Dennis the Peasant

Pretty Cool...

I just found out I'm a "blocked website" at something called securespot.bsecure.com.

Whatever that is.

Anyway, this is what they had to say about yours truly:

This site falls under the following categories: Hate and Discrimination, Militant/Extremist/Terrorist

Pretty cool, eh?

Change, Baby! Real Change!

You want change? I'll give you fuckin' change...

Here's a link to our web site opposing City Council's proposed tax increase. It still needs a bit of work to tighten up (and correct) the prose, but it's basically ready to begin pissing off the powers that be.

Say No To Sixty! 

There is a link in there somewhere to a PDF of the brochure we are distributing around town. I have 5,000 being delivered to households, my partner in crime is mailing another 400, and I am trying to plant the remaining 600 with Westerville merchants. So far I have 5 who have signed on.

I love the smell of naplam in the morning...

Boy, I Never Saw This Coming: Council Gets Stupid

Well, it's now clear that Westerville's City Council has decided to fight fire with something other than fire. They're going to fight it with what's at hand… and that - evidently - would be good, old-fashioned stupidity.

 

At the last City Council meeting - which was June 16 - I took the opportunity to point out that while Council was telling the citizenry that the City was going bankrupt, the City was (a) running large surpluses, and (b) bragging about it to the State of Ohio in their financial statements (for the most part, nobody other than the Auditor of State actually reads the financial statements). This is what I said:

 

Tonight, I would like to read exactly two sentences from the Management's Discussion and Analysis section of the City of Westerville's 2006 Comprehensive Annual Financial Report. In the context of Council's now claiming that they won't have money to pave the streets without a tax increase, I find these two sentences very confusing.

 

This is what Council was saying in June, 2007 about the state of Westerville's finances. I'm rounding off the numbers involved for the sake of brevity.

 

"The City had 48 million dollars in expenses related to governmental activities: 12 million dollars of these expenses were offset by program specific charges for services and sales, grants, contributions and interest. General Revenues (primarily income and property taxes) of 42 million dollars were more than adequate to provide for these programs."

 

"More than adequate." Those are your words, not mine.

 

See why I'm confused? A year ago City Council was telling the Auditor of State that they had more than enough money to keep the City running. And they did. They had 54 million dollars in revenues and offsets to cover 48 million dollars in expenses. To us uneducated folks, that sounds like a lot like a 6 million dollar surplus.

 

They told the Auditor exactly the same thing in 2006 -  that revenues were "more than adequate" to cover all expenses - while at the same time telling voters they desperately needed a tax increase. That year, the surplus was over 5 million dollars.

 

There will be another Comprehensive Annual Financial Report released this summer. In it will be another discussion by Management about the state of Westerville's finances. It will be interesting to see if Council actually tells the Auditor of State they don't have enough money to keep the roads safe. It will also be interesting to see if the City managed to turn yet another surplus in 2007.

 

Evidently that struck a nerve. Last week the City of Westerville released its' (unaudited) Comprehensive Annual Financial Report for the year ended December 31, 2007, and this is what they had to say about the 2007's $4,498,326 surplus:

 

The City had $51,310,752 in expenses related to governmental activities; $10,699,205 of these expenses were offset by program specific charges for services and sales, grants, contributions and interest. General revenues (primarily income and property taxes) of $45,109,873 were less than adequate to provide for the current year programs, and the City relied on the program specific charges of $10,699,205 to meet expenses.

 

This is also the exact point where the City of Westerville gets stupid.

 

It should be clear to any dispassionate reader, that the above paragraph has been written in a manner to obscure the one outstanding fact it is supposed to communicate… That the City ran a surplus of nearly $4.5 million in 2007. Beyond that, in attempting to obscure that fact, what they ended up writing was clearly incorrect from a purely technical (accounting) standpoint. The $10.6 million in "program specific charges" are actually sales of services the City does not provide for free, as well as the revenue the City receives from Ohio and the Feds in the form of grants. The City argues that it would have spent the entire $51.3 million it did actually spend in 2007 irrespective of whether it had sold nearly $5 million in services or received nearly $5 million in grants, which is complete nonsense. You don't incur costs for services you don't intend to provide, and you don't spend money on grants you don't actually have.

 

Now in all honesty, I cannot for the life of me imagine that anyone at the City would be stupid enough to think that I would not catch this stunt and raise Hell about it. They don't know me, but since I've already managed to get quoted in one Columbus Dispatch article opposing their tax increase, and get another article published in the same paper that they could hardly find to be anything other than embarrassing, you'd think they'd be a bit more careful.

 

At least that's what I'd think.

 

In any event, I fired this letter off to the Auditor of State's office on Thursday:

 

July 1, 2008

 

Ms. Mary Taylor, CPA

Office of Auditor of State

Columbus, Ohio

 

Dear Ms. Taylor;

 

My name is Kenton E. Kelly, and I am a C.P.A. residing in the City of Westerville, Ohio. In reading the compiled Comprehensive Annual Financial Report for the year ended December 31, 2007, I happened upon a section of Management's Discussion and Analysis that, in my professional opinion, is both inaccurate and misleading. It is on page 3 of the Financial Section of the C.A.F.R.

and describes the City's financial results related to governmental activities for the year ended December 31, 2007. This section is describing an annual surplus derived from government activities, which totals $4,498,326:

 

The City had $51,310,752 in expenses related to governmental activities; $10,699,205 of these expenses were offset by program specific charges for services and sales, grants, contributions and interest. General revenues (primarily income and property taxes) of $45,109,873 were less than adequate to provide for the current year programs, and the City relied on the program specific charges of $10,699,205 to meet expenses.

 

For reasons that will be explained in this letter, I believe that the wording of the above section of the MD&A has the potential to confuse readers of the financial reports as to the financial condition and results of the City of Westerville for the year ended December 31, 2007.

 

Furthermore, the wording of the above section of the MD&A varies significantly from the wording used in prior years' C.A.F.R.s. In my professional opinion, the wording used in prior years is far more accurate and understandable than that used for 2007.

 

My specific objections to the wording of this section are as follows:

 

1.       The City received $4,986,322 from charges for services and sales. Most of these charges and sales can be characterized as user fees related to facilities provided by the Parks and Recreation Department. The City of Westerville has never contemplated providing any of these services free of charge. Given that, it is both inaccurate and misleading for the MD&A to claim that general revenues cannot cover all program costs. For the statement above to be accurate and clear, the City would need to remove all costs associated with the revenues generated from services and sales and net them against the $4,986,322 in revenues generated during the year.

 

2.       The City received $4,921,913 for operating grants, contributions and interest and $790,970 for capital grants, contributions and interest. In both cases, the majority of these revenues can be characterized as specific purpose grants. Given that, it seems clear that the City would not have incurred many (if not most) of the expenses related to these grants had the grants not been in place. In our professional opinion, the most accurate treatment for the expenditures related to these grants would be to net them against the $4,921,913 and $790,970 in related revenues.

 

It should also be noted that the wording used to describe the 2007 results of governmental activities varies significantly from prior years. Here is the relevant MD&A section for the year ended December 31, 2006, when the City generated a $6,299,746 surplus:

 

The City had $47,929,353 in expenses related to governmental activities; $12,048,248 of these expenses were offset by program specific charges for services and sales, grants, contributions and interest. General revenues (primarily income and property taxes) of $42,180,851 were more than adequate to provide for these programs.

 

Here is the relevant MD&A section for the year ended December 31, 2005, when the City generated a surplus of $5,575,714:

 

The City had $46,116,756 in expenses related to governmental activities; $12,769,216 of these expenses were offset by program specific charges for services and sales, grants, contributions and interest. General revenues (primarily income and property taxes) of $38,923,254 were more than adequate to provide for these programs.

 

Here is the relevant MD&A section for the year ended December 31, 2004, when the City generated a surplus of $6,421,748:

 

The City had $42,480,719 in expenses related to governmental activities; $12,950,510 of these expenses were offset by program specific charges for services and sales, grants, contributions and interest. General revenues (primarily income and property taxes) of $35,560,957 were more than adequate to provide for these programs.

 

And finally, here is the relevant MD&A section for the year ended December 31, 2003, when the City generated a surplus of $7,880,513:

 

The City had $38,687,693 in expenses related to governmental activities; $10,670,574 of these expenses were offset by program specific charges for services, grants or contributions. General revenues (primarily income and property taxes) of $35,560,957 were more than adequate to provide for these programs.

 

In my professional opinion, it is clear that the choice of wording used in the 2007 MD&A analysis obscures the single outstanding fact presented; that being that the City of Westerville generated a surplus of $4,498,326. I would also note that no satisfactory explanation comes to mind for the management of the City of Westerville to reword a section of text in this manner when it had used far more accurate wording the four previous years to describe the similar circumstances of the City's annual financial results. The effect of management's rewording of the section is to heighten the risk that the user of the financial statements will be misunderstood.

 

Given that there is no acceptable reason for the City, or the Auditor of State, to accept an increased risk that a user of the 2007 Comprehensive Annual Financial Report might misunderstand the City's financial condition and results due to the wording used in the named section of the Management's Discussion and Analysis, I am respectfully requesting that the Auditor of State ask the management of the City of Westerville to use the wording from prior year's to describe the financial results from all governmental activities for the year ended December 31, 2007. Should the City refuse to correct and clarify the MD&A section of the report, I would respectfully request that the Auditor of State delay certification of the City's 2007 Comprehensive Annual Financial Report until such action is taken.

 

Sincerely,

 

Kenton E. Kelly, CPA

 

On Friday, I sent this letter to each member of City Council, as well as the City Manager and the Director of Finance:

 

July 2, 2008

 

[Council Members]

[City Manager]

[Director of Finance]

City of Westerville

Westerville, Ohio

 

Dear Madam/Sir;

 

Attached you will find a copy of the letter I have sent to Mary Taylor, CPA at the Office of Auditor of State. In that letter, I have requested that the Auditor of State delay certification of the City of Westerville's Comprehensive Annual Financial Report for the year ended December 31, 2007 until the City revises a section of the Management's Discussion and Analysis that is, in my professional opinion, both inaccurate and misleading.

 

This particular section of the MD&A is on page 3 of the Financial Section of the C.A.F.R. and it  communicates the City's financial results related to governmental activities for the year ended December 31, 2007. Specifically, it describes an annual surplus which totals $4,498,326:

 

The City had $51,310,752 in expenses related to governmental activities; $10,699,205 of these expenses were offset by program specific charges for services and sales, grants, contributions and interest. General revenues (primarily income and property taxes) of $45,109,873 were less than adequate to provide for the current year programs, and the City relied on the program specific charges of $10,699,205 to meet expenses.

 

For reasons explained my letter to the Auditor of State, I believe that the wording of the above section of the MD&A has the unacceptably high possibility of confusing readers of the financial reports as to the financial condition and results of the City of Westerville for the year ended December 31, 2007.

 

Given these concerns, this letter is being sent to Council and the senior management of the City of Westerville respectfully requesting that the City voluntarily remove the above section of the MD&A and insert wording similar to the wording used to describe the City's surpluses from governmental activities in the 2003 through 2006 Comprehensive Annual Financial Reports. You will find copies of wording used for those four years in the body of the letter I have sent to the Auditor of State.

 

Beyond that request, I would be less than frank with you if I told you I did find this incident particularly troubling within the context of Council's advocacy of a proposed 60% increase in Westerville's municipal tax rate. As you all know, it was I, on June 16 raised the issue of just how the Management's Discussion and Analysis in prior years' Comprehensive Annual Financial Reports seemed to directly contradict much of "educational" information being put forth by Council regarding the financial condition of the City. I am going to take the trouble here to reproduce exactly what I said at that Council meeting:

 

Tonight, I would like to read exactly two sentences from the Management's Discussion and Analysis section of the City of Westerville's 2006 Comprehensive Annual Financial Report. In the context of Council's now claiming that they won't have money to pave the streets without a tax increase, I find these two sentences very confusing.

 

This is what Council was saying in June, 2007 about the state of Westerville's finances. I'm rounding off the numbers involved for the sake of brevity.

 

"The City had 48 million dollars in expenses related to governmental activities: 12 million dollars of these expenses were offset by program specific charges for services and sales, grants, contributions and interest. General Revenues (primarily income and property taxes) of 42 million dollars were more than adequate to provide for these programs."

 

More than adequate… Those are your words, not mine.

 

See why I'm confused? A year ago City Council was telling the Auditor of State that they had more than enough money to keep the City running. And they did. They had 54 million dollars in revenues and offsets to cover 48 million dollars in expenses. To us uneducated folks, that sounds like a lot like a 6 million dollar surplus.

 

They told the Auditor exactly the same thing in 2006 -  that revenues were "more than adequate" to cover all expenses - while at the same time telling voters they desperately needed a tax increase. That year, the surplus was over 5 million dollars.

 

There will be another Comprehensive Annual Financial Report released this summer. In it will be another discussion by Management about the state of Westerville's finances. It will be interesting to see if Council actually tells the Auditor of State they don't have enough money to keep the roads safe. It will also be interesting to see if the City managed to turn yet another surplus in 2007.

 

In any event, I'm asking Council to answer this simple question: Which of these two representations is reality? You're telling the Auditor of State that revenues are more than adequate to run the City. You're telling voters you aren't going to be able to fix the streets unless you get a tax increase. It has to be one or the other. Which is it?

 

It has been noted that the Management's Discussion and Analysis in Comprehensive Annual Finance Report is dated June 18, 2007. That's two days after I presented the above facts and asked the above question of Council. If it is a coincidence that the City decided to reword that section after using different (and largely identical) wording each of the previous four years, then I would characterize that coincidence as rather an amazing one. I, for one, don't put much stock in amazing coincidences.

 

In any event, the issue here isn't who has done what, why they did it, or when it was done. The issue here is that the City of Westerville needs to revise a section of the Management's Discussion and Analysis in the 2007 Comprehensive Annual Financial Report to ensure it is as accurate and understandable as possible. As it stands now, it is my professional opinion that the section in question is both inaccurate and misleading and should be revised immediately. I respectfully request Council and senior management address this issue immediately.

 

Sincerely,

 

Kenton E. Kelly, CPA

 

You know, I really don't want to make Council's veracity an issue in this election, but one or two more stunts like this and I may have to. I really hope they understand that they need to me answering the questions put to them as forthrightly as possible, and that if they do not, they will suffer the consequences of not doing so. If nothing else, they are now going to have to suffer the embarrassment of addressing this issue with the Auditor of State. Take it from me, the last thing you want to be doing with your auditor is explaining away complaints about your financial statements. Hopefully, these folks are going to learn a lesson from this bit of nonsense.

 

Another Article In The Columbus Dispatch...

This story ran on page one of the Local section of the Columbus Dispatch today. I doubt Westerville's City Council is pleased. This is the second article in two weeks about Westerville's proposed tax hike, and neither has really done Council any favors.

If there is one thing I've learned over the past 20 years or so, it's how the journalistic mind works. When Dean Narcisco was working on his original story about Westerville's proposed municipal tax increase, he called me up for an interview about said increase. In the course of our conversation, I happened to mention my dust-up with Council on June 3. I hoped he'd bite on it, and sure enough he did. The result is the article that ran today.

The Letter My Attorney Sent To City Council, And My Council Meeting Comments...

Several readers have requested that I post the nastygram I had my attorney send the Westerville City Council. Here it is. For the time being at least, I'm going to be scrubbing names. I'll explain later...

June 11, 2008

[Names of each Council Member]

Re: Kenton Kelly, CPA

Dear Madam/Sir:

I represent Kenton Kelly, CPA who is a resident of the City of Westerville. On June 3, 2008 my client chose to exercise his first amendment rights and obligations as a citizen of your community and appeared before the City Council to voice his objection to the proposed increase in the city income tax.  He stated in his presentation that he had not had the opportunity to fully read the financial statements that had been presented and then continued his objection to the increase proposal.

After leaving council chambers Mr. Jerfkoff Lawyer took the opportunity to defame the intelligence, education and professionalism of my client by stating such things as he was shocked that a CPA could not read a financial statement and that he was uneducated.

These statements were not only in bad taste but were clearly slanderous.  I am aware of the immunity for slander that appears in the law of Ohio for elected officials but statements of this nature clearly cross the line of good behavior, courtesy and legality.  If this was an attempt by Mr. Jerkoff Lawyer to intimidate my client then his actions are an attempt to limit my client’s first amendment rights.

You may want to watch the proceedings of June 3, 2008 in case you were not present to hear Mr. Jerkoff Lawyer’s statements.  If my client chooses to appear before your city council in the future I expect that your council will treat him as he has treated the council with respect and dignity.  If not, legal action will be taken.

Sincerely,

Kenton Kelly's Lawyer

Note that Westerville tapes and broadcasts all Council meetings on the local cable channel the City shares with Otterbein College.

The next City Council meeting was on June 17. Here is the presentation I made during the Citizen Comments section of the Council meeting:

When I came before Council June 3rd, I came as a skeptic of Council's need for new taxes. I expressed my skepticism politely, I made no accusations, and I hurled no insults. Evidently I didn't have to.

For taking the trouble to respectfully voice my concerns, I ended up with a Council member asserting I was uneducated and so professionally incompetent that I couldn't read a financial statement. Well, that may be. Then again, it may not. You and I are going to have about 4 and a half months to figure that one out.

Tonight, I would like to read exactly two sentences from the Management's Discussion and Analysis section of the City of Westerville's 2006 Comprehensive Annual Financial Report. In the context of Council's now claiming that they won't have money to pave the streets without a tax increase, I find these two sentences very confusing.

This is what Council was saying in June, 2007 about the state of Westerville's finances. I'm rounding off the numbers involved for the sake of brevity.

Quote:

"The City had 48 million dollars in expenses related to governmental activities: 12 million dollars of these expenses were offset by program specific charges for services and sales, grants, contributions and interest. General Revenues (primarily income and property taxes) of 42 million dollars were more than adequate to provide for these programs."

Unquote.

More. Than. Adequate.

Those are your words. Not mine.

See why I'm confused? A year ago City Council was telling the Auditor of State that they had more than enough money to keep the City running. And they did. They had 54 million dollars in revenues and offsets to cover 48 million dollars in expenses. To us uneducated folks, that sounds like a lot like a 6 million dollar surplus.

They told the Auditor exactly the same thing in 2006 -  that revenues were "more than adequate" to cover all expenses - while at the same time telling voters they desperately needed a tax increase. That year, the surplus was over 5 million dollars.

There will be another Comprehensive Annual Financial Report released this summer. In it will be another discussion by Management about the state of Westerville's finances. It will be interesting to see if Council actually tells the Auditor of State they don't have enough money to keep the roads safe. It will also be interesting to see if the City managed to turn yet another surplus in 2007.

In any event, I'm asking Council to answer this simple question: Which of these two representations is reality? You're telling the Auditor of State that revenues are more than adequate to run the City. You're telling voters you aren't going to be able to fix the streets unless you get a tax increase. It has to be one or the other. Which is it?

As much as I love to stay for Council Comments this evening, I have a prior commitment and must leave. If you wish to answer my question, or simply prefer to resume the personal attacks, please feel free to speak directly to my friend Mr. Kenton Kelly CPA's Lawyer. He will pass your comments to me directly.

Thank you and see you July 8th.

And with that, I stormed out, leaving my lawyer to sit through the rest of the meeting. As I was a bit wound up, I had to stay focused on reading my statement and therefore wasn't really able to gauge the reaction of each of the Council members to what I said. My lawyer later told they looked as though they'd been whacked with a 2x4. Needless to say, not a one of them had anything to say on the subject of my level of education or professional competence on that particular evening.

 

Funny how that works...

How I Am Spending My Summer Vacation...

Evidently I've been gone long enough to arouse the concern of my small but compassionate readership. Several emails have poured in over the past week asking questions such as these:

"Dennis, are you OK?"

and...

"Dennis, are you giving up blogging?"

and...

"Dennis, where's the 50 bucks you owe me?"

These are all legitimate questions - except for the last one - and I'm prepared to answer them all - except for the last one - right here and now.

It seems the Grand Poo-Bahs of Westerville want to raise taxes. They tried this same stunt back in 2006 and had their collective ass handed to them by the voters. Of course, gas is now twice the price it was then, food prices are rising, home values are sinking and the nation in general (and Ohio in particular) is sliding into economic recession. So you can see it makes complete sense that these same Poo-Bahs have decided that 2008 is the perfect time to ask, once again, for an increase of 60% in the municipal tax rate.

As you might imagine, ol' Dennis is somewhat predisposed to resist new taxes. This case is no exception. And as a citizen, I decided to attend the June 3 City Council meeting and politely voice my skepticism of Council's claims that Westerville would be unable to fix its' roads without this tax increase. I want to emphasize that when I say I politely voiced my skepticism, that is exactly what I mean. I did not hurl accusations or insults, nor did I question anyone's motives or integrity.

Evidently I didn't have to. For taking the trouble to voice my opinion, I ended up with a Council member (whom I have never met) stating publicly in that same June 3 Council meeting that I was both "uneducated" and so professionally incompetent that I "can't read a financial statement". To give you an idea of just what sort of creature ends up sitting on Westerville's City Council, this particular Council member is a divorce attorney who has the logos for VISA, Mastercard, American Express and Discover (along with "Major Credit Cards Accepted") on the home page of his firm's web site.

I don't know about you, but for my own true self, nothing screams "professionalism" like making sure everyone knows you take credit cards. I have honestly never seen this on a law firm's web site before. Nor have I ever seen such a thing on the web site of a C.P.A. firm. Just amazing.

Anyway, now I have a new Special Friend.

The upshot of all this is that over the past three weeks I have registered as the Treasurer of a ballot issue political action committee that will oppose the proposed tax increase, threatened Council with legal action over Mr. Jerkoff Lawyer's comments, and been quoted in a story that ran in today's Columbus Dispatch. A link to the story is here.

So now you know what I'm doing on my summer vacation. While this project is sucking up much of my free time, I hope to be able to keep a running diary of my efforts. I have a feeling that I will experience some adventures between now and November 4, and I'm betting at least a few of them will prove interesting to my readership.