Fort Smith Finance Director defends allocations from 1% street tax fund

Fort Smith Finance Director Jennifer Walker on Thursday (Feb. 16) pushed back against the idea of stopping certain street fund transfers. The idea is pushed by some members of Fort Smith’s streets, bridges, and associated drainage capital improvement plan (CIP) advisory committee.

The committee continued to talk about the street fund at their Thursday meeting.

Committee members initially voiced concerns over transfers from the voter-approved 1985 1% tax fund at a December 2016 meeting. Member and Fort Smith-based property manager David Armbruster said then that the committee needed “to ask that the Board of Directors to cease and desist transferring money from street funds to various other departments.”

He continued: “I’ve looked at the ballot titles, and the people were shown these funds would be used exclusively for streets, bridges and drainage purposes. Nowhere does it say it will be used for the city administration office and other departments. We should ask them to stop doing it and bring this to a head or they’re going to keep sweeping this under the rug as they have for the last 30 years.”

Fellow committee member Robert Brown added at the same meeting it was his past experience in dealing with government entities that “they tend to estimate how much they want or need based on how much budget there is.”

“I think there is a lot of fluff in these numbers,” he said, adding that if allocations were to be made, it needed to be for “billable hours.”

The 2016 total generated from the tax through November was $19.421 million with an estimated $20.887 million for the year. Walker said allocations to other departments are less than 10%.

REVIEW UNDERWAY
Walker was present Thursday to address these past concerns. Walker initially launched discussions in June 2016 when she told the committee the city needed to review allocations and she would pursue an independent review at the first of 2017 once the city’s budget had been approved.

Walker said accounting firm Przybysz & Associates has begun the review and while no hard deadline was given, the firm expected to be finished “in a couple of months.”

When asked to provide details on the parameters Przybysz would be using, Walker said, “Generally accepted accounting principles say do not give parameters, but you have to be able to defend your decisions.”

Armbruster then interrupted Walker and said the concern of the committee was there “isn’t any historical information out there that you all have available to back up the decision to withdraw funds from the street program to support other departments, and I think that’s what we want to know. What is the basis? What will they have on-hand based on historical experience that will give them an idea as to the future calculation? And just out of curiosity, what do they use the money for? If the city administrator is getting three or four thousand dollars from this committee, what is he using it for? As we see it, it’s very arbitrary where it now stands.”

Walker responded that parameters used are different for each department based on the level of activity.

“We don’t want to say, ‘One method is to look at the number of employees that work on street projects versus the rest of the employees of the city,’ and create a calculation based on that,” she explained.

While such a calculation might be appropriate for human resources since the department supports employees across all departments evenly, Walker explained, “that doesn’t work for administration because their work is very different and not based on the number of employees in each department.”

She continued: “For administration, most of their work supporting the street fund is centered on items that go before the (Fort Smith) Board (of Directors) and their review and creation processing or facilitation for getting Board approval for those items. Typically what we would do is look at the number of CIP proposals that go in front of the Board as a percentage of the total proposals that go in front of the Board, and that generates an allocation for the work spent on that. For finance, we typically look at two things — either volume of transactions because we have to review and process all payments for the CIP fund, or the total dollar value of payments as a percentage of the whole.”

Walker said the department-specific nature of setting allocations is the “fairest way to do it,” adding “if you just pick one allocation method and use it for every department, you’re likely not going to get good numbers.”

When Armbruster pressed and asked how the city could conclude it could take any of the funds when the 1985 ballot title did not make mention of it, Walker stated, “If you don’t want us to take any of the money, we will stop processing the payments. We will stop putting items in front of the Board. We have to fund the activities that we do, and that is how you fund the activities that you do. So if you don’t want to give an allocation to finance, that’s fine. But we’ll stop paying the bills. And if you don’t want to give an allocation to legal or to administration, that’s also fine. But we’ll stop putting items in front of the Board.”

Walker also noted allocations are taken from other city funds provided projects cross over to other departments. To Brown’s point about government entities tending to estimate “how much they want or need based on how much budget there is,” Walker pushed back.

“It’s important to remember that I’m not a finance director of a for-profit company. My fiduciary responsibility — and I take it very seriously — is to ensure that the numbers are fair, and that they are accurate. It’s not to make money. My number one priority is to make sure that it’s an accurate allocation, not to make sure that I get the most money out of it.”