Watchdogs: County kept public’s $34 million
Two former Mesa County Finance Department employees — who have painstakingly reconstructed a series of accounting moves made surrounding the county’s Taxpayer’s Bill of Rights calculations between 2003 and 2009 — allege that more than $34 million retained by the county should have been returned to taxpayers according to the letter of the law.
Numbers provided to The Daily Sentinel by former county Finance Director Bill Voss and former county Budget Director Hal Mason allegedly show a series of questionable accounting entries and practices connected to TABOR refunds to taxpayers over a large part of the last decade.
Voss and Mason allege the Finance Department first under-reported, and then misapplied, a roughly $3 million railroad grant associated with the construction of the 30 Road underpass.
The county went to the voters to keep the railroad money, and after winning that approval, excluded the revenue from TABOR in 2003 — most of it, at least. Records show the county exempted about $2.6 million of the full amount of about $2.9 million, a subtle difference that changed the county’s base spending number in its favor and compounded over time.
Records also document how the county allegedly applied the wrong spending limit in 2004, and again in 2005 — opting to use the higher of two spending limit numbers when they are required to apply the lower — in calculating its annual TABOR liability, essentially wiping out a small refund due taxpayers in 2004.
But things can change quickly in economics, and in 2005 the county was confronted with having to refund more than $4.8 million to taxpayers, according to Mason’s numbers.
According to county Finance Director Marcia Arnhold’s own entries, as presented by Voss and Mason, the revenue from the railroad grant was added back in to the county’s TABOR spending limit for 2005. By increasing their base revenue, the county effectively decreased the amount required to be returned to citizens.
Voss and Mason allege the maneuver to add back in the railroad money reduced the county’s $4.8 million liability to about $1.6 million.
Since revenue numbers are carried over year to year, changes in the base compound over time and have lasting effects — to the tune of about $14 million with regard to the railroad grant money.
“This resulted in $17 million being retained (over time) on a $3 million grant. You know that wasn’t what the voters were voting to do,” Mason said in reference to the previous measure approved by voters.
“TABOR expressly says that you can’t add (voter-approved revenue changes) to your base, which is exactly what they did — two years later,” Voss said, additionally noting the irony of first excluding the revenue, but later deciding to add it back in.
The Sentinel has previously reported on county TABOR calculations in the 2006-07 time frame, which led to further reductions in county liabilities to taxpayers during a boom-time of record revenue.
Then-County Administrator Jon Peacock “challenged” the Finance Department to reassess its TABOR strategies in 2006, according to Arnhold.
The county began excluding sales tax revenue from its TABOR calculations around that time, based on the legal opinion that local voters had approved the county’s sales tax well before TABOR. The Sentinel has raised questions about whether that decision was made with enough public scrutiny, and two of the then-commissioners either deny knowledge of the decision or can’t remember how it was made.
The county also established its Building Services Department as a TABOR-exempt “enterprise” at the end of 2006, but then retroactively subtracted revenue from the new fund going back two years.
The county’s 2006 Comprehensive Annual Financial Report confuses the situation. It cites a TABOR refund for 2005 of $151,000 — clearly adjusted with revenue from Building Department funds. But it later reads: “Beginning in 2007 Building Inspection operations will also become an Enterprise Fund and qualify for the exclusion.”
All told, Voss and Mason allege, the county either illegally or improperly kept $34,490,743 for the years 2005 through 2008.
In theory, that’s $235.07 per Mesa County resident, based on 2010 population numbers.
In a recent letter to Colorado Bureau of Investigation Agent John Zamora — who is today investigating the county Finance Department at the behest of the current county administration — Voss laid out his perception of the sequence of TABOR events.
Voss posits that the county faced three options when faced with compounding TABOR liabilities in the 2000s: refund millions to taxpayers; go to the voters to keep the money, known as de-Brucing; or “devise various schemes to effectively de-Bruce Mesa County without taxpayer knowledge …”
“It is apparent which choice was taken,” Voss wrote to Zamora.
County Administrator Tom Fisher — who previously went to Mesa County Sheriff Stan Hilkey with the watchdogs’ allegations, leading to the current CBI investigation — believes all will be settled in the end by the CBI probe. “I am under the impression that the accounting is correct,” Fisher said.
“We don’t have any reason to believe that anything is wrong,” adding that the county has not considered suspending Arnhold while the investigation is ongoing.
Fisher said he believes everything done has been according to county policy and a result of board direction.
“I don’t believe they’ve acted independently,” Fisher said of both Arnhold and Peacock.
He also said he believes Voss and Mason don’t have the full picture.
“They do not have daily access to our financial system, our financial records. They were not here during that period of time as employees,” Fisher said, further noting that both Voss and Mason are previous employees of the county and may have “personal” motives for their scrutiny.
“They are making assumptions in order to support their accusations,” Fisher said.
Voss and Mason counter that their calculations are the result of open records requests provided by the county and were determined using Arnhold’s own numbers.