial Affairs Advisory Board is a good idea which is badly needed. Other jurisdictions have employed similar bodies without being “controlled” by a political agenda. Falls Church residents should not fear having a financial advisory board, they should fear not having one.
The views expressed in OPINION columns are those of their authors. They do not necessarily reflect the views of other Falls Church Times staff members or of the paper as a whole.
By Stan Fendley, Falls Church City
July 30, 2009
I support the idea of an FAAB (depending on whatever specifics get hammered out) but of the 4 examples Stan gives above I think the FAAB would have helped with only one of them at best.
I’m fairly confident that the CC understands the idea of interest free loans well enough to know the risks they were taking with the FCHC. I don’t think an FAAB would have swayed them on this issue – they knew the risk and decided to take it. Maybe an FAAB would have brought more attention to the risk, allowing the public to weigh in more on it, and that could have swayed the CC? If the CC didn’t understand the risks of an interest free loan then we need an FAAB yesterday (and probably need a new CC).
I don’t think an FAAB would have helped with the GEORGE situation either. The FAAB would have probably asked for more info about GEORGE when the budget numbers came out (just like the EDA and many people from the general public did) and that would have forced the City staff to get it figured out – but I doubt the FAAB is going to be putting in the time to figure these things out themselves. Maybe with an FAAB in place things like GEORGE would never get to where they got to (i.e. years ago the situation would have been scrutinized – forcing GEORGE accounting to be more accurate all along)?
The Green Lab initiative (is that what we’re calling it?) is another poor example, in my opinion. That proposal was put together by private citizens and the details were presented to the CC without much warning (that I’m aware of) with what turned out to be a less critical deadline than was originally stated. How would an FAAB factored in? The FAAB wouldn’t be at the CC meeting for immediate consultation. The CC would have had to make a decision on the spot either way. Maybe the existence of an FAAB would have given the CC more incentive to push for delaying a vote (to give the FAAB a shot at reviewing things)?
I think Stan’s final point is the most valid – not necessarily the specifics of figuring out how much a new school would actually cost – but providing some ideas and guidance for better ways to approach and present the budget. However, like with the other examples, this issue came to light without an FAAB so it’s not like an FAAB will magically solve all our problems.
If there are FC residents with expertise in this area and time to donate to the City to help the CC and staff better develop budgets and financial plans then I think that’s a good thing. I think the real payoff will be over time as this group helps us improve our process. I think an FAAB chiming in on specific things like GEORGE, the Green Lab proposal, and affordable housing loans will be less valuable (and probably pretty political).
I strongly disagree with the appropriateness or effectiveness of a FAAB. Here is a post that I did for Blueweeds on the topic:
Why Would We Ever Need a FAAB?
I find the current discussions about the creation of a new Fiscal Affairs Advisory Board (FAAB) to be — mystifying. This Board would supposedly be composed of “experts” in financial affairs and municipal finance who would have magical — and heretofore unimagined — insights into the budget challenges facing the City. These unelected volunteers would have Dumbledore-like wisdom and foresight, and would be able to relieve the Council from having to make anything like a difficult fiscal decision.
Let me tell you that — as someone who is pretty decent with numbers and budgets — the issues facing the City are very hard but not very complicated. The City’s consolidated budget is actually pretty simple (as these things go) — and no amount of expert pixey dust is going to relieve the Council of the burden of deciding whether to raise property taxes to pay for essential and desired services. A FAAB, not matter how it is constituted, would necessarily have to get into core political questions about what to cut and what to keep. I personally don’t want any unelected body getting anywhere close to those issues. That is what Council is for and anyone on Council who doesn’t want to make those kind of decisions should resign.
The City’s challenges aren’t that hard to understand. Our status as an independent city brings a lot of benefits. Government is intensely local, it is easy to be involved and you know that all of your tax dollars are spent within a 2.2 square mile area around your home.
But there are big downsides too. On a per capita basis, government is always going to be much more expensive here than in surrounding jurisdictions. And it is particularly hard to affordr things in arenas where we directly compete with these jursidctions — like schools.
Most of our revenue comes from residential real estate taxes, and I am pretty sure it always will be. First, the State of Virgina allows localities to have relatively few sources of income. Second, the City doesn’t have the physical room for truly intense commercial development, and I am convinced now that most people wouldn’t want it anyway. They like commercial development that is low density and, hence, very expensive for both developers and taxpayers.
So do people want great schools and good City services? If the answer is yes, then they are going to have to pay-up and no FAAB is going to make that reality go away.
David, I saw your post over there the other day but hadn’t gotten around to commenting. I think I agree with most of what you say – but if the FAAB is only an advisory board could it cause any harm? It wouldn’t have any authority other than whatever persuasive arguments it could make. Many of those arguments could be (and have been) made by the public anyway so it’s not like the FAAB would necessarily bring up new issues.
I doubt an FAAB could really help us that much but I also don’t see how it could cause much harm.
What a great new “Newspaper” you all have created. I have moved away from Falls Church, and I miss it a lot. I am still reading the FC Times regularly. Andy, Stan, I have to say, David is right on target on this FAAB debate, but a great discussion by all.