September 18, 2023 Transparency Report

East Dubuque Transparency Report #1

September 18,2023

By Mayor John Digman

As a new mayor, I think it’s important to be open and honest about where the city stood when I was elected and where it’s headed.  I will tell you from the start that the fiscal situation of East Dubuque is not pretty.  We have serious issues to tackle and that’s what we’re going to do.

We got into the mess we’re in because not enough information was presented to the Council and the public and, frankly, not enough questions were asked by the Council.  We’ve been asking questions and diggin’ for facts.

Here’s what we found:

Cities are required to have a financial audit every year.  We are working on an audit for the fiscal year that ended April 30 of this year.  That process has been slowed by the fact that our books, which should be reconciled, in other words balanced, every month had not been reconciled since August of 2022.

Not having the books up to date meant we haven’t been able to apply for a loan for the new fire station, much less knowing if we will qualify for one.  It also meant the City couldn’t maintain the line of credit at the bank that helps with cash flow.  And, of course, it meant we couldn’t have an audit or even know how much money the city really has.  Imagine not balancing your checkbook for a year.  Now, imagine not balancing your checkbook when you spend $4.5 million per year.

When I found out how dire this situation was in July, we made changes.  Thanks to the efforts of our Interim City Manager, City Clerk, Administrative Assistant and Treasurer, we are close to balancing the books and truly knowing where we are financially.  We also contracted with a CPA with tremendous experience in local government finance to reconcile those books and ensure we get on a good path moving forward.  We have also brought in the independent auditors to prepare a complete audit.  We have asked them to take a particularly close look at areas that seem out of whack. 

Let me be clear, we have absolutely no reason to believe there has been any illegal misappropriation of funds.  But, when the accounting has not been kept up to date, there is not proof things have been done properly.  That is why my top priority has been to get the books in order and make city government completely transparent.

So, what does the most recent audit we have show?

The most recent audit was for the year that ended April 30, 2022.  The trend is disturbing.  The simplest way I can demonstrate the problem is to compare the amount the audit says we have in our Tax Incremental Finance or TIF account.  TIF is property tax money specifically set aside for projects that will develop a specific area of the city to grow future tax revenue in that area.  It is an important tool to improve East Dubuque.  Unfortunately, we can’t pursue those projects to improve our city and grow our tax base because the money has been spent covering East Dubuque’s deficit spending. 

We should have over a million dollars available in TIF funding alone.  Instead, if you add up all the general government funds we have, including TIF, in 2022, it added up to less than a half million dollars.  Let that sink in.  The audit shows $1,037,133 in TIF alone but $496,414 when you add up all the general government accounts including TIF.  In other words, the City funded a deficit of $885,006 in the general fund mostly by spending tax dollars that were supposed to be set aside for another purpose.

The 2018 audit showed a general fund balance of $219,758, we were in the black.  By the 2021 Audit, the general fund was in the red by 949,320.  That deficit was reduced slightly to $885,006 in the 2022 Audit.  As stated, we have not received our fiscal year 2023 Audit, yet.

Again, I am not suggesting that anything that was done was illegal and I am not pointing fingers anywhere.  I believe people have a right to know how their government is run and what challenges and opportunities we face.  We will face those challenges and opportunities together as a community.

I realize the job is big but I’m not afraid to tackle it because I see huge opportunities for East Dubuque on the other side.

The City has made progress in improving our deteriorated infrastructure.  We can all see the new City Hall and the new water tower.  What you can’t see (and might not seem too exciting) are the sewage treatment improvements and upcoming sewage lift stations.  These were needed investments and there will have to be more like them.  We have to extend city services to bring more development to broaden our tax base which will ease the burden on everyone.  We will continue to work on both improvements you can see and those you can’t.

Let’s talk about how we turn things around.

One of the first things I directed our interim city manager to do was dig into our financial situation.  I agreed with his recommendation to limit spending to items that are essential.  This was implemented immediately.  He now personally approves expenditures and has met with each department head to find savings. 

We are examining programs the City operates and doing cost /benefit analyses to determine whether we are producing benefits to East Dubuque taxpayers equal to the cost.  One example of a program we are curtailing is DACRA which provides the same services to neighboring communities that we have ourselves in issuing and processing municipal citations.  Our analysis found that we are subsidizing the costs of these communities with East Dubuque tax dollars.  We want to be a good neighbor…but not that good.  We will work with any communities that agree to pay their own way.  Cooperation can save everyone money but, moving forward, we will only pay our own costs.

We are committed to finding ways to get the City out of deficit in a reasonable time by spending wisely, making tough decisions and being transparent to the people of East Dubuque.

You will hear these transparency reports from time to time when there is something new to report.  When we have completed balancing the books we will include simple financial reports to the Council so they can track where we are and, most important, ask questions and provide leadership.  When the Audit is prepared, we will provide the Council and the Public a written report and we will bring the Auditor to the Council to report on the audit and take questions from the Council in the open before the citizens of East Dubuque because that’s how government should run and that’s how you keep government honest.

The audit will provide the facts that we can use to set a course and make decisions going forward.

There is tough work ahead but, working together, we can get the job done.