Mike Hendricks’ article in the KC STAR last Saturday about the city’s new “Rumor” page, shows that the city is so desperate to divert the bus money that it will mis-represent a city ordinance to spin its position. The city does not want to re-calculate the bus payment from the ½ percent sales tax on the proceeds for the year. Hendricks, like anyone else, can read the ordinance and see the bus funding is not based on a year old estimate, which is wrong by $4M, but on the proceeds for the year. http://bit.ly/1CGgEe6

We want to clarify that this issue is not about KCATA, but the city’s integrity and honesty in how it deals with voters, taxpayer’s money and obeying city law.  We should not need an ordinance for the city to honor its promise to voters to build a bigger better bus system. The city’s promise provided the bus system with 7/8 percent sales tax, if voters agreed to pay an additional 3/8 percent to supplement the 1/2 percent sales tax. However, we got the city to pass the ordinance when it was caught diverting large sums of money away from the bus system. It seems the city is struggling to break that habit, even with a city law. Taxpayers don’t like bait and switch especially when it concerns their hard-earned cash. If KCATA doesn’t get the money, then we don’t get the bus service we were promised. We are paying the 7/8 percent in sales taxes but the city isn’t giving all the money to the bus system.

Since the city council is voting March 26th on the new budget, let’s look at all the problems we are aware of in both this year’s actual expenditures and the Submitted Budget. Get the Submitted Budget FY15-16

Public Mass Transportation Fund (1/2 percent sales tax) PAGE 382

Fiscal year 2014-2015 actual expenditures

1. We want the budget department to calculate the final payments for the bus system for this fiscal year based on the formula in Ordinance 130796 for the actual PROCEEDS for this year. The payments are not based on the budget, which was estimated a year ago and ended up being significantly underestimated. Revenue going up an unexpected 13% is great, and if the budget department had budgeted correctly last year, KCATA would already be receiving the correct amount. Based on the year-end estimated figures and the ordinance formula for net receipts, KCATA should receive over $29 million this year but the report shows they are only going to receive $25 million. KCATA is only receiving 81% of the net receipts and 68% of the gross receipts. That is a long way from the 95% of net receipts stated in the ordinance. The city should not disobey the law or change it to avoid paying the bus system the appropriate amount of money.

We are concerned about facts, and this is not a rumor. The city has not dealt with why they aren’t re-calculating the payment to the bus system for FY14-15.  They talk about doing the adopted budget right last year, which is irrelevant now, or they talk about the Submitted Budget for next year, or they talk about the 3/8 percent sales tax when this problem is with the 1/2 percent sales tax. So far there is total avoidance of the real issue.

This fiscal year isn’t over until April 30th and it takes the city about 2 months to close the books. During that time it is easy and a normal accounting procedure to make these types of adjustments for the payment to KCATA based the net sales tax proceeds generated for this year.

2. The ordinance says the downtown streetcar subsidy “shall not exceed $2,039,000” The city is transferring $2,068,000 to the streetcar. This amount is wrong and should be corrected.

At this point Kansas City is not honoring its promise to voters, distributing the sales tax as taxpayers believe their taxes are being spent, or obeying the law as passed in Ordinance 130796.

Fiscal year 2015-2016 Submitted Budget

1. Obviously there will be significant changes to the amounts budgeted for Public Works and the transfer to the General Fund for Street Maintenance if corrections are made to Fiscal Year 2014-2015. Nevertheless, we have to deal with what is currently on the report.

• We have several concerns about the $2 million transfer to the General Fund.
  • According to state law this money can only be used on transportation projects. When money is transferred to the General Fund it loses its audit trail as transportation money.
  • The budget director says this money is transferred to the Street Maintenance Fund. There is a transfer from General Fund to Street Maintenance for $15.7 million, so the state mandated requirement appears lost for the $2 million. This transfer should have been made directly from the Public Mass Transportation Fund to Street Maintenance Fund page 387. The budget shouldn’t be a scavenger hunt for the money. This two-step transaction looks like the city is trying to hide the fact that additional money from the bus funding is going to street maintenance. Of course, this money probably shouldn’t come out of the bus funding to start with.
• The budget director said this $2 million for Street Maintenance is for street re-paving, including re-paving the streets for the streetcar work. Obviously the streets need to be re-paved along the streetcar construction line, but this re-paving should be charged to the Streetcar Fund, page 387 in the budget, and not the Public Mass Transportation Fund, which funds the buses. Basic Accounting 101 requires billing to the correct account for the work done. The correct account should be charged.

2. Using the ordinance formula for net receipts, the amount budgeted for KCATA is too low by $350,000 in the Submitted Budget.  The formula should be calculated correctly, with transparency, each year. Any attempts to do otherwise will only be seen as an attempt to subvert the ordinance. KCATA can receive at least 95% of the adjusted receipts, but not less. If the proceeds are more next year, then the payment needs to be adjusted upwards. This amount needs to be corrected.

The City Manager has said that the budgeted amount will be the minimum KCATA will receive. That is why he has a reserve in the account. We agree with that process but the reserve should only be about $1.5 million.

3. The ordinance says the streetcar shall receive no more than $2,039,000, but the budget has $2,069,000. The ordinance clearly states a fixed maximum amount, so this line item needs to be corrected.

KCATA Sales Tax Fund (3/8 percent sales tax) PAGE 368

Fiscal year 2015-2016

This Fund handles the 3/8 percent sales tax and the receipts are dedicated 100% to KCATA by voters. We appreciate that the city is going to transfer the excess money that has accumulated in this account to KCATA. It is about $3 million.

We will know the outcome of the budget deliberations tomorrow, Thursday March 26.

Previous posts on this topic:

KSHB41 TV Reporter Lexi Sutter Understands The Bus Funding Problem includes a list of the amounts of money diverted from the bus system since 2003.

Speak Up! Why is Kansas City Giving Transit Money To Public Works, AGAIN? includes calculations of bus payments based on the ordinance