Fun With Budgets - Reading Between the Lines


This is a somewhat different article than our typical "in the news" or "analysis" - it's moreso a primer for peeling the onion to find the truth in what the Town has to say about its finances. It's also a signpost that we'll no doubt be pointing back to at some point in the future with a "remember, we told you..." message.


This week's council meeting is generally uninteresting, with a couple of agenda items that are often long and dry: capital asset replacement plans. Normally, the annual discussion about what will need replacing or fixing during the next five years is a single topic called "Capital Improvement Program"; this year, there's also one dedicated to traffic safety.


While there's the usual eye-roller like the waste of time and money on roundabout studies or the utopian Berkeley-esque vision that Moraga could be transformed into Amsterdam if it'd just get on board with abandoning cars for bike lanes and sidewalks (that philosophy driven by an expensive consulting report that relied on surveying a few hundred people), there's also the perennial eye-opener like the hundreds of thousands of $ needed for the underutilized, white elephant Hacienda that - in addition to the capital expenses - is a ~$300,000/year money loser for the town.


We're not going through the line items here; we're looking to provide a better understanding of language, spin and reality in the interest of financial discipline and transparency. Ready? Let's go.

What’s really instructive about these plans is that they contain some common features in language, propaganda and omissions we’ve seen from town hall over the years.

First and as always, the introductions contain the requisite “we lack money and resources” prose, which they hope residents will believe solely because they keep repeating it. This does nothing more than to serve to soften up residents for the time when a “revenue measure” (Moraga-speak for new taxes) ultimately gets presented to further support town hall’s insatiable appetite for cash, headcount, and compensation. Noticeably absent: Moraga’s incorporating principle and promise to be a MINIMAL GOVERNMENT town.


The spin doesn’t end with the poor-mouth lament, however, and continues farther into the documents, particularly the capital improvement plan. Staff states that the town only spent a meager $65k from FY16-18 and managed to scrape up $280k in FY19 only thanks to a one-time reimbursement from elsewhere. If one didn’t pay attention, you might think that Moraga’s ability to fix infrastructure is horribly constrained and the FY19 expenditure was an anomaly. Neither of those conclusions would be true.


Before we get into picking apart those particulars, suffice it to say that by our math, in two to three years the town could fully fund infrastructure needs and replacement by doing absolutely nothing. The ever-growing property taxes and sales taxes (in particular) would be sufficient to fund ongoing capital needs. That is, if those additional sources of revenue aren't wasted the second they arrive.

Back to the particulars of the razor-thin spending mentioned earlier: While the town indeed spent just $65k directly on infrastructure fixes during the earlier period, consider that it also managed to spend hundreds of thousands in legal fees, well over $250,000 on its failed storm drain tax that was 9X more than necessary and plagued with dishonesty, $50,000 in unauthorized legal fees associated with unapproved backroom deals at the Rheem Theater and Hacienda, and salary increases across the board.


Those salary increases included director-level raises ranging from 10% to 15%: doled out to two directors who had just been hired and another (now working elsewhere) whose punishing mismanagement brought us repeated, late and overbudget fiascos like the Canyon Bridge.


As for the "one-time reimbursement" amounting to $280k? Think on that for a second. The town had $280k to spend on infrastructure, but didn't spend it until it was reimbursed for fronting expenses associated with the Canyon Bridge and sinkhole repairs. That hardly comports with "insufficient funding" that give the impression it never existed nor with the desired interpretation that a one-time "windfall" somehow enabled the investment in capital replacement.


In FY20, the town will spend nearly $475,000, some of which is a transfer of $84k from the town's lighting district fund (the town taxes us for streetlights as a separate line item on our property taxes). Consider for a moment the reality of a transfer of $84k from that tax holding account that also is presented to seem like a one-time lucky fortune. It may be a one-time transfer, but what exactly does it tell us when the town had more than $84k in this fund that it didn’t need for streetlights and could transfer to spend on other infrastructure?


The answer is quite simple: it means the town had a pile of extra cash from overtaxing its residents for streetlight operation and maintenance it didn’t even need. There's nearly $170,000 still remaining in that fund that doesn't appear to be needed for its stated intent. This is reminiscent of the $250k in annual storm drain taxes the town collects from us but pretended didn’t exist at all during the storm drain tax initiative - and, we uncovered, was never spent on storm drains at all!


More recently, the town chose to take no action to mitigate potential financial impacts from Covid, although most neighboring towns and cities did so. The result? An unfavorable hit between $250k and $400k to town finances.


During this entire period, the town has enjoyed record property and sales tax revenues while simultaneously receiving hundreds of thousands of dollars per year more through state-related legislation via increased car registration fees and gas taxes.


The lesson is this:

Any claimed lack of funds, invariably, is not because of a "lack of revenue" nor is it because of external factors beyond the Town's control. Any claimed lack of funds is a direct result of the Town's actions and inactions.

The next time - and every time - town hall says it’s broke and laments its lack of resources, you might want to see where and how it’s been spending the resources it already has...or if there might be other piles of our tax money squirreled away, sitting unused because it wasn't needed in the first place.





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