The city of Durango’s budget is flawed, and it may be more than a month before city staff members can fix the errors and bring a final, complete and accurate spending document to City Council, said elected and appointed officials.
The 350-page document is riddled with an unknown number of “typos, omissions and oversights,” said Mayor Melissa Youssef.
One example on Page 30 of the 2020 adopted budget incorrectly added three numbers, creating an error that added $10 million in expenses. And a budget appropriations document had a missing zero in what should have been a seven-figure number – “$1,200,00.”
The irregularities “can be linked to the departures” of former City Manager Ron LeBlanc and former Finance Director Julie Brown, who drafted the first versions of the 2020 budget, Youssef wrote in an email to The Durango Herald. LeBlanc and Brown drafted the 2020 budget, a document formatted in Microsoft Word and embedded with Excel spreadsheets, according to city staff.
Staff members in November revealed the first of many errors in the spending documents weeks after the Colorado Bureau of Investigation opened an investigation into the alleged misappropriation of city funds.
The $10.7 million “calculation error” on Page 30 distorted anticipated spending for 2020, according to documents provided by interim City Manager Amber Blake. The original proposed 2020 budget sought $94.16 million to operate the city. But the total should have been $83.47 million, a decrease of more than 11%, documents show.
“We realized at the time that it was just the tip of the iceberg,” Youssef said.
Not adding upDrafting the city budget is a complicated process that requires actions on the part of staff and council. Staff members prepare the budget using trends to anticipate revenues and expenditures to create a proposal for City Council to approve.
The budget does not bind city staff to spending limits, Blake said. Rather, it acts as a blueprint for spending decisions.
The council approves maximum spending in the form of an appropriations ordinance – a legally binding document that sets the maximum for city spending in the upcoming year. City Council approved $87.57 million in spending this week.
The city’s budget resolution, also approved by council, explains in broad terms the city’s anticipated revenues, how much money is held over from the previous year and how staff members plan to spend public dollars.
City staff defines spending priorities in the budget. It is a “living document” used to direct how staff members spend money and offers the public assurance of how staff plans to spend public dollars.
Staff has in the past kept spending within the appropriated amount, Blake said, but that does not mean it spent money as earmarked in other spending documents.
City staff is scouring past budgets for potential miscalculations or mistakes. The council has sought a new auditing firm to review this year’s spending compared with anticipated expenses in the 2019 budget.
A new processThe budget errors cannot always be explained, and not all errors have been found, Blake said. But one thing is clear, she said: The process staff members used to create the budget is flawed.
City Council this year asked staff to use five-year spending averages to forecast future expenditures. It was noted in previous budgets that the city used previous forecasts rather than actual amounts spent to make predictions about future spending.
Using old budget assumptions to predict future spending is not considered best practice, Councilor Kim Baxter said in October.
Calculating five-year actual spending averages exposed flaws in the 2020 proposed budget, Blake said.
“I have learned this year that the way we have been producing and generating the budget sets us up for the risk of many errors and additional challenges we don’t need,” Blake said this week during a City Council meeting.
City officials can’t say with certainty if more or less spending is likely in 2020 compared with 2019 until a thorough review can be done comparing line items from both budgets to ensure departmental spending is “apples to apples,” Blake said.
“I can’t say with certainty what the difference would be,” she said in an interview this week.
Further corrections to the budget and appropriations ordinance will take time as staff members compare previous budgets to expected spending in 2020. Staff members expect to find more errors in the document and plan to ask City Council to approve changes sometime in January or February, Blake said.
“There is a Colorado Bureau of Investigations investigation currently ongoing,” she said. “In this process, we will look back, correct the errors and look forward to see how do we ensure that we have an accurate, transparent and understandable budget document.”