Integrated Software Systems are High Risk

As Watchdog reported in June and July, the city is embarking on purchasing and installing a cloud based integrated software system that will tie all the city functions together. They call it an Enterprise Resource Planning system, or ERP. Georgetown plans to spend $6M to $12M over the next 10 years for ERP.

The risks associated with buying and installing such a system are evident by observing the difficulties encountered just down the road by the University of Texas. Statesman

A key part of a major University of Texas technology upgrade that was already running behind schedule and over its $106 million budget has been delayed indefinitely, UT officials announced Tuesday.

The project to shift UT’s payroll, human resources and finances from a mainframe computer system to cloud-based operations was originally scheduled to be implemented, or “go live,” on July 10. Officials said in January that they would introduce it in phases starting sometime later, without specifying exactly when.

UT is only converting payroll and human resources to a cloud based system and they are $20M to $25M over budget and over 1 year behind in schedule after spending $89M of the $106M budget.

They have no idea of the cost and schedule to convert and integrate the financial system into the overall cloud based software system. 

Gerogetown's management and city council better be closely watching Georgetown's much smaller, but, more inclusive effort. The city staff should be in regular communications with other organizations, like UT, that have or are in the process of buying and installing similar systems to take full advantage of their experience.

The risk is high that there will be major cost or schedule impacts before ERP is completed.

Larry Gonzales Announces He is Not Running for Reelection

State representative Larry Gonzales announced last night at the Williamson County Republican Executive Committee meeting that he is not running for reelection.

Gonzales represents District 52 which includes the southern part of Georgetown, Round Rock, Hutto and Taylor. Here is a map of district 52.

And here is the portion of District 52 that includes Georgetown.

Click to Enlarge

Guest Post on Texas Legislature

Rules Need to be Changed: 

During the recent Special Session, Speaker Joe Strauss used various tactics to delay and/or prevent Senate bills from getting to the House floor.  For example, none of the 18 bills the Senate passed during the first week were assigned to a House Committee by the end of the second week. This made it impossible for elected Representatives to do their job. This is not acceptable.

It is time Texans stop complaining and start demanding rule changes addressing the abuse of power by House Speakers regardless of who holds the office:

     (1) We must demand Speakers be selected via a secret ballot within the House caucus. 

     (2) We must demand House rules be changed to allow open selection of committee chairs.

      

     (3) We must demand the discharge petition used in the U.S. Congress be adopted. It allows members to go around House leadership and force the Speaker to bring legislation that may not otherwise make it out of committee to the floor for a vote.

Unless meaningful changes are made, Speakers will continue to ignore the wishes of Texan voters and their Representatives. 

Tree Fund

Did you know that Georgetown has a tree fund? Yes they do and they expect $300,300 in revenue for FY-18 which starts October 1. This is a money making enterprise for the city as they expect to spend $250,000. The tree fund is projected to have a balance of $754,537 at the end of the fiscal year.

The Tree Fund is financed by fees assessed when development projects remove trees. These funds are used to plant, prune, irrigate, maintain, and fund other associated tree activities in City parks, or other City‐owned property.

Keep in mind these fees are assessed against property owners and this is one of the areas that the state legislature has tried to eliminate the collection of such fees. Of course the city lobbied the legislature to not pass any laws that would limit their ability to extract money from property owners.

These fees are not only charged to the "big boys". They are charged to many property owners, ranging from individuals who want to expand their home to developers that want to build housing or commercial properties. 

Georgetowns Future Economic Direction?

The city has contracted through GEDCO, see previous post, to study workforce trends and business trends and opportunities for Georgetown.

The study results will be presented to GEDCO this afternoon in the council chambers at 4pm and again to the City Council tomorrow at their 3pm workshop. Attendance is encouraged if you want to know what is going on and how the city expects to promote business development.

Both studies are available on the agenda for GEDCO on the city website. GEDCO Agenda

Several observations can be made about the results.

75% of the individuals who work in Georgetown do not live in Georgetown.

Looking at this chart indicates the bulk of Georgetown's jobs are in retail and entertainment. I presume these clusters include restaurants and pubs. The point being is that these jobs are among the lowest paying. The study does not seem to emphasize enough that the city should be encouraging businesses that pay well above retail and entertainment to locate in Georgetown.

The target industry recommendations do not include retail and entertainment, and it is clear the city should not be encouraging more fast food establishments and retail stores even though the study does not explicitly so state that.

Also, the city should be wary of health care services as they are also notoriously low paying jobs.

The airport is identified as a strength for Georgetown and includes aerospace and aviation as potential growth areas. The people living around the airport likely will not be enamoured with any business that increases air activity over their neighborhoods.

Finally it should be noted that the share of the city population that lives in poverty is substantially below the surrounding communities and the state. This raises the question of whether or not the city needs to be engaged in the development of low income housing. Most working citizens are well educated and have decent paying jobs. More information about salary levels are included in the report.

GEDCO?

What is GEDCO?

The Georgetown Economic Development Corporation considers requests and grants economic development funds as authorized and defined by the Internal Revenue Code of 1986, Section 4A, leading to the creation or retention of primary jobs and/or provision of significant capital investment which benefits the community of Georgetown.  A minimum of two members are Council members, and four members are citizens at-large. 

Notice this is a corporation, created by the city, separate from the publicly understood city government of City Council, City Manager, and all the departments reporting to the City Manager.

It does have its own budget and dedicated revenue from sales taxes and is quite powerful as shown in the table below.

This board meets the 3rd Monday of each month at 4:00 p.m. at the City Council Chambers, 101 E. 7th St.

Board Roster:

• Jeff Parker (President): 2/19
• Kevin Kelly (Vice President): 2/18
• Bill Mateja (Secretary): 2/19
• Valerie Nicholson: 2/18
• Hugh Brown: 2/18
• Steve Fought: 2/18
• Steve Klein: 2/18

This corporation does report to the City Council and indeed two board members are council members.

Public Service Announcement

As the dominant element in our property tax system, schools and their funding sources must be reformed away from property taxes, buildings and systems. An excellent analysis of the issues and recommended path forward was published in thehill.com.

Consequently, about once per century — so just twice in American history — there is a movement to refashion the very notion of education in America. The first of these, in the early 1800s, culminated in what we now recognize as our public education system. To this day, Americans should be proud of a system that, in spite of a deeply heterogeneous population, both taught the basics and fostered a unifying vision of the common good. 

Unfortunately, the opposite has been true for too long. The second of these “education revolutions,” motivated by the work of John Dewey and William James, has laid the foundation for the current system – a system in which truth is relative, and in which education’s purpose, therefore, is not to cultivate an understanding of the “permanent things,” but to make each student the best, most predictable, well-trained cog in a machine.

Read the entire article!

More Math on Property Taxes

In the previous post it was shown that the property taxes collected from Georgetown property owners increased from $17.37M in 2013 to $28.033M projected for 2018. That is a compound annual growth rate of 10%.

If the property tax revenue revenue for the city had grown at the population plus inflation rate of 7.0%, then the property tax revenue would have grown from $17.37M to $24.348M over the 5 year period. Therefore city property owners are paying $3.685M more to the city in 2018 than is warranted due to city growth. Another way of saying that is the property owners are paying 15% more in property taxes each year over the 5 year period than can be justified by the population growth plus inflation.

The city needs to get their property tax collection in line with city growth.

Property Taxes Continue to Grow 10% + Annually

The Texas House abruptly adjourned this week without providing any property tax relief to Texas property owners. Not that what was proposed would have made any difference to Georgetown property owners. The City Council has basically held the tax rate constant over the last 5 years, but, that does not mean that city property owners taxes have not increased. Taxes have increased substantially over the last 5 years as shown in the graph below.

Thus we see that property tax revenue, extracted from Georgetown property owners has been increasing at a 10%+ annual rate over the last 5 years. No wonder the City Council has been able to hold the tax rate constant. The appraised value of Georgetown property has been appreciating at a 10% rate which automatically brings in 10% more revenue for the city each year. And they have been spending the additional revenue, not leaving it in tax payers pockets.

Any property tax "fix" will have to control the rise in tax revenue, not just tax rate on the maintenance and operation portion of the budget.

Talk with your city and state elected officials if you want property tax relief!

City Bus Service

It appears Georgetown is starting a new public bus service during a long-term decline in ridership across the nation.

After the 2007-2009 recession, financially strapped city bus agencies pared back service nationwide, slashing routes and frequency to save money. That drove riders away and starved bus agencies of cash needed to recover lost services. Fares account for about one-third of agencies’ operating budgets, with the rest coming from state, local and federal sources. The agencies responded by cutting service even more.WSJ

The Community Impact Newspaper has an excellent description of the new bus service for Georgetown, including costs, routes and much more.

The City Council has established performance metrics that must be met over the next three years covering ridership, on-time performance, cost and revenue. Citizens should pay attention to ensure that the metrics are being met and the goal posts are not moved, or else the service should be terminated and other alternatives should be explored such as grants for car pools and/or vouchers for Uber/Lyft. 

Annexation Bill Passes the Legislature

Senate Bill 6 has been passed by both houses of the Texas Legislature, with the Senate giving final approval today to amendments make by the House. 

The bill clearly applies to the city of Georgetown. An election is required if 200 voters or more reside in the proposed annexation and a majority must approve. There are other elements of the bill to deal with different unique circumstances.

The bill now goes to Governor Abbott who is expected to sign it into law and it will take effect December 1, 2017. It would apply to annexations not yet finalized by that date.

The Mayor Doesn't Get It!

In his latest Op Ed in the Wilco Sun, the Mayor complains again about the legislation being considered in the State Legislature that reduces the power and authority of local governments. 

He either does not understand or accept that the State created local governments and established their authority. The State also has the power to change or reduce the authority of local governments. See page 10A of the Wilco Sun published August 6, 2017 for an in depth discussion of the State's authority and responsibility.

Next, there are so many red herrings and diversions scattered through out the piece that focus is lost on the fundamental issue of city governance. A city government should fundamentally provide for public safety (fire and police), build and maintain roads, garbage pickup, storm water, sewer and water systems. (Electricity has been intentionally omitted as private industry is quite able to provide that service, even though Georgetown currently owns and provides electric service) Since the need for these services grow with the population, it follows that the city budget should grow no faster than population plus inflation. So why has the city budget been growing at more than 10% annually over the last five years? Population plus inflation has been 7% over the same period.  

The city government should be focused on providing those essential government services for the least cost. The more that the city government focuses on land use, economic development, restrictive development codes and other issues means they are doing a less than optimal job on providing the essential services for the least cost. Is the city charged with "managing growth"? That is not one of the essential functions of government. The private market will best decide when, where and how growth occurs. If growth does not occur within Georgetown, then it will occur in Williamson County. So what if the city cannot grow its boundaries over the objections of those citizens living adjacent to the city? Shouldn't citizens be able to vote on being annexed?

Red herrings abound like changing the subject to school finance. School finance is not under the purview of the city. Why bring it up?

Do not let politicians invoke visions of budget cuts to public safety. That is the standard response. In Washington D.C. it is called the "Washington Monument" response, meaning the monument will have to be closed no matter the amount or location of a budget cut.

Georgetown has adequate funding to maintain its essential services as long as the budget increases in relation to population and inflation.

Surveys are also highly suspect these days. Does anyone remember the 2016 presidential election where the pollsters unanimously declared Hillary Clinton would win? The results always depend on who is surveyed, how many are surveyed and the composition of the questions. They should be viewed with skepticism and are generally not very useful.

The Mayor needs to understand that the Governor and Lt Governor are "staying in their lane". The proposed legislation is all about reining in the power of local governments and returning that power to the citizens. The Mayor should be supporting that, not opposing it.

Georgetown Budget Factoid

Georgetown has $39.6M in cash or cash equivalents scattered through the budget accounts identified as contingencies or reserves for 2018.

Presented without comment.

Click to Expand

Georgetown Budget Tricks

Georgetown uses creative accounting to hide taxes in the most unlikely place on the revenue sheet.

Here is the projected revenue for the General Fund for 2018 which is primarily funded by property and sales taxes, but, not entirely as we shall see.

Now notice the line titled "Return on Investment" which provides $8.4M in revenue.

Now where does that revenue come from? Why it comes from the electric and water companies that Georgetown owns. About $5.6M comes from the electric company and $2.7M comes from the water company.

How do these entities have an extra $8M+ to provide to the Georgetown General Fund? Why they overcharge their customers in excess of their costs. Isn't that convenient?

So if Georgetown wanted revenue of $62M to spend and they didn't have the $8.4M coming from the utilities overcharges, then they would have to raise your property taxes by $8.4M.

Do you see how that creative accounting works. The overcharges for utilities are effectively taxes, but, they are labeled as Return on Investment.

100% Renewable Energy Claims Are 99% Misleading

City Pledges for ‘100% Renewable Energy’ Are 99% Misleading. The power grid is built on fossil fuels, and there’s no way to designate certain electrons as guilt free so says Charles McConnell of Rice University in the WSJ.

Although activists herald these pledges as major environmental accomplishments, they’re more of a marketing gimmick. Use my home state of Texas as an example. The Electric Reliability Council of Texas oversees 90% of the state’s electricity generation and distribution. Texas generates more wind and solar power than any other state. Yet more than 71% of the council’s total electricity still comes from coal and natural gas.

So how do cities make this 100% renewable claim while still receiving regular electricity from the grid? They pay to generate extra renewable energy that they then sell on the market. If they underwrite enough, they can claim to have offset whatever carbon-generated electricity they use. The proceeds from the sale go back to the city and are put toward its electric bill.

In essence, these cities are buying a “renewable” label to put on the regular power they’re using. Developers of wind and solar farms win because they can use mayoral commitments to finance their projects, which probably are already subsidized by taxpayers.

But the game would never work without complete confidence in the reliability of the grid, which is dependent on a strategy of “all of the above,” generating power from sources that include coal, natural gas, nuclear, wind and solar.

The mayor of Georgetown, Texas, announced earlier this year that his city had reached its goal of 100% renewable electricity. But in a 2015 article announcing the pledge, he acknowledged what would happen if solar and wind were not able to cover the city’s needs: “The Texas grid operator, the Electric Reliability Council of Texas, will ensure generation is available to meet demand.”

The headline-grabbing 100% renewable pledges intentionally overlook these facts. Fossil fuels are not only the largest and most critical component of the energy portfolio, they are the foundation upon which renewable power must stand. Wind and solar generators ride free into the electric grid on the backs of fossil generators that have installed and paid for the infrastructure on which all Americans depend. The rise of renewable generation is made possible by fossil fuels, not despite them. 

Finally someone has applied critical thinking skills to the hidden costs of renewable energy and the misleading claims being made by renewable energy advocates.

It is doubly true in Texas that the electric grid was built and maintained by fossil fuels and the money generated by fossil fuels. The Texas state budget receives enormous funds through taxes on the oil and gas industry. That is one reason Texas was able to fund the $7B transmission lines from west Texas, where the renewable energy is generated, to central and east Texas where the people live.

Girls and Women's Privacy

One of the twenty items identified by Governor Abbott for action in the Texas Legislature's Special Session is the protection of girls and women's privacy in all state, city, county, and school facilities. 

The Texas Senate has responded with SB 4 which will protect girls and women's privacy in all public buildings as well as disallowing boys to pretend they are girls and participate in girls sports.

The leadership of the Texas House have publicly stated they are against such legislation and will do everything in their considerable power to see that such legislation is not even voted on in the Texas House.

Our State Representative, Terry Wilson, has indicated he will support HB 46 if given the chance to vote on the bill. HB 46 is sponsored by Representative Simmons and is equivalent to SB 4.

Here is a sign that was displayed by one of the attendees at the capital rally today to tell the House Leadership to "Let the House Vote".

Local Government Vs Local Control

Why are local government and local control at the center of the debate in the Texas Legislature’s Special Session? Read what America’s Founders have to say. State Regulation of Cities Does not Illegitimately Infringe on “Local Control” by Tom Lindsay, Ph.D.

Read the entire article! Local Liberty

Too Many Property Taxing Entities?

"Excessive property tax levy increases have been partially fueled by the mammoth number of property taxing jurisdictions here in Texas. Today, more than 4,100 local governments that levy a property tax collect more than $52 billion from homeowners and businesses statewide. That translates into a burden of roughly $1,900 per Texan or about $8,000 for a family of four.Statesman

From 2005 to 2015, total property taxes levied statewide increased by 4.9 percent on an average annually. Separating levies into major categories of property taxes, average annual growth increases were: 7 percent by special purpose districts, 6.3 percent by counties, 5.6 percent by cities and 4 percent by school districts."

Even though school property taxes are the largest in absolute dollars for the property owner, special purpose districts, counties, and cities are increasing their extraction of property taxes at a rate higher than schools. Recall from an earlier post that Georgetown is growing their property tax take at 10%+ compounded annually over the last 5 years. That is double the state wide averages.