Sweden Going Cashless!

Sweden looks to be the guinea pig when going to a cash-free economy according to the New York Times. Cash-Free

Watch for the following impacts:

1 Loss of privacy
2 Increased risk of hacking/loss of funds
3 Marginalizing old people who depend on cash
4 Banks and credit card companies profits increase due to fees
5 Increased debt because easy to use electronic pay systems
6 Increased tracking of individual's location and spending
7 Increased government revenue

Other countries like Australia promise to be cashless by 2022.

The citizens of these cashless economic societies better hope they do not have any significant or extended power outages as they will not be able to purchase the necessities of life!

1 Year GeorgetownWatch Blog Anniversary

It has been exactly 1 year since the first post in this blog. It is not known if this humble effort has any impact on shining light on the governance of the City of Georgetown, but, it does require that I am educated about the policies advocated and ordinances enacted.

The primary goal is to educate the people of Georgetown so that the size and intrusiveness of city government is minimized. A list of the City's impacts on the citizens will be summarized for the end of the year which can be used to see how we are doing.

SunEdison Continues to Struggle

SunEdison's market capitalization is only $1.68B while its debt is $11.7B, including the debt of TerraForm Power and TerraForm Global, its wholly owned subsidiaries. The financial crunch that the company finds itself in has forced the company to cancel or renegotiate acquisitions, stop paying selected vendors and cut jobs.

The financial turmoil has caused shakeups in senior management of the subsidiaries as funds were transferred from the subsidiaries to SunEdison against the wishes of ousted board members.

The company is negotiating a $650M credit line with Blackstone Group. Blackstone owns Vivant Solar which SunEdison is trying to purchase for $1.9B. The credit line will likely require SunEdison give up a large block of its equity in return for cash, which will make Blackstone a major shareholder. The credit line will also be used to pay back an existing second lien credit.

In a SEC filing the company admitted that it continues to incur significant debt to fund its activities and acquisitions and has substantial pending obligations. Investors Business Daily rates SunEdison stock at a near-bottom IBD Composite Rating of 6 out of a possible 99!

The City Council needs to closely follow SunEdison to assure there are no financial impacts on the City as a result of SunEdisons financial difficulties.

"The Texas Economy is Getting Smoked"

So says the headline in Business Insider.Link Headlines are always over the top attention grabbers and this one is no exception. The carnage in the Texas economy is still largely restricted to the energy sector and its suppliers which include metal fabrication companies.

However, prudent people should take this as an indication that the broader economy is also likely slowing. Sales tax revenue to Georgetown is up 2.5% from last year, but sales tax revenue for Texas as a whole is down 3.3%. Georgetown needs to be very cautious and conservative in spending.

The War on Federal Reserve Notes (CASH)

In case you have missed it, the Federal Government is waging a war on CASH! This war has been on-going for some time, but, it seems to be intensifying of late.

As part of the "War on Drugs" banks have been required to file a report with the Justice Department anytime more than $10,000 cash is withdrawn or deposited. Auto dealers have to report cash purchases of cars and title companies have to report cash transactions greater than $10,000 for real estate. This effort has been an abject failure. Link

Due to recent events in Greece and other European countries, capital controls, in the form of restrictions on cash withdrawals from banks have been imposed in many European countries. In the U.S., banks have been told to scrutinize cash transactions greater than $5,000 and report if deemed suspicious.

There are four principal reasons why governments want to eliminate cash from the economy.

1. People would not be able to evade paying taxes if all transactions are electronic.

2. The Federal Reserve and banks would be able to impose negative interest rates on depositors (depositors pay interest to banks on their deposits), since the depositors could not withdraw their funds and hold cash.

3. The Government would be able to shut down all illegal activities that are currently conducted using cash.

4. A fourth advantage of the elimination of physical cash would be to more easily control people and potential dissidents through the freezing of their bank accounts.

The bottom line is that citizens lose privacy and freedom while the Government increases its control over the populace. An in-depth description of actions taken so far and the potential ramifications are detailed in a two part article by Dan Mitchell senior fellow at the Cato Institute. Link

Latest on Fight to Stop Airport Expansion

Here is the latest from Carl Norris who is leading the fight against expanding Georgetown's airport.

GET AROUSED! GET INVOLVED!

Last Thursday, 12/10/15, city staff advised the Georgetown Transportation Advisory Board (GTAB) a grant agreement between the city and Texas Department of Transportation Aviation Division (TxDOT AVN) for the approximate $10 Million, 25 components, 90% federal grant, 1514GRGTN, is currently planned for execution by the city in January 2016. This is the immense airport construction project, with an estimated cost of 60% of the entire past $17 million, 36 year history of executed federal funded expansion improvements for the airport, it includes the infamous Fuel Farm, and is to be the irreversible platform for unlimited expansion for future airport aviation operations (more air fleets, heavier, noisier aircraft, more landings and takeoffs on a 24 hour basis, 7 days a week). Given the immense growth of our city and the airport in its very heart, this grant would impact every citizen inside the city limits and territorial jurisdiction.

This immense project is being slipped by without public participation by unaccountable and remote state bureaucrats in Austin by use of a "categorical exclusion" from legitimate National Environmental Policy Act (NEPA) review. The "categorical exclusion" means that full construction of this grant along with all cumulative previous airport improvements would have no adverse impacts on our community. Legitimate NEPA review would include preparation of an Environmental Impact Statement (EIS) in which public hearings would be conducted where all adverse impacts to our lives, safety, environment (noise, neighborhood disruptions, children's school environment, religious services,etc.), and property values, mitigation to lessen or eliminate adverse impacts, and practicable alternatives to the proposed project would be examined and evaluated. Remember, FAA's own records for our airport show 29 air crashes, 9 deaths with 4 of those deaths in our neighborhood to date.

If you are concerned and aroused about these adverse impacts and believe in public participation before this agreement is executed you need to take a few minutes before the end of this month and write a letter and/or an email (or both) expressing why you demand the preparation of an EIS prior to execution of this grant agreement. You need to address your communication to Mr. Robert W. Jackson, Environmental Specialist, Texas Department of Transportation Aviation Division, 125 East 11th Street, Austin, Texas 78701-2483, Robert.W.Jackson@txdot.gov.

If you do not get aroused, actively involved, inform others, and this tragedy occurs, you will have to include yourself with others also disinterested and apathetic to blame. If you want more information on this issue, contact me. cnorris29@suddenlink.net

Do Georgetown Police Spy on the Citizens of Georgetown?

There is no indication that Georgetown police use surveillance equipment, but, has the question been asked? The Federal Government, which has sponsored the development of surveillance devices is very secretive about the deployment of such devices and how they work. The bit of publicly available information was disclosed through open records requests and lawsuits filed by journalists and researchers.

It is known that surveillance equipment has been deployed with local police departments. They have to sign non-disclosure agreements with the Federal Government and with the manufacturer. This makes it extremely difficult for local citizens to discover if their local police are using the equipment in their communities.

Jennifer Lynch, a senior staff attorney at the Electronic Frontier Foundation has said that the use of these tools is part of the militarization of the police in the U.S.: “We’ve seen a trend in the years since 9/11 to bring sophisticated surveillance technologies that were originally designed for military use — like Stingrays or drones or biometrics — back home to the United States.”Link

The citizens of Georgetown need to let their council persons know that we do not want the Georgetown police to have the capability to listen to the phone conversations of the citizens. 

Confirmed! Omnibus Bill Funds HUD Takeover of Local Zoning

"GOP LEADERSHIP CAVES ON GOSAR AMENDMENT

More bad news about the Omnibus spending bill: the Gosar Amendment language has been stripped out. This language would have prevented the Obama administration from implementing its Affirmatively Furthering Fair Housing rule (AFFH), a radical plan to use the power of the national government to create communities of a certain kind, each having what the federal government deems an appropriate mix of economic, racial, and ethnic diversity.

Apparently, Mitch McConnell and Paul Ryan weren’t up to defending the freedom of Americans to decide, through their local governments, how they will live — just as they weren’t up to slapping down the Department of Education’s assault on freedom of speech and due process."Link

The Real Reason to Keep HUD/Low Income Housing Out of City Government

President Obama’s wildly overreaching and altogether transformative Affirmatively Furthering Fair Housing (AFFH) regulation is the real threat to the autonomy of our local city council. Has the Republican leadership in Congress included in the Omnibus funding bill the amendment defunding AFFH proposed by Representative Paul Gosar (R., Ariz,) and passed by the House this past spring. As the root justification for all progressive initiatives, this regulation is structured to redistribute wealth from the haves to the have-nots and they do that by taking control of the zoning process.

I guess we have to wait until the bill is passed before we find out what is included!

"Mr. Obama’s AFFH rule seeks to radically reinvent local zoning laws in the United States – reengineering America neighborhoods based on racial and ethnic quotas. Under the rule’s assessment tool, local governments are required to “identify neighborhoods or areas in the jurisdiction and region where racial/ ethnic groups are segregated.”

Specifically, Mr. Obama’s AFFH rule seeks to radically reinvent local zoning laws in the United States – reengineering America neighborhoods based on racial and ethnic quotas. Under the rule’s assessment tool, local governments are required to “identify neighborhoods or areas in the jurisdiction and region where racial/ ethnic groups are segregated.” Next the rule compels them to “identify significant determinants that influence or contribute to those issues, and set forth fair housing priorities and goals to address fair housing issues and determinants.”

Refusal to comply with these invasive, unfunded mandates would empower the U.S. Department of Housing and Urban Development (HUD) to withhold millions of dollars in community development block grants from the area – effectively turning this $3.5 billion annual program into a political redistricting tool."AFFH Regulation

To preserve our autonomy, the City needs to decline any HUD block grants, because these grants all come with "strings" attached.

Tell your city council person to keep us out of the web of HUD rules and regulations by declining to apply for HUD block grants.

Unfunded and Unreported Obligations

Under past accounting standards cities have not been required to report it's unfunded liabilities. This hidden debt is a result of outdated accounting methods used by city government officials, allowing a vast amount of pension and retirees’ health care benefits to be excluded from the cities’ financial reporting. The new pension reporting rules now in effect correct this deficiency in city's financial reporting, however, there are no requirements to report future health payment obligations. This latter deficiency needs to be corrected also.

Georgetown currently self-insures for health care for employees and retirees. This is accomplished by budgeting, annually, an amount to cover expected average medical expenditures plus a catastrophic insurance policy to cover those extraordinary expenses incurred by a limited number of individuals. Future health care obligations are not currently accounted for in the city's annual financial statements. A method needs to be developed to provide insight into these unfunded obligations.

The new pension account standards require a new discount rate for calculating net pension liability. The discount rate can continue to be the expected long-term rate of return, 7% per TMRS, on plan investments where current assets plus future contributions are projected to cover all future benefit payments. This requirement will be met if the employer funds the actuarially determined contribution, provided it pays off the unfunded liability over a reasonable period. However, plans where current assets plus future contributions are projected not to cover all future benefit payments must use a municipal bond rate to discount the noncovered payments.

The municipal bond rate is a yield or index rate for 20-year, tax-exempt general obligation bonds with an average rating of AA/Aa or higher (currently between  3.2% and 3.8%). Including a municipal bond rate as part of the discount rate increases liabilities. In addition, changes in the municipal bond rate or assumed rate of return on plan investments between measurement dates introduce more volatility into calculating liabilities and expense.

This new blended discount rate between the 83% funded liability and the 17% unfunded liability for Georgetown will cause the net unfunded liability to increase. The exact amount will not be known until TMRS reports to the city sometime next year.

Reality is Appearing in the Texas Economy

While the City of Georgetown continues to spend the taxpayers money like there is no limit and no tomorrow, sales tax data is showing the Texas economy is slowing down. (Link)  "But then came the October collections: they plunged 5.4% year-over year; and now November collections that fell 3.3%. Two months in a row of declines; four months of the last six, and the first declines since the Great Recession low of March 2010."

It should be expected that sales tax revenue for the city will also decline and at the same time, pension contributions are likely to increase due to increases in city staff, in compensation levels, and revised pension accounting rules.

In the meantime, the city budget for FY-16 has increased by 23%. Developers are continuing to build as if there is no slow-down coming in the economy. Sun City has recently started to expand with 2500 additional homes and Wolf Ranch has started building another 2500 homes along highway 29. Exuberance is the word for the day and dismiss and ignore any thoughts or signs of a slowing economy. When the builders realize there are not enough buyers for all the homes anticipated, the revenues paid to the city by the builders and developers will also decline.

The city should be looking for ways now to slow down their spending before it becomes a crisis.

New Pension Accounting Rules Increase Unfunded Liabilities

New accounting rules for government pension funds are currently going into effect. The net effect is that realistic discount rates have to be employed when calculating the funded/unfunded values of the investments. Lower discount rates cause the unfunded liability to significantly increase with the associated requirement for increased annual funding by government organizations, like the City of Georgetown.

The new accounting rules require: "For all fiscal years ending after June 15, 2015, GASB 68 requires your city to record a net pension liability (NPL) or net pension asset (NPA); and being in TMRS requires that you include disclosures in your financial report as a participant in an agent, multiple-employer plan."(TMRS)

An example of the impact of the new accounting rules on the unfunded liability of a pension plan is what happened to the Kentucky Teachers Retirement System. "Kentucky Teachers Retirement System's (KTRS) unfunded liability jumped to $24.43 billion in the fiscal year ended June 30, 2015, using new accounting rules known as GASB 67, compared to $14.01 billion in the prior year, a meeting of board members was told on Wednesday.

Under the rules Kentucky had to use a discount rate of 4.88 percent to calculate the net present value of its liabilities, compared to the 7.5 percent it would have used normally, said Beau Barnes, an executive and general counsel for the fund."Link

Texas Municipal Retirement System(TMRS) currently uses a 7% discount rate and based on KTRS's experience, it is expected that the discount rate will be reduced for calculating the unfunded liabilities for Texas cities.

The city needs to be prepared to increase its pension contribution to be able to maintain the recommended 80% funded ratio. TMRS will not issue its Comprehensive Annual Financial Report(CAFR) until the middle of next year, so the next year's contribution amount will not be known until then.

Council Declines to Fund Low Income Housing Study

The City Council admitted that there is a lack of low income housing available in Georgetown, but, they refused to fund a $195,000 study on how to provide more low income housing. The study was denied for a variety of reasons, including being too broad, insufficient information and premature.

The real question was not addressed at all! Is it the City's responsibility to provide, subsidize or support any segment of the housing industry? It would seem that the purpose of the city government is to provide public safety, build and maintain roads and bridges, provide water and waste services, protect personal and property rights and maybe, energy. All other activities are not necessarily the city's responsibility, especially housing. That should be provided through the free market. City intervention into the housing market seems to be "social engineering" and that is definitely not a city responsibility.

The bottom line is the City should stay out of the housing business, regardless of income level of the housing users.

Where Is the City Budget for 2015-2016?

The fiscal year is almost one-fourth complete and the city has not posted the budget for FY 2015-2016!  Where is the budget? Contact the City Manager, the Mayor, or your Council Person and request that the budget be posted on the city website. It should be posted Here, but, there are no entries since July 2015 when the budget was proposed. There have been several changes to the budget since July and there is no integrated public record of those changes. The July 2015 documents are also incomplete, especially with respect to city demographics, debt and debt service.

How can the city operate through 1/4th of the year without a complete, published budget? Are they "winging it"? Not a good way to run a city.

Investor Lawsuit Filed Against SunEdison

"Rosen Law Firm, a global investor rights law firm, announces the filing of a class action lawsuit on behalf of purchasers of SunEdison, Inc. (SUNE) securities from June 16, 2015 through October 6, 2015, both dates inclusive (the “Class Period”). The lawsuit seeks to recover damages for SunEdison investors under the federal securities laws.Class Lawsuit

According to the lawsuit, throughout the Class Period, Defendants issued materially false and misleading statements to investors and/or failed to disclose that SunEdison did not have the financial resources to maintain its high growth and sustain its dividend. When the true details entered the market, the lawsuit claims that investors suffered damages."

Let the games begin!

Watch the City's Pension Obligation

As is usual for government organizations, the bad news from Texas Municipal Retirement System (TMRS) was dumped to the internet for public consumption late last Friday. TMRS earned -3.57% on its investments last quarter, and has earned -1.71% year to date.

Remember that when TMRS calculates the City's pension liability, they assume the investments earn 7% annually. When the investments earn less, the City's liability increases. At 7% return, the City's pension liability is covered at 83.3%, whereas at 5.85% the coverage is only 60%. Thus it is easy to see the City's pension liability increases substantially when investment returns decrease.

This bears watching as the City may need to substantially increase its annual pension contributions due to lower than expected investment returns.

Battle Against Airport Capacity Expansion Continues

The Airport Concerned Citizens (ACC) continue their battle against the city of Georgetown and the Texas Department of Transportation to stop the capacity expansion of the airport. The airport has applied for a grant from TxDOT for a new refueling and storage capability that increases the fuel storage by 60%. The cost of such improvements are usually split with TxDOT, which gets the funds from the FAA, with TxDOT paying 90% and the city paying 10%. The following email shows the funding sources the city has used for past airport projects and questions the propriety of the whole funding process.

ACC,

The December GTAB meeting is set for Thursday, December 10, 2015 , GMC Bldg, 300-1 Industrial Ave., in lieu of the usual 2nd Friday of each month.  ACC will have a presentation.

 

Access to the agenda is available via georgetown.org – government- agendas city council, boards and commissions.

 

Your attention is directed to Item E, Airport Progress Report, Mr. Russ Volk, Airport Manager. The last item in his eight briefing papers is a response to Councilman John Hesser’s request at the September GTAB meeting for information on the sources of funds identified by the city for payment of the city’s share of federal grants for the airport.  After 3 months staff has prepared a response for Mr. Hesser and others by listing sources of payment for five (5) grants.  The first four are current executed and one still pending, 1514GRGTN (this is the proposed $10 Million, 25 component grant of which the Fuel Farm is one of the components.)

 

The listing shows the fiscal pocket being used for payment as (1) the Airport Fund for 1114GRGTN and 1214GRGTN, (2) Bond issuance for 1314GRGTN and 1514GRGTN, and (3) Cash from the general fund for 1414GRGTN.  These sources raise questions.  Were the payments for 1114GRGTN and 1214GRGTN identified in the most recent Airport Fund Audit?  What bond issue or bond issues authorized airport grant payments? What ordinance or ordinances authorized these payments and authorized cash payment from the general fund for 1414GRGTN?

 

For your reference, these identified grants are as follows:

1114GRGTN - $1,248,644 GTU improvements in 2011 for operations expansion;

1214GRGTN - Approximate 13 acre land taking under threat of condemnation for RW 11/29 – no final status or cost available.  Cost estimated in excess of $1 Million;

1314GRGTN- Garver Engineering Contract – Design of GRU 2014 and 2015 CIP’s- no final status or cost available- Cost estimated in excess of $600,000;

1414GRGTN – Airport Lighting Improvements (GTU 2014 CIP) – no final status or cost available – Cost estimated at about $1.4 Million;and

1514GRGTN – GTU 2015 CIP- remains pending for grant execution. Program is 25 component, $10 Million, and includes the Fuel Farm.

 

Your attention, interest and questions of your own are encouraged in the above. Please make plans to attend this meeting.

 

Carl

 

There is no question that the fuel farm project is geared to supporting expanding the airport capacity. The City Council has directed the airport manager to make the airport self-supporting. To generate more revenue, the airport must sell more fuel which means it must attract more aircraft to the airport. Thus the airport manager is following the Council's directive! Doubling the load bearing capability of the main runway also supports the objective of increasing airport revenue by attracting larger and heavier airplanes to the airport that also use more fuel.