Stephenson's surplus claim is questioned

An examination of Shelbyville's financial figures from the 1990s appears to contradict the claims of a former mayor who said he left the city with a $3 million surplus.

The city is facing a $770,000 deficit and Mayor Wallace Cartwright has said the city could be broke by September 2011 if something isn't done to increase revenue.

During Monday's heated meeting over a controversial $11 monthly trash fee that officials hope will balance the city's books, city councilman Al Stephenson told citizens that when he departed the office of mayor in 1999, a $3 million surplus was left in the budget.

But several callers to the T-G have questioned this claim and, according to figures provided by city treasurer Gary Cantrell, the cash surplus was only slightly over $250,000 when Stephenson's term ended.

Surpluses and bills

Cantrell was asked to look into the city's funds for fiscal years 1996 through 1999. He explained that at the end of fiscal year 1995 the city had $2,980,623 in cash.

The treasurer explained he was using Shelbyville's audit reports from that time period because he was not working for the city at that time.

But Cantrell said that even though the books showed that much money, "you net out your payables, if you already have a bill, that's not your available cash."

He compared the situation to someone having $1,000 in the bank but with $900 worth of outstanding checks.

Cantrell said that the city receives the bulk of its revenue in December and February, and when the start of the fiscal year begins on July 1, the city must have $2 million in the bank "or we will not be able to meet payroll or pay our other bills."

"That $2 million is operating capital," Cantrell stated. "If you don't have it, you're already broke."

Therefore, the actual cash surplus starting for the fiscal year 1996 was $980,623, Cantrell explained.

But for the fiscal years 1996, 1997 and 1998, Cantrell showed audit figures indicating that the city had deficits during that time.

Net cash for fiscal year 1996 was a negative $105,232. For 1997, it was minus $140,019 and net cash on hand for fiscal year 1998 was a negative $50,497, according to audit figures provided by Cantrell.

Going into 1999, the city entered the year with a cash surplus of $191,267. Cantrell said the city also received $161,000 in grant money, but those funds were earmarked and "was not available cash."

Also, a building was sold by the city during that year for $460,000, which Cantrell called "liquidating your assets."

Cantrell said according to the city's audit figures, the cash "surplus" on hand at the end of Stephenson's tenure was $255,142.

Reserves gone

When Cantrell was asked where Stephenson got the $3 million surplus figure, he said "I don't know. He never asked me to look up numbers for him."

The treasurer said he assumed Stephenson was looking at the cash that was on hand in 1999 before deducting the $2 million of operating capital, which would have been close to $3 million.

Cantrell also took a look at the numbers over the last decade, saying that in the year 2001, the city was in bad financial shape due to having to replace much of its fleet of vehicles, trucks and other equipment, but that Shelbyville began building up its cash reserves again until 2008.

"But the last two years have been really bad," Cantrell said, saying that the economy, lower local and state tax revenues, the costs of repairing the underground flume, demolishing two buildings of the city square and other expense ate up those reserves.

Cantrell also said he feels that people are mistaken when they try to compare a city to a business or a family budget.

"In a business, you equate everything to making profits and if we ran the city like a business, we would immediately shut down the fire and police because they don't make any money," he said.

"Our job is to provide services," Cantrell explained, adding that a family doesn't have requirements like how much food to keep in the refrigerator, or standards for keeping its driveway maintained, or how much of an allowance you give the kids.

Also, a family mainly works to accumulate enough for retirement and to pass on what's left to the next generation, "but a city is perpetual," Cantrell said.