The El Paso Central Appraisal District increased it’s valuation of our local Western Refining from $280 million to $1.1 billion in one year.
That is simply absurd.
Western refining appealed and fought, ultimately settling at a negotiated value of $320 million.
The district’s board is made up of elected officials from our local governments, including the city and the El Paso Independent School District (EPISD). The board members should have stepped in, they certainly are in charge.
Now we find out from the city’s chief financial officer. who is also one of the Texas Education Agency appointed managers of the EPISD, that both governments budgeted to receive the inflated tax income from Western Refining. It looks like they were off by $11.5 million. In fairness to the chief financial officer she was not part of the budget process this year at the EPISD,but watch out for next year.
The city will have to cut about $3 million from it’s current budget for the remaining four months left in their fiscal year.
Why? Any competent manager would have held back on spending because of the probability that the valuation increase would not hold. Instead she claims that they have spent the money. The city manager and city council should not have spent money that they did not know for certain that we would receive.
What grade were you in when you learned not to count your chickens before they hatch?
This was done at a time when they have spent over $135 million to move city hall and build a new ball park. Wait! They have not actually spent the money yet, they have borrowed it and we will have to pay it back with interest over the next few decades.
The $3 million per year would pay most of the cost of the bonds that were issued to pay for the new ball park.
The city knew this could happen. They also knew that the number of airport passengers was declining (see HOT, but getting colder) and that the portion of the ball park financing paid by the hotel occupancy tax would likely not grow at the rate they predicted.
El Paso taxpayers have assumed almost $1 billion in new debt this year while the folks at the city have continued to spend despite knowing that incomes would not match what they told us.
We deserve better
Brutus
elpasospeak 
So you are giving a pass to EPISD in its decision to spend the tax revenues from Western Refining? People challenge their appraisals every year at every level. So all taxing districts should put that money in escrow for a couple of years until the appeal process or negotiations are completed? You place no blame on the total incompetence of the Chief Appraiser and her staff. They are the “professionals” in this deal and they failed miserably! But you hate the city manager so somehow it’s all her fault or one of her staff. You need to get a life.
LikeLike
Companies do it for “material” contingencies. Chances are your or my appeal of our property taxes is immaterial vs the $300-400 million that western refining was disputing and Susie Byrd mentions in the email and then goes on tv accusing others of making things up.
LikeLike
MEK,
With all due respect, I think you missed Brutus’s point. Either that or you chose to overlook it and simply argue to defend the city manager and her tribe for whatever reason.
There is a basic financial management 101 concept called a “reserve”. In business and most organizations, you don’t commit to spend all of your projected revenue in case you have an unexpected drop in income or an unforeseen increase in expenses. Especially if you are not sitting on a war chest of cash (think Apple). Even the State of Texas has a “rainy day fund”.
Brutus never said taxing districts should put 100% of challenged appraisals in escrow, but some level of reserve would be prudent. Ever heard of actuarial or probability estimates? Ever heard of contingent liabilities? These are all concepts that are appear to be totally foreign to people who make careers in government and politics.
I’m willing to bet that Oscar Leeser understands the concept of not spending every dollar one takes in because he understands the value of operating at a profit/surplus. That would be refreshing.
LikeLike
It’s been talked about for years — the incompetence of CAD and the director. Who controls CAD anyway? Surely not the Board, which is made up of incompetent people from all the taxing entities. Except for the Board representatives from the city (who are out-voted on every single issue), the board has no clue about their duty of oversight. How can we clean house over there? Its a mess!
LikeLike
And who’s on that boards, former EPISD trustees, Ann Morgan-Lilly (Eddie Holguin, a successful businessman resigned)
LikeLike
Ann Lilly and Eddie Holguin voted to reign in the CAD’s budget and have tried to replace the incompetent director. Check it out yourself. Holguin was asked to resign because his wife went to work for the Houston attorney hired by CAD. Someone — don’t know who — claimed conflict of interest.
LikeLike
MEK your efforts to shill for the city council ring hollow when there is overwhelming evidence the city council, mayor and the city manager and her CFO knew the value would be contested or possibly litigated. This was announced coincidentally right after council approved the ballpark vote. It was reported by El Diario and even theEl Paso Times last fall and the Mayor discussed the potential impact. Any half competent accounting and financial expert will tell you that in such cases, organizations should set aside that money in a contingency account precisely so they don’t spend what they might not have. And as if that isnt enough to point out the incompetence of the city manager , her CFO and council– or their deceipt or both– Rep Susie Byrd forwarded an e-mail last fall to Reps Cortney Niland and Steve Ortega defending Paul Foster Western Refining’s litigation from a constituent protesting the ballpark vote and the litigation. Most troubling is the fact that she acknowledges speaking to the head of the CAD and not only reporting that the company always negotiates its assessment to this level because the CAD is not authorized to pursue litigation due to the cost. Further, she admits the company is probably undervalued because it would cost too much to appraise. See the email for yourself in the link below. It was on Chucoleaks. It should be noted that the SEC has sued a number of cities and its officials for witholding this typre of material financial information and essentially presenting false financial reports.
http://deepinsideelpaso.blogspot.com/2013/05/guilty-of-fiduciary-malfeasance-steve.html
LikeLike
So when are you filing a malfeasance ethics charge against city staff and elected officials? If this is so terrible you have a case for malfeasance. You complain a lot but you don’t file any charges, if you believe your own rhetoric then file the charges. The real idiots is CAD. Taxing entities must adopt their appraisals and set tax rates based on that regardless of any challenges. Technically the City and EPISD had a lower effective tax rate that budget year based on the over inflated erroneous appraisal. And yes everybody knows that government has rainy day funds and that is where this shortfall will be paid. Duh. The blame is squarely on CAD and their arrogance.
LikeLike
PS, citizens dont file “charges” fyi. Tax assessment entities also dont “establish” appraisals. They dont even really conduct appraisals. They perform property valuations according to different standards. In fact. Look at a real appraisal and the tax assessed value for a property. You’ll likely see a different value. If i were you, I would reasses who you attach the idiot label to.
LikeLike
And yes, EPISD failed to account for that contingency. However, they didnt have the material infirmation that Susie Byrd, Cortney Niland and Steve Ortega did.
LikeLike
Dear city council internet monitor guardian MEK, no one is excusing EPISD’s failure to follow basic accounting and financial principals. The County sure wasnt caught off guard. In fact, look at financial statements and look at entries xalled reserves or read the notes that describe cintingency reserves or set asides. But the difference between EPISD and the City is that the City had vitl information that those expected tax revenue figures were not reliable or certain, yet contrary to their fiduciary duty they appear to have withheld this vital information, approved inflated, false budget (not the first time either as Wilson and Niland also had info about the police pension director’s travel expenditures but both co opted to keep quie t as per an email). And if what you are doing is issuing some sort of challenge or dare to report potential irregularities because of your ignorance about key finanancial rules and securities laws, well it’s silly and no need. Just know there are many precedents, the newest one just this week. Eeringly similar since it involved overinflated budgets. Also see SEC v Miami, v Victorville, and many others.
http://money.cnn.com/2013/05/06/news/economy/sec-harrisburg/index.html
LikeLike