Notes from a Finance Conference Fan

Last month, I went to the 57th annual Washington Finance Officers Association (WFOA) conference at the Three Rivers Convention Center in Kennewick.  (Geography quiz: name the three rivers!)   I have been to 20 of them.  For the last couple years, I have been wondering if I might start to get bored. Eighteen finance conferences, nineteen finance conferences -  surely I had heard and seen most everything.  But, you know, every conference has been interesting and worthwhile.  And, if I ever start becoming jaded, all I  need do is talk to someone like Victoria Lincoln, Legislative and Policy Advocate for the Association of Washington Cities (AWC).   This was her first WFOA conference, and it was fun to share her excitement - “Over 600 people!   Seven concurrent classes!  How do I even begin to choose?”

For those of you who have never been, you can get a feel for the breadth of topics covered by checking out this link to descriptions of all the conference and pre-conference sessions all the way back to 2003.  Yes, there were classes in the areas that one would expect of a government finance conference, such as accounting and financial reporting, investing, banking, budgeting, issuing debt, internal controls, and performance measures.  But, there were also classes on annexing to a fire district, health savings accounts, communicating and managing across generations, public records and open public meetings, IRS issues for local government,  and utility finances.  Many presenters provided copies of their handouts for posting, which you can download.  Put the dates (September 17-20, 2013) for next year’s conference at Tulalip on your calendar.

I always check to see what classes the State Auditor’s Office (SAO) is offering on audit issues and other hot topics to get a heads up.  This year, a group consisting of Jan Jutte, Director of Legal Affairs; Debbie Pennick, Program Manager; Kelly Collins, Deputy Director for State and Local Audits; and Chuck Pfeil, Director of Audits teamed up to offer  classes such as “State Legal Compliance and Your Audit,” “SAO Roundtable,” and “Small Entities Roundtable.”  Only the first class had a handout, but a number of topics discussed in the roundtables were the same.  You might print out the handout, since it has helpful information.

Below are some thoughts that occurred to me as I was listening to the speakers.

Sunsets Are Beautiful, But Not When It Is Lodging Tax Uses That Are Sunsetting  

Most people who have an interest in the lodging tax are aware that the new uses of the funds that were added to the statutes in 2007 are due to sunset on June 30, 2013, unless the 2013 legislature chooses to extend or remove the sunset date.  Since I wrote a blog post on this issue a couple months ago, I won’t go through the entire argument again.  However, the uses at risk are:  1) operation (as opposed to “marketing”) of special events and/or festivals designed to attract tourists; and 2) support of the operations and capital expenditures of tourism-related facilities owned by non-profit organizations.

Since I wrote that blog post, we have received some inquiries from cities that want to fund a festival or special event that will occur after the June 30 sunset date - a 4th of July celebration, for example.  “Assuming that the legislature does not remove the sunset provision,” they ask, “would it be permissible for them to use lodging tax funds to pay that festival’s expenses before the sunset takes place on June 30, 2013?”

Jan Jutte’s response to this question at one of the sessions added information that is not in the class handout. She said (this is my paraphrase of her words, and I am being much more verbose than she was) that if these expenses were typically paid on or before June 30 in past years, using lodging taxes to pay them before the sunset date in 2013 will be permissible.  However, if the city (or county) moves the payment date of expenses that had traditionally been paid after the festival to an earlier date to meet the June 30 deadline, using lodging tax money would not be allowable.

Note that this situation is an issue only for 2013.  If the 2007 legislation sunsets, no lodging tax funds can be spent on these uses in 2014 and beyond.

No Personal Use of Credit Cards

SAO added a section on the use of credit cards to the 2012 BARS Manual Update. (See Part 3, Chapter 10, No. 17 in the Cash Basis manual and Part 3, Chapter 12, No. 17 in the GAAP manual.)  It states:

Credit Cards

Under the Washington State Constitution and the laws of this state, including RCW 43.09.2855 and RCW 42.24.115, a local government official or employee should not use a publically-issued credit card for personal purchases, even if the person pays off the card prior to the date that the bill becomes due.

Now I can hear some of you saying that this warning shouldn’t be necessary.  Using the entity’s credit card for personal use, even with the amount of the purchase being reimbursed, is an unwise thing to do and might even be an unconstitutional lending of credit under Article 8, Section 7 of the Washington State Constitution.  Well, you are correct, and the Washington State Attorney General’s Office agrees with you.  Take a look at the reasoning in this June 2, 2011 letter opinion from Callie A. Castillo, Assistant Attorney General, to Senator Pam Roach.

However, not all employees and officials having permission to use their local government’s credit card understand our state’s strict constitutional prohibitions - “Of course I’m going to pay the city back.  I just left my own credit card at home today.”  If you don’t currently have an explicit statement in your credit card policy, you might consider adding one now.  For example, you might say:

Credit cards must never be used to purchase items for personal use or for non-city purposes, even if the card holder intends to reimburse the city of _________.

“What? You don’t have a credit card policy?  Pass one now.”  See our credit card webpage for examples.  Note that you may need to add the language above.

BARS Manual Guidance on Capital Asset Management for Cash Basis Entities

SAO added a new section on capital asset management in the BARS Manual for cash basis cities, counties, and special districts.  This is a welcome addition.  It is also probably a “heads up” that you should start thinking about writing a policy if you don’t already have one.

As I am writing this blog post, we have the following paragraph on the Capital Asset Management page on our website:

Entities that account on a cash basis do not have to book their assets in their general ledger, so there is no information in the “Cash Basis” BARS Manual for them. However, they have a responsibility to tag and track their assets so they know what assets they own and where they are located and whether they have enough insurance. Parts of chapter 7 of the GAAP BARS Manual and the policies below can provide guidance to them also.

[Emphasis added.]

Now that the new “Inventories and Capital Asset” section in the cash basis BARS Manual (Part 3, Chapter 7, Pages 1-6) has been published, I can rewrite this narrative and may well have done so before you look at the webpage.  The new material is much more appropriate for small entities than telling them to try to use the policies in the GAAP BARS Manual.

Check our webpage for articles and sample policies.

Special Meeting Statute Is Amended

I found out from the handout that RCW 42.30.080, the statute that sets out the notice requirements for special meetings for public agencies, was amended during the 2012 legislative session (2SSB 5355, ch. 188).  I missed that bill when I wrote up notes on legislation for Budget Suggestions for 2013.   The notice of a special meeting must now be posted on the agency’s website unless it has no website, or employs fewer than ten full-time equivalent employees, or does not have a person on its staff whose duty is to maintain or update a website.  The notice must also be “prominently” displayed at the main entrance of the agency’s primary location (city hall, the courthouse) and at the meeting site, if the meeting is not held at the agency’s primary location.

What I think is interesting about the bill is that it apparently got one of the MRSC attorneys, Bob Meinig,  thinking about existing language in the statute that states:  “A special meeting may be called at any time by the presiding officer of the governing body of a public agency or by a majority of the members of the governing body . . . .” and he wrote a blog post titled  “Can a Majority of the Members of a Governing Body Call a Special Meeting Without Violating the OPMA (Open Public Meetings Act) in Doing So?”  Take a look if you are one of the people who thinks it is fun to puzzle about questions like this.  Or, if you just want to know the answer, never mind how it was arrived at.

Be Aware That the Auditor Knows You Are Looking for Money for Your General Fund

When times are hard, SAO knows that some local governments are going to try to stretch the limits of the statutes and accounting practices.   For example, cities and counties look for creative uses of hotel-motel taxes.  And, auditors have found in the past that some entities have been too generous in allocating utility costs to the general fund, and they may be on the lookout for similar practices.

By including a new section on interfund utility surplus transfers in the 2012 BARS Manual (Part 3, Chapter 4, Page 3; also see the handout for the State Legal Compliance class), SAO is giving local governments direction on how to measure the surplus and information on the rules for making transfers to the general fund, so agencies do not have an excuse for doing the transfers incorrectly.

One thing the handout does not mention, but which Jan Jutte brought up in one of the classes, is the frequency with which some entities are transferring utility surpluses.  Utility surpluses are supposed to be an occasional event, a surprise.  Perhaps you had a very cold winter, and your electric utility sold lots of electricity at the high winter rates.   If you have surpluses year after year, it probably means your utility rates are too high, and SAO might be watching for this.

 Washington Municipal Treasurers Association Conference

And, let me finish by giving a shout-out for the Washington Municipal Treasurers Association (WMTA) Conference, which occurs every year in April at Chelan.  Next year’s conference, “The Heroic  Age of Public Treasurers,”  will take place on April 17-19, 2013.   This conference is smaller than WFOA (about 200 participants) and somewhat less broad in its topics.   It focuses more on issues associated with treasury functions, so you are not likely to see a class on budgeting or utility rate-setting, for example.   There are several sessions given as classes, but the feature that distinguishes this conference in my mind are the roundtables.  There are usually four round table sessions, with three or four choices in each time slot.   You really do “sit around a table” and the sessions are informal and allow the participants to share information.

About Judy Cox

Judy is MRSC’s expert on budgeting, revenue options and forecasting, financing capital projects, and everything else related to local government finance. If you’ve got a money question, Judy’s your go-to resource.
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2 Responses to Notes from a Finance Conference Fan

  1. Sonja Springer says:

    Thank you so much for that recap of the conference. Due to budget constraints, this was the first year since 1999 that I was not able to attend. I really appreciated your highlights of the conference!

    • Great article. I was there (I agree it was a very good conference) and appreciate hearing about sessions that I was not able to attend. Thank you also for mentioning the Washington Municipal Treasurer’s Conference in April. It would be wonderful to see everyone there as well.

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