8 Thoughts to “PWC and the Discretionary Funds…we aren’t finished yet”

  1. Blue Moon
    December 10, 2011 at 1:22 pm

    All right, I’ll start the ball rolling . . . It is pretty widely known that supervisors use these funds mostly to buy votes and to help specific entities they want to support for any number of reasons. It can be something as simple as a genuine desire to support an organization like, say, the boys and girls club, or it can be something sleazy, such as supporting an organization run by one’s spouse, BF, or largest campaign contributor. Or it can be something bordline unlawful, like promising a charity that takes car donations a significant check in exchange for a vehicle being given to a certain individual, like a relative or a friend. These things can and do happen.

    The big problem is that this is taxpayer money but the supervisors treat it like it’s their own money. I have never heard a supervisor say they are donating $500 of taxpayer money to such-and-such an organization because .. . fill in the blank. Instead they say something like ‘I am donating $500 to whomever’.

    There is literally no oversight to these expenditures and there is a complicit compact between supervisors that they don’t question one another’s intent to “donate” because they don’t want their own “donations” questioned. So, it’s a rubber stamp process unless the citizens make some noise.

    The only time I can recall a supervisor’s announced intent to spend descretionary funds was rejected by the board was shortly after Stewart was first elected to the Chairman’s office and announced he was going to use a small portion of his funds, (I recall it being somewhere in the $4,000 range), to pay to have Planning Commission meeting televised under the existing Comcast contract that televises the BOCS meeting. If memory serves, Nohe led the opposition to that rubber stamp for which he never really gave any good reason, though the speculation was he didn’t want to be embarrassed by the fact that the Coles commissioner was frequently absent from meetings.

    We all know the noise that was made when Corey used over $30,000 of the chairman’s slush fund of taxpayer dollars to rile up mob emotions over the immigration issue back in 2007 by using the money to send out his infamous postcard. The noise was first made by Stewart’s opponent for that race, Sharon Pandak, in co-ordination with Hilda Barg and Maureen Caddigan. My guess is there was also co-ordination with Paul Ebert, since Pandak, Ebert, and Barg are all in the same political party and are generally perceived to be tight, and the complaint was in the middle of a political election campaign. Caddigan was just doing what she always does, let the wind blow her in whichever direction for the moment and at the time she thought Stewart was toast. The problem with that whole episode is that Ebert had numerous times in prior years already looked at alleged abuses of the “descretionary funds” by other supervisors, (Ed Wilbourn’s use of the funds to buy his personal health insurance coverage, some noise over Maureen Caddigan’s personal use of the funds – don’t remember the details alleged), and in all cases Ebert had already publicly stated that the funds were descretionary in nature and, therefore, as long as the funds were board authorized in general, individual supervisors could spend the money at their own descretion. So, carte blance.

    But, these funds tend to be used to cover things that otherwise would probably be rejected for budgetary consideration, or at least squeezed out, for one of any number of reasons including not passing the smell test.

    Long and the short of it is that the funds are slush funds and an open invitiation to much mischief with taxpayer dollars mostly out of the public view, (expect for those paying close attention). Ruth Griggs, when she was Occoquan Supervisor, said she thought they should be done away with entirely. I agree. If it ain’t important enough to pass muster in the budget process, it shouldn’t be funded with taxpayer dollars.

    As far as charities go, I stand second to no one when it comes to supporting worthwhile organizations. But I do that based on my own decisions with my own money. Taxes, by definition, are collected under ultimatum. Not voluntarily. If a charity cannot garner support from voluntary resources, unless there is a contractual arrangement of fee for services, there is no rational justification for taxpayer money to go to support an otherwise unsustainable organization.

    1. Moon-howler
      December 10, 2011 at 3:17 pm

      Excellent post, Blue Moon. This should be its own thread.

  2. George S. Harris
    December 11, 2011 at 9:24 am

    Here is an excellent piece by John Gray who recently ran unsuccessfully against Corey Stewart. It seems the Rainbow Riding Center is not telling all and it makes one wonder what else is doing on behind our backs. There is something rotten in Prince William County and it ain’t the horse manure at the RRC!

    Blue Moon’s piece is EXCELLENT and should be in the local paper. I hope it will get forwarded to them for publication.

    ——————————————————————————————————————-

    This just keeps getting better and better. The RRC had an “unusual year”
    that was not disclosed to many people prior to the attempted $100,000
    contribution by Wally Covington. What was unusual was it “enjoyed” a
    $514,988 profit on an asset it sold DURING THE YEAR but didn’t own at the
    BEGINNING of its reporting year. Also, the RRC had $820,000 of cash on hand
    on its last tax return available for inspection.

    Yet they are not disclosing what the asset was they sold or who the donor
    was. This is a public charity and this information must be disclosed. RCC
    did not have it at the beginning of the year because now I can read the
    Supplemental Financial Information and that identifies their assets as
    $95,000 for the “caretakers residence” and $35,000 in program equipment, yet
    they sold an asset at a gross sales price of $716,197 less an original cost
    basis of $ 201,209 resulting in a profit of $514,988. That was supposed to
    be explained in Part IV but there is no disclosure there. I am really quite
    surprised at that because the tax preparer and auditor is of a very well
    know and reputable CPA firm.

    This asset was not on the books at the end of its last fiscal year. I
    thought RCC is a June 30th year end entity because the filing date is Nov
    15th for that year end closing date. However, this return is signed in 2010,
    a year ago, so it is a 2009 return. And that is perplexing because a 12/31
    entity would have its initial filing date as May 15, with an allowable three
    month extension to Aug 15th. And this return is signed by the preparer 11/12
    and by the entity on 11/15, the due date of a June 30th entity. So that
    would be a late filing. I wonder if there was just an error in not filing in
    the year end at the top. We need the more updated return to see how they did
    for this last fiscal (06/30/2011) or calendar year ended 12/31/10.

    The asset sold was not on its books at whatever its year end is, because the
    statement of fixed assets only shows the caretakers residence and program
    equipment shows at the beginning of the year. I anticipate “someone”
    “donated” an asset (not stocks, so it’s probably undeveloped land) to them.
    That land (presumably) had a cost basis to the donor of $201,209 and RRC
    subsequently sold it at the $ 716,197 sales price, resulting in the net
    profit of $ 514,988. The significant “issue”, if this is in fact the
    scenario of the asset sale, the donor gets to deduct on their tax return the
    APPRECIATED value of their donation, which is the $514,988 “profit”! Donors
    who contribute APPRECIATED assets (land, other real estate, art, stocks &
    bonds etc) to a charity can deduct on their tax returns the difference
    between their cost and the fair market value of their contribution. In this
    case, the FMV was the sales price of $ 716,197, the donors cost was the
    $201,209 and the difference, the $514,988 is profit to the RRC and a tax
    deduction to the donor. Nice deal for everyone involved, except
    taxpayers………

    We need to get a copy of the audit report itself also.

    I’ll keep plugging on this to get to the bottom line but there is much more
    behind the $100,000 then anyone wants us to know. And we need to know the
    truth.

    Feel free to distribute, post, blog, forward etc, as long as attribution
    goes to me.

    John
    John S. Gray CPA PC
    Twitter: @johngraycpa
    Office / Voicemail: 703-497-0430
    Fax: 703-497-9038
    12510-A Lake Ridge Drive
    Lake Ridge, VA 22192

    1. Moon-howler
      December 11, 2011 at 9:41 am

      Something certainly seems rotten in the state of Prince William. Hats off to John Gray for his dilgence in getting to the bottom of what appears to be a flim flam of sorts and Thanks to George for posting it here.

  3. Ray Beverage
    December 11, 2011 at 9:39 am

    Easy enough to get their audit – IRS policy, regs and rules make it very clear audits are part of the public documents. A nonprofit must make available its organizational documents – charter/bylaws, minutes, and includes the IRS exempt letter although RRC puts theirs online, registration with the State (to include registration with the Office of Consumer Affairs in Virgina to comply with the Solicitiation Laws). And upon request, provide copies for a nominal fee.

    Realize John probably knows all this; just a little edification for all as a lot of folks don’t know about it.

  4. Mom
    December 11, 2011 at 11:27 am

    One would presume that it was the sale of 49+ acres of property in November of 2009. Purchased in 1995 for $155 grand and sold for $700 grand, it seems to fit the bill. But that raises another obvious question. If they had nearly 50 acres, why is the county leasing a nearly equivalent site for a dollar a year. Something is beginning not just to stink but truly reek here.

  5. Mom
    December 11, 2011 at 11:54 am

    It suddenly occurred to me that if this is the case, the asset apparently isn’t or wasn’t listed on their books. Stranger and stranger.

    1. Moon-howler
      December 11, 2011 at 12:13 pm

      @mom

      How does the public get full disclosure since they are at the public…nah…I hate that expression too much to use it.

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