Tavares, FL Sept. 2, 2015 Rev. 7 – Updated Oct. 22, 2015
The short URL to this page is: http://bit.ly/VoteNO-LakePennySalesTax
NOTE: Other new posts to this blog will be listed in the "Recent Posts" section in the right hand column. Scroll down until you see it. This "10+ Reasons" page will remain as the top page until the Nov. 3 election is finished.
This page will be periodically updated with added reasons to vote NO in Nov. 3 on the $800-million "Infrastructure Sales Tax" referendum.
10+ Reasons to VOTE "AGAINST" the $800-million Lake County sales tax renewal referendum on the Nov. 3, 2015 ballot – 3 pgs
By Vance Jochim, FiscalRangers.com Rev. 5 – Updated Sept 27, 2015
This is the third 15-year renewal of this penny sales tax. It will generate over $800-mllion in tax collections over 15 years. The County, the School District, and a group of the 14 cities each receive 1/3. That 1/3 is currently about $11-12 million per year for each group.
You can find the official Lake County website supporting the tax here, including the ordinance. Notice there are no costs listed by all the proposed projects. There are no specified percentages allocated to any specific type of project like roads vs huge spending on parks.
UPDATE Oct. 22, 2015 - I added reasons 14 & 15. Scroll down to see it.
UPDATE Sept 3, 2015 - Daily Commercial front page story: "Critics slam officials for soliciting businesses that work for the county, (school) district" - Apparently pro-tax leaders set up a $50,000 PAC (Impact Lake County) to market the $800-million tax to voters and solicited funds from vendors who have worked with Lake County & the School District. It indicates blackmailing of vendors with the implied threat they won't get future government business if they don't contribute to the PAC. So this referendum is not about filling voter needs, but vendor needs.
Why Lake County voters should vote NO on the $800-million sales tax renewal:
This is a SLUSH FUND for big spending officials.
1. NO bonds should be issued: The agencies should pay as they receive funds, not run up debt. There will be a feeding frenzy of selling bonds, which run up debt and cost hundreds of millions of dollars in interest charges. The County, the School District, and the Cities should pay “as you go” and not sell costly bonds. In the last 15 year period, school officials alone SOLD over $600-million in bonds to pay for fast construction of expensive buildings, then ran out of money during the downturn, but still had to pay millions in interest each year. In the last 15 years, the Schools alone paid over $100-million in bond interest instead of “paying as you go”. My review of expense reimbursement forms from the County's 14 cities revealed that many of them are using 40-89% of their annual sales tax revenues to pay bond or loan debts.
2. Vague Restrictions on Spending are not adequate or specific enough: State laws specify the types of “capital” spending that are allowed. However, this referendum wording includes spending for “other public infrastructure” projects which is extremely vague. This means the big spenders on the County Board, Jimmy Conners, Welton Cadwell and Sean Parks will blow the money on unexpected projects proposed by construction firms and department managers and bond salesmen. Examples could include more parks without operating funds, trails, trains and bike paths. It could include millions for roads and infrastructure to subsidize land owners in large projects like the South Lake Sector Plan (aka Wellness Way). The $10-million, always vacant and unused Emergency Operations Center (EOC) is an example. The $35-million Motorola phone system is another, where the County staff failed to plan for the required $1-million annual maintenance contract.
There are no restrictions or priorities on how the funds can be spent other than they will be for capital items like buildings, computers, vehicles. There are no requirements that funds be spent on priority items like roads vs another park or boondoggle building. There are no requirements that specified percentages be spent on taxpayer priorities, like 50% of County penny tax revenues should be spent on roads. Instead, the board or city council leaders can spend funds on expensive projects based upon lobbyist and construction firm visits as well as staff “wants”. This is a SLUSH FUND for big spending officials with inadequate business controls.
3. Lack of Oversight & Transparency for some Constitutional Officer spending: There are many Sheriff vehicles and projects for his Department in the plans for this tax proceeds, but yet there are no budget hearings, no performance audits or published detailed budgets on his website or for the other Constitutional Officers. The County Board exercises zero performance oversight of his spending as well as other Constitutional Officers. Why give them any penny tax funds when they are not transparent? No sales tax should be approved until transparency of the Constitutional Officers is dramatically improved as described above.
4. Do you trust current and future elected officials to not waste some of the $800-million? Why must the referendum be 15 years? Why not five year cycles to prevent long term waste? Do you trust Lake County Board big spenders Jimmy Conner, Welton Cadwell and Sean Parks? They approved the 14% property tax increase in 2014 and failed to roll back taxes this year.
5. Does the County really need the funds? They just raised property taxes by 14%, so they have funds. There are numerous “taxing authorities” listed on your property tax trim notice like EMS. Yet the plan for this spending includes a shift of emotional capital spending objects like Ambulances from those accounts to this tax, freeing up funds for unknown uses. If this referendum does not pass, the Schools can still implement a referendum to get ½ a penny tax just for them, and cities can increase millage rates. Additionally, the County Board reduced impact fees to just $500 per new home. Impact fees should be approved at the amount the consultant says in needed to pay for roads and infrastructure needed due to growth and new homes and commercial buildings. It is only fair that if a developer builds 100 homes, he should pay impact fees to pay for the roads to serve those residents, as well as schools to cope with increased student populations.
6. Do the Schools Really Need the Money? The County Board and School Board waived Impact fees for three years, giving up $30-million in revenue, indicating they would rather give reduced impact fees to developers than collect funds for school buses, books and computers. They also used grant funds to analyze costs and found millions in savings, but they didn’t pay down bonds or hire more teachers. Instead the funds were spent on hiring more administrators, English Language learners and other non-classroom spending. The schools should file their own referendum that is legally allowed for a half penny tax just for schools. Thus if this referendum fails, the schools can file a separate half penny sales tax referendum (with better rules) and received MORE funds to build needed schools.
7. County funds for roads should be taken from the General Fund - Lake County Board members ignored advice from the CFAC committee to allocate 8% from the general fund for roads, indicating they want to spend general funds from property taxes on favored projects rather than a taxpayer priority of roads. At least 50% of the sales tax funds given to Lake County government should be specifically targeted to roads. Impact fees for transportation (roads) should be increased to 100% of the consultant recommendations to pay for the cost of roads and schools needed due to growth and new housing.
8. No Sales Tax Funds should be Allocated to Favored Developers or Residential projects like Sean Park's South Lake Sector Plan – Commissioner Sean Parks is pushing build out of the 16,000 acre South Lake Sector plan which requires many roads. The property owners who will gain from development should pay for the roads and schools needed, and no penny sales tax funds should be allocated to that or similar developer “growth” projects. Even Orlando Sentinel Columnist Lauren Ritchie thinks the South Lake Sector Plan is a boondoggle, and points out that County employees have spent many days and months doing free work for the land owners in the Sector Plan. County taxpayer funds should not be eligible for subsidizing the South Lake Sector Plan.
9. Do the Cities really need the penny sales tax revenues? Not if you read Lauren Ritchie’s August 22, 2015 column about radically excess spending by Clermont HERE: http://bit.ly/ClermontExcessSpending Or read newspaper articles about the budget shortfalls of Groveland or Leesburg. If they want to build expensive buildings or use bonds to finance them, they should do that locally with property tax funds, not force every taxpayer in the County to subsidize their projects.
10i. The Sales Surtax Oversight Advisory Committee needs Reforms: Proponents for the $800-million sales tax cite this committee as the watchdog. It has 9 members, all appointed by the recipients of the tax, a direct conflict of interest, including two by the County Board, two appointed by the School District Board, two appointments by the League of Cities, and three appointees by Consitutional Officers. Members of the Committee have a conflict of interest. There is not one independent taxpayer advocate or watchdog on the committee. Update Sept. 22, 2015: I reviewed the Committee's file folders and packets they get to approve spending (not posted on the webpage) and found:
a) The committee approves annual reimbursement requests with barely 4 words per expense, like "Wellness Park" for $500,000. No receipts, contracts, invoices, etc. Would you pay your car dealer $800 when the receipt only said "repairs"? Why is there less oversight over these expenses than a routine travel expense report from employees?
b) Many of the cities had very high percentages of their annual payments for DEBT payments, like 43% to 89%. That indicated they ran up debt and interest due in the beginning of the 15 year period when they should pay as they go.
c) I found math errors in the spending request documents, and they were poorly designed so that not many had sub-totals or grand totals that directly agreed to the top line request form. In auditing terms, there was no direct traceability.
d) Later questions found that the entire process of requesting, approving and paying the $450-million or so for the current 15 year tax was never subject to an independent audit. In contrast, the North Lake County Hospital District and the Lake County Water Authority both have annual financial audits AND the NLCHD also has a separate independent audit of the expense requests to ensure they are properly documented and examined.
e) A review of the legal file showed a memo saying the Committee had no authority and it's use was questioned. It is a FRONT that does not provide verifiable accountability. (I am a former Fortune 500 Internal Audit Director).
f) The website for the committee sucks. It was drastically out of date when we looked at it in early September. It now only contains meeting agendas and minutes for the last two years. There is NO attachment of regulations, procedures used by the committee, list of Committee members or original documentation and responses submitted to questions by the committee. There is also no evidence that any County staff re-verify the math on the spending requests from the Cities, Schools or even County.
10ii. Reforms Needed for the Sales Surtax Oversight Advisory Committee:
a) One independent appointee each from these taxpayer watchdog organizations is needed for the committee: North Lake Tea Party, a fiscal watchdog blog (such as FiscalRangers.com or The Right Side of the Lake), the South Lake 912 group, the Republican Party and the Democratic Party, and two local service clubs like Rotarians or Kiwanis. Independent appointees should exceed the count of internal appointees by recipient agencies by one.
b) An independent annual financial and process audit is needed. There is no indpendent financial or process audit of the Committee's work or payment process. An independent external auditor should be engaged to conduct an annual audit of the final approved expenditures including compliance with the ordinance, math accuracy verification, & tracing of original documentation from each recipient to the approved amounts.
c) Better documentation should be required. If employees have to provide receipts for travel expenses, why not for the $800-million tax?
d) Prohibit bonding: The excess debt percentages indicates our point for the need to prohibit bonding is needed. This is a slush fund to build expensive projects without much scrutiny.
e) Redesign the expense reimbursement request forms from the cities, County and School District. need re-design to emphasize standard accounting control procedures to prevent math errors. (I think the forms were designed by the County attorney, not accountants).
f) A much better, independent website should be designed before any new tax renewal. It should contain meeting agendas, minutes and reports and regulations going back to the origination of the current surtax, which was in 2001.
g) The minutes of the committee meetings are extremely short (one page) and vague. Minutes should be verbatim, especially when annual spending exceeds $30-million. Minutes should be published within one month of a meeting, and/or at least 5 working days before any subsequent meeting.
h) Required audio recordings of meetings should be posted on Soundcloud with links on the website.
11. Is Pay for Play politics being used by Lake County Board Chair Jimmy Conner to extract referendum marketing funds from current Lake County and School District vendors? THIS Sept. 3, 2015 Daily Commercial story seems to indicate that. Interestingly, the night before, the North Lake Tea Party hosted a speaker from Integrity, Florida, a watchdog group who talked about corruption in Florida. AND, the above story finished on page A6, next to page A7 and an article about "Pakistan Corruption"
12. An independent annual financial and process audit of the documentation and spending approved by the above mentioned Sales Surtax Oversight Advisory Committee is needed. There currently is NO such audit. An independent public accountant audit is needed like the one required for the North Lake Hospital Tax District and the Lake County Water Authority, which spend LESS each year than this tax generates.
13. Public hearings for bond debt and for annual spending plans: Responding to two of our issues, Lake County Commissioner has requested modifications to the County Ordinance to require these to ensure more open transparency over sales surtax spending and bond usage. School Board members Bill Mathias also said he would request a school board policy for the same. At this time there is no word that cities will do the same, but Campione said she would request them to do so. However, public hearings can still ignore the taxpayer issues. You only have to look at last years demands by the public to reduce the planned 14% County property taxes, but they were ignored by Lake County Commissioners Jimmy Conner, Welton Cadwell and Sean Parks.
14. Lake County Board settles a lawsuit costing taxpayers $6.5-million and Chair Jimmy Conner refuses to even discuss the issue in public meetings. Another reason to vote against the sale tax referendum is the recent $6.5-million lawsuit settlement where BCC won't reduce their budgets to pay for it, but pay it out of future fire fees where they increase them, then give 60,000 homeowners a reduction "to pay them back for the class action lawsuit settlement". It is nothing but a shell game and Board Chair Jimmy Conner won't even discuss the settlement in the meetings or put it on the agenda. Do you want to give $800-million a year in sales tax revenues to officials like that?
15. Audit of Lake County run Fairgrounds program finds cash controls are abysmal and they can't confirm if all funds were collected. You can read the entire report HERE. This quote says how bad the County management over cash is: "We conclude that the Fairgrounds does not have adequate controls over cash receipts and, consequently, we could not determine whether all monies are accounted for properly." I had to ask in public input how they could have an operation that collects tens of thousands of dollars in cash and not have defined cash control procedures. Chair Jimmy Conner refused to have this idea discussed at two recent Board meetings, so do you want to give $800-million a year in sales tax revenues to officials like that?
Our Action Step Recommendations: By voting "AGAINST" to turn down this vague referendum, you can force the government to revise the wording of the referendum and the Ordinance to meet these transparency conditions, and add a better worded referendum to the Nov. 2016 ballot. The School District can go independent and submit a half penny referendum to receive more funds for schools.
- Vote "AGAINST" the tax on the Nov. ballot in order to tell all Board or City Council members there is no support for sales taxes until they include a prohibition on any Bond sales or borrowing. They should “pay as they go”. No more huge debt incurring $100-million or more in interest charges. Build reserves not debt.
- Create a public tax review committee from taxpayer advocate groups and NOT appointed by public officials to hammer out acceptable provisions for approving the tax funded projects.
- Demand that roads, city utility infrastructure and school student stations & buildings be the priority with specified percentage allocations like 50% roads, 80% student stations & 80% utilities.
- Demand that no sales tax funds be given to the Sheriff until there are public hearings over his $60+million budget AND he publishes three years of detailed budgets online, AND he approves an independent performance audit. The same applies to the other, but smaller Constitutional Officers.
- Demand the ballot wording be changed to exclude vague projects like “other public Infrastructure” (which can be trains, trails and public transit, or roads to subsidize developers).
- Require an independent annual financial and process audit by an external auditor, including certified worksheets showing cumulative payments and purposes.
- The County Government should agree to these conditions to improve transparency:
- Development of performance based metrics devised by the public tax review committee and their inclusion in the department sections of the budget book and part of the budget review process for each government entity.
- Public discussions by the Board of the performance audits issued by the County Inspector General.
- Beefed up oversight duties for the existing Sales Tax Oversight Advisory Committee.
- The School District should agree to:
- Consolidation of services for all Schools like lawn maintenance.
- Addition of another School District internal auditor to conduct performance audits.
- The Cities should agree to consolidate specified services with the County:
- Procurement operations
- Dispatch of police, fire and ambulance
- Inter-local agreements with the County to provide fastest first responders
- Vote NO until the ordinance is modified to resolve the above concerns.
Scroll down to see the actual ballot language.
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Here is the official ballot language from the County website:
Notice how VAGUE it is and how there are no rules or limits, and the statement “Other Public Infrastructure” is very vague and could result in any big project that bond salesmen and construction firms and County staff “sell” to the elected officials. There are no requirements that X% be spent on taxpayer priorities like roads or school seats. Notice that they want to spend this money on MORE parks, trails, recreation without specifics. There is also NO MENTION of a requirement to specify their ability to pay for maintenance, operations (employees) to use the facilities.
WHAT WILL THE BALLOT LOOK LIKE?
Here is the ballot language that will appear when the electors cast their votes on Nov. 3, 2015.
SHOULD LAKE COUNTY ORDINANCE 2015-____ EXTENDING THE EXISTING ONE-CENT COUNTYWIDE INFRASTRUCTURE SALES SURTAX FOR FIFTEEN YEARS BE APPROVED?
PROJECTS ELIGIBLE FOR FUNDING:
Law Enforcement Vehicles,
Fire Trucks and Ambulances, and
Public Safety Equipment
Construction/Reconstruction/Remodeling of School Facilities
“Other Public Infrastructure” <<< what does this mean – very vague
______FOR the 1-CENT Sales Tax (Remember, this is the $800-million tax, not pennies)
______AGAINST the 1-CENT Sales Tax Ordinance (Vote NO)
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