Hugo Council Fields Citizen Audit Request
Denial Qualified By Request For Specifics
At its regular meeting on Monday, February 5, the Hugo City Council voted 5-0 to deny the request of 14 of its residents for a state audit of the city's finances. The discussion leading to the vote occupied the first half of the three-hour meeting.
The request, which received top billing on the evening's lengthy agenda, was submitted by letter dated January 20, 2007, and specifically asked the council to request an audit of the years 2004, 2005 and 2006.
During the lengthy discussion, Mayor Fran Miron invited each person who signed the letter to speak. Of the 14, three addressed the council. Hugo resident Kevin Church presented five reasons why he felt the city is headed in the wrong financial direction.
Church, a chemical engineer who works as an applied statistician, addressed property tax increases, falling home prices and his expectation that those trends would result in future property tax revenue decreases, decreases in building permit revenue, increases in city expenditures on a per capita basis, and the use of tax increment and tax abatement financing.
Citing an average increase in city spending of 8.3 percent per year, he said, "I'm concerned where the city will be in the future."
Two other individuals who signed the letter addressed the council.
Former mayor Michael McAllister said, "I'm not going to stand here and tell you all the things I'm going to talk to the State Auditor about."
He said that his decision to support the audit request had nothing to do with city Finance Director Ron Otkin. "This is about accountability," he said.
Otkin was first hired during former mayor McAllister's administration. Miron said he had a difficult time with the idea of spending public dollars on an audit without understanding what the group was seeking, especially in light of Otkin's presentation on state audits at the beginning of the meeting.
Otkin noted, "The State Auditor will supply an estimate of cost only upon receipt of the petition." In the recent case of the city of Faribault, Otkin continued, the state spent $100,000 over a period of several months.
"The dollars that you'll be expending I don't think will be much of an issue, to be quite honest," said ex-Planning Commissioner Victoria Hoffbeck, who also signed the letter. "I think that an auditor with any acumen will be able to give us some insight, where we can actually cost-save, as well as investigate other areas of the budget . "
Other members of the audience were invited to speak. "So far, I haven't heard one legitimate reason for this audit," said resident Steve Heinz, who was present for another matter. "What's the excuse? . $100,000 for an audit and there hasn't been a single person to come up and give a legitimate reason for using my tax dollars for this."
Council members directed a number of questions toward Jason Miller of Smith Schafer and Associates, Inc., the independent accounting firm retained by the city to perform its yearly audit.
Miller explained that the yearly audit does not judge whether the city's financial decisions are necessarily "good policy decisions," but indicated that if the firm sees "trends that are disturbing, we may make some recommendations." He said that an audit firm is "not going to question the city council's decisions [on where to spend money]" but looks for proper authorization of expenditures "and overages."
After each council member identified their position on the request, it appeared there was little support for it. Council Member Chuck Haas said, "It's hard for me, in charge of the public purse, to go on a fishing expedition."
Council Member Mike Granger seconded a motion by Council Member Frank Puleo to deny the request, quipping, "We don't know what we're fishing for. We don't know if we're fishing for walleyes or northerns."
An amendment from Council Member Haas modified the motion to include the provision that if specific reasons were provided to justify the expense to Hugo taxpayers, the council would reconsider its vote on the matter.
The amendment and motion passed unanimously.
In further action, council authorized the scheduling of a public workshop dealing with city spending, valuations, building permit revenue, and to look at financial trends. The workshop date will be announced at an upcoming council meeting.