18 September 2010

Who is Ross Perot?

I attend fewer Town Council meetings these days. Its become far too business-like and professional. In the bad old days of the Keenan/Canvin administration (or should that be maladministration) material for the blog came thick and fast and I was rarely stuck for something to write about. The truth is, back then, I was spoiled for choice.

Today its a rather different affair and so writing about the Town Council is rather harder but every now and again something appears that is worthy of comment and I'd like to comment upon some of the critiscism that is being levelled against the current Town Council regarding their expenditure. Obviously the big item is the likely cost of the investigation into my own objection to the Town Council's accounts for fiscal 2008/09, an investigation which will likely cost somewhere north of £30k.

Now that seems to be quite a lot of money and it is certainly going to divert funds from other projects, one of which is the current demand for new play equipment at the memorial playground. I certainly regret the cost of the investigation but I suspect that the size of the bill reflects to scale of the problems with the administration of the Council's affairs. But the critiscism being levelled against the Town Council is both partial (mainly coming from the friends of the old Town Council who could be described as 'people ranting against truth' or PRATS) and displays a remarkable degree of ignorance.

Lets wind the clock back a couple of years to 2008 when I was really starting to look seriously at the Town Council and its finances. The first thing to look at was where the Town Council's money was coming from. Very little of its revenue has ever come what might be termed 'earned income' and the vast majority of it comes from the taxpayer via the Town Council's precept demand. An examination of the Town's Precept shows that, throughout the late 1990s that demand tracked a generally inflation based increase, year on year until fiscal 2000/01 when the Town Council started to demand levels of Precept which far outstripped inflation. Now, it might be a coincidence but the real increases started around the time that well known local businessman and entrepreneur, Anthong Henry Canvin, joined the Town Council. In 00/01 it went up by 25.5%. In 01/02 it went up by 39.1%. The Precept was flat in 02/03 but took off again in 03/04 with a 30.6% increase and an astonishing 51.9% increase in 04/05. In the space of 5 years the Precept had risen by an amazing 350%.

Now, there is no doubt that the Town Council was throwing money about through this period but the key to understanding the challenges that the currewnt Town Council faces is to understand what the old Town Council spent the money on. To understand this you need to recognise the difference between a Fixed overhead (an expense which repeats each year) and a variable overhead (an expense which does not repeat, year on year). As an example, a salary is a fixed overhead. It repeats year after year. Insurance is a fixed overhead. Maintenance is a fixed overhead. Inetrest repayments are fixed overheads.

Compare that type of expenditure to, say, the cost of play equipment. The capital cost might be quite high but it's a one-time expense, occuring in one fiscal year. Similarly, the cost of an investigation is a one-time only expense (but one that we might learn much from).

So, it is useful to have a look at the budget of the Town Council in, say, Fiscla 2007/08 as published by the old TC in Somerton News. A quick look shows that of an expenditure of around £260,000 some £140,000 was fixed or repeating overheads leaving the Town Council around £120,000 to play with. In the following year, 2008/09 there is significantly less available capital as the Town 'purchased' the Tin Dunny with its Capital cost and the maintenance overheads. At the same time, the old Town Council did not pay off any borrowing so instead of having £120,000 to invest in the Town, the Council had only £80,000. More importantly, the fit-out of the Tin Dunny spiralled out of control (under the careful management of local businessman and entrepreneur Anthony Henry Canvin) and has cost more than double the original estimate of £155,000. Not only that but the Council's failure to unload the Parish Rooms onto the church meant that the entire refurb budget came out of reserves so the Town Council have very little for that rainy day, when it comes.