The SEC has been scrutinizing [Miami] since 2009, after the Miami Herald and a scathing city audit raised questions about a series of financial transfers that moved money out of capital projects and restricted accounts in the late 2000s in order to shift millions into the city’s depleted general fund. The transfers — akin to a person moving money from a home improvement fund into a main checking account — were recommended by [former Miami budget director Michael] Boudreaux and approved by Miami commissioners.
But SEC investigators determined that Miami officials moved the money in order to pad the city’s reserves and make the city seem financially healthy as they prepared to take three bond issues to the market. They said the city’s budget projections showed Miami was going bankrupt, and the transfers were equivalent to cooking the books, since many of the raided accounts were either filled with highly restricted dollars, money already spent, or dollars that were still needed to pay for ongoing expenses.
Wow, a lot of this sounds REALLY familiar. Scottsdale’s embattled incumbent mayor, Jim “Shady” Lane has bragged often and loudly about Scottsdale’s “Triple-A bond ratings,” when in reality not all of the bonds are actually AAA-rated.
For the entire time Lane has been in office, Scottsdale has had budget deficits that have been “balanced” (verb, not noun) by sweeping undesignated reserve accounts at the end of the year to shore up General Fund shortfalls.
Lane and his city council cronies (including Wells Fargo VP Linda Milhaven…guess who issues Scottsdale’s bonds?) have shorted the capital improvements fund every year.
Adding insult to injury is a long list of taxpayer subsidies, many of which have been financed by bonding (aka, “borrowing). These include about $20 million to the PGA, which squats in a pair of taxpayer-owned golf courses known as the “TPC Scottsdale”; and $2 million to Phil Mickelson, similarly situated in the taxpayer-owned McDowell Mountain Golf course.
Meanwhile, the city has accumulated over a BILLION dollars in debt, and an estimated billion dollars in neglected infrastructure maintenance. The city just borrowed $12 million to patch potholes!
And the IRS recently ruled that issuing tax-free City of Scottsdale muni bonds to refinance a parking garage owned by a luxury retail shop was not a good use of taxpayer credit. So the City of Scottsdale had to pay $750,000 to the IRS for lost tax collections that otherwise should have been paid by the bond holders…but since the folks who bought the bonds are Friends of Jim (Lane, the mayor), we can’t make THEM pay the fine, right?