On May 15, 2018, Omaha voters will be asked to approve $151 million of Street And Highway Transportation Bonds (“Street Bonds”). In return for this approval, the City commits to complete some transportation projects.
Mode Shift believes it is incumbent on the City to perform three steps:
- Inform the voters what projects it plans to fund with the Street Bonds
- Account for Street Bond spending and progress of the planned projects
- Disclose how it selects the projects that receive Street Bond funding
In Part 1 of this three part blog series, we showed that the City earns high marks for the first step.
In this blog, Part 2, we look at the second step, and find that the inadequate and obscure financial reporting allows the City to:
- Go vastly over budget on the projects that are completed
- Cancel or delay planned projects and divert the funds to unplanned projects or to the projects with budget overruns
So in fact, the City asks for voters to approve Street Bonds to build certain projects, and then does not hold itself accountable to build the projects as planned, use the funds as planned, or adequately report changes to the public.
To support that claim, we mine the City’s published data to offer the City’s past performance in two areas: the 2006 Street Bond Issue, and the Expenditures for Budget Year 2016. In both cases, we will show that the City’s plans as published in the Capital Improvement Program (CIP) are wildly inaccurate and not dependable. And as usual, we will offer the footnotes and links to the details that support our findings.
Past Performance: 2006 Street Bond Issue
Mode Shift would have liked to report more recent numbers, but due to the City’s gap in expenditure reporting (more on that later), the 2006 Street Bond Issue is the only one with (nearly) complete numbers.
In 2006, the City asked for approval to spend $58 million in Street Bonds on 33 projects. Here’s what happened:
2006 Street Bonds: Project spending planned (in blue) and actual (in red). Source: CIPs 2006, 2009 to 2014(1)
As shown in this graph:
- 17 of the 33 planned projects were built, but at a combined cost overrun of $24 million
- The remaining 16 projects were cancelled or delayed, shifting over $18 million to future bonds (when these projects were re-estimated, their cost doubled, so they would have been over budget as well)
- 23 unplanned projects used up the $18 million “savings” from the delayed projects
So taxpayers spent $24 million more than was approved in the ballot, to get half the planned projects, along with 23 unplanned projects.
You may say: That was years ago. Hasn’t the City’s performance improved since then? No, as a recent example tells us.
Past Performance: Expenditures for Budget Year 2016
In August 2016, the City reported it planned to spend $19 million of Street Bond on 32 projects in 2016. A year later, the City reported what it actually spent:
Street Bond spending planned (blue) and actual (red) for Budget Year 2016. Source 2017 CIP (Appropriations) and 2018 CIP (Expenditures) (2)
So eight months into 2016, the City was unable to forecast its 2016 spending with any accuracy.
Like the previous example, the City did not spend at all as planned, with only one project even close to its plan, and most of the expenditure more than double the plan, or not planned at all.
These two examples show the inaccuracy of the CIP both as a short term and long term forecast, and how the City does not hold itself accountable to deliver the projects funded by Street Bonds.
Most Project Spending Is Not Reported
The two examples were based on what little the City actually reported:
Past Street Bond Issue amounts (in blue), expenditures reported in the City’s Adopted Budgets (orange), and in the City’s Published Capital Improvement Program documents (red) (3)
This chart reflects the gaps in the reporting:
- There is not data prior to 2007, so the Year 2000 Street Bonds expenditures are incomplete.
- There is a 3 year gap for years 2013 to 2015, so the 2010 Street Bonds expenditures are incomplete.
The 2006 Street Bond expenditures reported by project on the CIP are close to the total reported in the City’s “Adopted Budget”, so they must be accurate. Why do they exceed the voter approved amount by $24 million? Mode Shift can only say that the City’s books are audited, so there must be a valid explanation.
Street Bonds account for 50% of the 2018 CIP Capital Budget. The rest of the funds are from other sources. The expenditures from these sources have never been reported.
A Challenge for the City
After years of neglect, the CIP got a worthwhile overhaul in 2017. This year, the City must further improve the reporting so that the CIP lives up to its stated goal:
“The CIP reflects both the fiscal status and the physical progress of each project”(4)
If the City held itself accountable to its spending plans and said:
We are asking the voters to approve a $151 million expenditure of Street Bonds funded by property taxes to build 47 transportation projects. We are happy to report how we made use of the previous Street Bonds approved by the voters in 2014:
- X projects were built as planned, within 10% of their budget.
- Y projects were cancelled, either because they were reassessed when their final design increased their cost, or because better solutions eliminated the need for the projects.
- Z projects were completed at a cost above 110% of their budget. In most cases, the increase was due to the difference between the original rough estimate and the final design. We are working hard to eliminate such differences in the future.
- V projects were added to the list, in most cases because they were deemed important and urgent, while W projects were delayed to make way for them. These changes and the reasons behind them were reported here as they happened.
- The details behind all these numbers as well as accounting by project, by year, can be found here.
We are proud of the confidence the voters have put in us in the past, and we look forward to reporting how we made use of the $151 million on the May 2018 ballot.
Wouldn’t that be nice? Unfortunately, the City’s past performance shows that the $151 million will not be spent as planned, that projects will be wildly over budget, cancelled or delayed, that unplanned projects will receive the diverted funds, and all this will not be reported to the public – unless someone like Mode Shift takes the time to piece the inadequate and obscure CIP data together, year after year.
Without change, voters can’t be sure what the City will do with the $151 million on the May 15, 2018 ballot.
In part 3 of this blog series, more bad news as Mode Shift addresses the last point: How does the City select the projects that receive Street Bond funding?
Notes:
- Citizens will think “it can’t be that bad”, but it is worse when you look at the details, all compiled from the City’s CIP documents. Click here to see the list of projects that make up the numbers in the chart.
- Click here for the source: the projects that received or were planned to receive Street Bond funding, compiled from the 2017 and 2018 CIPs.
- Source: Street Bond issue amount from past ballots, Expenditures from Adopted City Budgets on the City’s website, and Expenditures from CIP from all past CIP documents that include expenditures.
- Page 2, paragraph 4 of Omaha’s 2018 CIP.