Who Owns City Hall?
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(Copyright notice: to lawfully reproduce all or part of this article, the following attribution must be included: “Natural-law copyright by Anthony Hargis, redressone.wordpress.com)
This question and others occurred to me while I was examining the financial statements of several local cities.
Let me address one of those other questions first. I noticed, for example, that the “Operating Statement” for the city of Costa Mesa reported a loss of six million ‘dollars’ for the fiscal year 1993. Since it is general knowledge that American governments are supposed to operate at a loss, this operating loss tripped no red flags in my mind. However, when I turned to the Balance Sheet, something didn’t seem right: the equity position of the city increased six million ‘dollars’ for the same year.
As noted, something puzzled me. The only ways an equity position of an organization can increase is for the organization to sell more shares or to generate a profit. I didn’t think Costa Mesa had outstanding shares so I turned back to the “Operating Statement” for a closer look. I started at the top and noticed it was titled “Combined Statement of Revenues, Expenditures and Changes in Fund Balances.” The explanation of why the “Operating Statement” reported a loss while the Balance Sheet indicated a profit lay in the word “Expenditures.”
Revenue is an event that increases equity.
An expense is an event that decreases equity.
An expenditure, on the other hand, is money disbursed for any reason – it may or may not affect equity. Money disbursed as a loan, for the purchase of a paperclip or for the construction of a bridge are all expenditures – not necessarily expenses.
Revenue and expenses are events of the same kind: one is plus and the other is minus. When we combine them into one statement, we are subtracting apples from apples. Expenditures, however, are a mixture of apples and oranges. When we combine revenue with expenditures, we produce confusion – we subtract apples and oranges from apples. When we do this as a private business, we go to jail. When we do it as a government… well, we pull down fabulous pensions, live in palatial and subsidized condominiums and sit on thousand ‘dollar’ toilet seats.
When a private business disburses money to retire principal of a loan, the event is not recorded as a charge against revenue. When a private business pays money for the construction of a building, the building is expensed over twenty or thirty years against revenue – not all in one year.
When governments, however, expend money to retire principal of a loan or for the construction of a bridge, the entire amount is charged against revenue on the “Operating Statement.” Such procedures would lead the casual observer of the “Operating Statement” to expect a reduction of equity on an ordinary balance sheet. But, the financial statements put out by governments are just not normal. Instead, while the loan retirement is shown as a charge against revenue on the “Operating Statement,” it reduces the loan payable on the balance sheet and leaves the equity untouched; while the entire cost of a bridge or road is charged against revenue, the same entire cost is capitalized elsewhere and carried on the balance sheet as land or property and leaves the equity untouched, see, also, note l.f. of the ’93 Huntington Beach Comprehensive Annual Financial Report (CAFiR).
When Costa Mesa accountants, at page 7 of their 1993 CAFiR, style their “Operating Statements” as “Statement of Revenues and Expenditures (for Governmental Funds),” they aren’t really lying – they’re telling the world that they are subtracting apples and oranges from apples. And they are supremely confident that not one man in a million is capable of distinguishing between expenditures and expenses. A truthful Operating Statement is styled a Statement of Revenue and Expenses. I know they can do it: at page 10 of the same Report, the heading is “Combined Statement of Revenues, Expenses… (for Enterprise Funds)” The same distinction between Governmental and Enterprise Funds can be found in all the city and county Reports that I’ve examined. They’re all doing the same thing: they’re all either idiots or consciously deceiving someone. Since there is absolute conformity among the CAFiR’s that I’ve examined, I think we can conclude that they know what they are doing – that they are not idiots.
This is what enables Costa Mesa to report a six million ‘dollar’ loss on its “Operating Statement’ and a six million ‘dollar’ profit on its balance sheet – for the same reporting period. In other words, Costa Mesa is keeping two sets of books – in the same book. The same is true for all the other cities and counties I’ve examined.
While I was trying to make sense of these two sets of books – of trying to separate the apples from the oranges, a word began to play with my mind.
equity 3 b: the money value of a property or of an interest in a property in excess of claims or liens against it c : a risk interest or ownership right in property. Webster’s Seventh New Collegiate Dictionary.
Equity : an “ownership right in property.” Equity equals ownership.
The city was reporting an equity of 215 million ‘dollars’ as of 1993 June 30. Equity is of the nature of a liability; it is property that an organization owes to its owners: it belongs to the owners of the organization.
Who owns this 215 million ‘dollars?’
All American governments are created and derive their authority directly or indirectly from the People for the purpose of protecting their rights and property. The City of Costa Mesa even acknowledges this flow of authority. Its CAFiR contains an organizational chart that shows authority deriving from the “Citizens of Costa Mesa.” By this term I presume they mean the inhabitants of Costa Mesa; although, to be sure, someone may have to learn this thru a discovery process during a legal contest with the City.
Who will deny that the “Citizens of Costa Mesa” are the owners of the City of Costa Mesa? They are the ones that choose its city council members. The city council members are responsible for the management of city property, and, who but the owners of property have the authority to choose the managers of it? Hence, it logically follows that the “Citizens of Costa Mesa” are the owners of the City of Costa Mesa.
On the books of an ordinary organization that is owned by shareowners, the category of equity consists of a list of all the different shareowners: this list consists of their names, contact information and ownership details (number of shares, when purchased et cetera). However, when we examine the categories under Equity on the balance sheet for Costa Mesa, we find no entry even remotely referring to shareowners. Instead, we find, at note 5 of the Costa Mesa 1993 Report (detailing specific categories listed under Equity),
Landscaping and sprinkler improvements,
Buildings and structures,
Office furniture and
At note 13 of the same Report (detailing other specific categories listed under Equity), we find
Encumbrances (When money authorized for a particular purpose is unspent at the end of a fiscal year, authority to spend the money lapses. Thru the hocus-pocus of “encumbrances,” the money is “saved” for future spending.),
Cash value-employee life insurance,
Low and moderate housing,
Employee’s retirement system,
Designated for capital outlay,
Designated for cable TV program,
Designated for golf course improvements,
General Fixed Assets, at page 5 of the same Report.
These, and others, are the “owners” of Costa Mesa equity. These lists give the impression that the Costa Mesa financial report is the result of a class assignment for a loony farm. “Land,” “Inventories,” “Prepaid items” et cetera are asset items; “Designated” items are liability items. None are capable of owning anything. When we study a government financial report, we go into Wonderland and look into the face of Alice. This equity is being held for the construction companies that will build the “Low and moderate housing,” the “golf course improvements” and the “capital outlay.” It “belongs” to the company that will operate the “cable TV program.” It “belongs” to the City “employee’s retirement system.”
In a rational accounting system, an organization is operated for the benefit of its owners: the ones who created it and choose its managers; and, the equity i.e., the accumulated profits are held in the name of the owners. But, in a socialist accounting system, there are no “owners,” just people who exercise the privileges of ownership. In other words, Costa Mesa’s accumulated profits of 215 million ‘dollars’ is being held for the benefit of special interest groups and city employees. And where the city fathers and mothers didn’t have time to appropriate City equity into the name of the construction companies or City employees, they effectively erased “Citizens of Costa Mesa” on the equity line and inserted such terms as
Landscaping and sprinkler improvements,
Buildings and structures,
Prepaid items and
General Fixed Assets.
These are items that, on a truthful balance sheet, would be listed as Assets or Liabilities. Think about this for a few minutes: when those government accountants assemble the above list as the “owners” of Costa Mesa, they are telling us
that a bottle of bathroom cleaner (an inventory item) is an “owner” of the City of Costa Mesa;
that a golf course (a General Fixed Asset) is an “owner” of Costa Mesa;
that a dump truck (Automotive equipment) is an “owner” of Costa Mesa;
that the water fountain (Landscaping) in front of City Hall is an “owner” of Costa Mesa;
that the potted rhododendron (Office furniture) in the lobby of City Hall is an “owner” of Costa Mesa.
To paraphrase Mark Twain, what do you think of the brains of those government accountants? I mean, in case you think they have any.
The mentality that is capable of regarding a golf course as the owner of anything is properly entrusted to the care of an insane asylum – not with the fate of a society.
If we were discussing the affairs of a private business, we would be describing a case of grand theft: the total theft of a company from its owners by its vendors and employees -or grand lunacy: the listing of Asset and Liability items as the owners of the company.
If the special interest groups and City employees are the rightful owners, we have several questions.
Why don’t they choose the managers of City property? -instead of letting “the Citizens of Costa Mesa” do so.
What was the property they contributed to the City necessary to establish their ownership position?
If they contributed no capital to the City, what was the event that established their ownership of the City?
Does mere employment by the City establish an employee’s ownership position of the City?
Does the providing of a service or product to the City establish a vendor’s ownership position of the City?
How do dump trucks acquire their shares in the City?
And finally, does one have to masquerade as a rhododendron or dump truck to be recognized as an owner of the City?
If the special interest groups and City employees are not the rightful owners of the City, we have a case of wrongful conversion – and a lot of answers that must be given.
In either case, we have a conspiracy by 400 to 500 people operating a city government as a modern day plantation for the purpose of enriching themselves, by sucking millions of ‘dollars’ a year out of the remaining city inhabitants, many of whom wonder where their next pay check – or meal – is coming from.
The plight of the city inhabitants generates another question regarding Costa Mesa’s accumulated profits of 215 million ‘dollars.’ As noted earlier, the purpose of American governments is to protect rights and property: not to accumulate profits for the benefit of privileged and insolent genetic failures. The City’s balance sheet shows a “Cash” and “Investments” holdings of 150 million ‘dollars.’ The annual budget of Costa Mesa is about 50 million ‘dollars.’ In other words, the City has enough loose cash laying around to operate the city for three years without collecting a single penny of taxes, the other cities and counties are doing the same thing, and they know it. The 1994 December 8 edition of the Los Angeles Times, at A37, contained a fantastic sentence: “Irvine City Manager Paul Brady says his city has enough liquidity to cover all operating expenses for three years.” That’s all, just that one sentence. There was no elaboration, no head-line. And we will probably see no more sentences, much less stories, related to the huge cash holdings of the cities and counties as they and the media steadfastly try to suppress such knowledge. Orange County reports “Cash” and “Investments” of 15 billion and an annual budget of one and a half billion. This indicates that the County could operate TEN years without collecting a single penny of taxes – this “years of cash” figure for the County is probably high since some of the cash held by it belongs to local cities and other governmental units. In other words, the profits and cash accumulated by the cities and counties represent excess taxes they have collected. While the cities and counties were accumulating these excess taxes, the politicians were telling you that you had to pay more taxes. With such a cash position, the City has no justification collecting any taxes until its cash position falls to five or ten million ‘dollars.’ The City has even less justification to screech for higher taxes. I’ll let you generate questions from these facts.
The 215 million ‘dollars’ of profits accumulated by Costa Mesa is most certainly a very conservative amount. This equity is what is left
after the City employees have purchased all their thousand ‘dollar’ toilet seats;
after the palatial and subsidized apartments they have built for themselves;
after disbursing nine million ‘dollars’ to a local bank for a temporary building worth 300,000 ‘dollars’.
does not include some very considerable capital property: “Expenditures for infrastructure (roads, curbs, sidewalks, sewers, et cetera)are not capitalized as such assets are immovable and generally of value only to the City,” 1993 Huntington Beach Report, note 1. f., if the construction cost of a city street is 200 ‘dollars’ per foot, a mile costs just over a million and the cost of the 188 miles of Costa Mesa streets is over 190 million ‘dollars,’ the 370 miles of Huntington Beach streets, over 370 million – maybe we could add half of these amounts, to allow for depreciation, to the equity of each city;
does not reflect true market values for some properties, for example, the 235 acre Costa Mesa golf course (this is separate from its other golf course and country club… wait a minute, did I read that right – “country club?” – city property?) is carried at its 1980 purchase price of just under eleven thousand ‘dollars’ per acre, while lots in the same area are currently valued at 150,000 (as of 1995) and more (probably twice that as of 2005). A lot is about one fourth to one sixth of an acre. In other words, Costa Mesa carries this golf course at a value of just under three million, while its market value sits at one hundred and forty million (as of 1995). See note 7 of the 1985 Costa Mesa CAFiR.
If we were to adjust the Costa Mesa Balance Sheet to reflect the value of its streets at fifty per cent of their cost (95 million) and a market value for one of its golf courses (140 million), the equity would more than double, from 215 million to 440 million. I suspect that, if inhabitants of Costa Mesa owned shares in the City, this adjustment would be sort of pleasing to them.
Perhaps it is time to return these accumulated profits -these excess taxes – to the People. And I don’t mean just by inserting their names on the equity line; I mean by actually returning property to them.
All city, county and state governments are accumulating huge profits while the federal government is sinking deeper into an unpayable debt. As long as the city and county governments retain their profits, these profits will be an irresistible target for the federal government, or special interest groups. A bankrupt has an insatiable appetite for loose cash; and, once he, or she, gets his hands on the cash, it’s gone – forever.
If we don’t return city and county property to its rightful owners, it will disappear into the gaping maws of bureaucrats, fall into the hands of embezzlers or evaporate in the socialist investments of government cash managers.
The grab by State and federal governments is, in fact, already underway. “Since the early- 1980′s,… the City (of Costa Mesa) has been forced to absorb nearly $7.8 million in financial impacts from Federal, State and County governments.” For example, in “September 1992, the State of California adopted a budget which eliminated $1.5 million in property tax revenue by shifting it to the State.” (’93 Report, page ii.)
Around 1980, the City of Costa Mesa paid nine million ‘dollars’ to a local bank for a 5,000 square foot temporary building, with a construction cost of 300,000 ‘dollars,’ and moved it onto the Orange County fairgrounds.
In December of 1994, a multi-billion ‘dollar’ loss was reported by the Orange County tax-collector for a pool of cash managed by him and “belonging” to local cities, court trust funds, school districts and other governmental units. This loss by Orange County is a good example of the folly of socialism. One of the essential planks of the Communist Manifesto requires the centralization of all credit into the hands of the government. The State legislature defines the kinds of investments local governments are permitted to invest their excess taxes in. These permitted investments tend toward the centralization of credit from city governments to county governments to State governments to federal government and, finally, to the Federal Reserve System. Hence, we have the Orange County tax-collector making investment decisions for a ten billion ‘dollar’ pool of excess taxes “belonging” to local cities, court trust funds, school districts and other governmental units.
Now we will watch to see what happens when an entire county conforms to the Communist Manifesto and places its fate into the hands of one man. We will consider it as prelude to the events to come regarding the fate of the entire world for placing management of its money into the hands of the Federal Reserve System.
The investment losses of Orange County are by no means ‘life’ threatening. The highest estimate for the losses is three billion while, eighteen months earlier, the County reported total assets of eighteen billion. Also, a high percentage of the losses will be incurred by the 187 other governmental units that “owned” the cash managed by the County. Thus, however great or small this catastrophe turns out to be, we should keep in mind that it was caused by a large number of small losses concentrated into one pair of hands.
When we consider the waste, larceny and folly that sucks on government money, it should become clear who controls the discussions of closed door City Council sessions. As long as this loose cash remains in the hands of government, it will induce continual excitement to the loafer, the crooked, the fool and the profligate.
To address this situation, an organization should be established to sponsor candidates who will agree to return city property to its owners once the candidates are elected to office. Each candidate would execute a valid contract with each of his supporters for that purpose; thus, making the candidate’s promises enforceable. Instead of returning the property in one year, we would propose a ten-year period for the process. This would minimize any economic disruptions that might accompany the return of city property to its rightful owners.
Let’s translate this process to numbers. Costa Mesa has a current population of about 100,000, of which about 50,000 are registered voters. Since many of these voters would not want their property returned to them, i.e., they would not vote for our candidate, we propose to limit the return of property to those who support our candidate. That is, I would suggest something like 100 ‘dollars’ as payment for each contract our candidate executes. The city property, then, would be distributed to everyone who purchased one of these contracts: if a Costa Mesa voter does not buy one of the contracts, we must conclude he or she does not want his property returned. Based on current numbers, about twenty five million ‘dollars’ of Costa Mesa property would be returned to supporters on a yearly basis over a ten-year period. If we were to sell 10,000 contracts, a number of voters more than sufficient to ensure election to office, each contract holder would realize a return of 2500 ‘dollars’ each year. This does not take into consideration the fact that our candidate will have to stand for re-election every two to four years and will have to sell contracts for each election. Thus, a supporter may have to buy a contract every two or four years in order to keep our candidates in office.
I would also propose that a fraction of the contracts be sold to non-Costa-Mesa inhabitants and voters since some of the property accumulated came from them. We will do the same thing for other cities and counties. Thus, a Costa Mesa inhabitant or voter would be able to purchase contracts issued by one of our other candidates running for office in Huntington Beach or Los Angeles.
Our major issue would be the return of city or county equity to the rightful owners. Beyond that, each of our candidates would be required to contractually commit to vote for ordinances that are consistent with the inherent and inalienable rights of the People and to vote against, or for the repeal of, all ordinances that infringe upon the same rights. Beyond this, you should let your imagination run wild as to what we could do once in office. We could, for example, require all city employees to pass a course in American History and state citizenship; require the city attorney to begin law suits to invalidate gun control statutes; return city property to its owners with allodial title, among others. When we choose a candidate to support, we should ensure that his or her agenda is consistent with our basic philosophy and, most importantly, that his agenda is not perceived as likely to cause major disruptions of city services.
My research has given me the impression that cities and counties in western America are accumulating excess taxes at an obscene rate while cities and counties in eastern America are approaching true bankruptcy. It also appears to me that the State and federal governments are influencing the city and county governments for the purpose of using the young and prosperous areas of western America to perpetuate the socialist failures of the East. In other words, the western cities and counties collect excess taxes and are “permitted” to invest the proceeds in U.S. Treasury and U.S. Agency obligations, commercial paper and so forth, see State of California Government Code 53600, et. seq. The U.S. Treasury and U.S. Agencies, then, grant this money to the eastern bankrupts – who have no incentive to correct their policies.
The U. S. government also needs this money to salvage socialist failures in other parts of the world. Congress recently (in the early ‘90’s) gifted ten billion ‘dollars’ to Israel to finance the construction of housing for dismissed Soviet military officers and to “retrain” KGB agents with a bad attitude. The U. S. government also needs several hundred billion ‘dollars’ to bail-out foreign governments that default on loans payable to American banks.
Here is a pop quiz: What service was provided to the U. S. government by the dismissed Soviet military officers and KGB agents? (See Exodus #23) They earned this money by (choose one)
- planting daisies and daffodils along American
- singing the Star Spangled Banner at three American
- providing justification for the American military-
industrial complex or
- doing a tap dance at the Super Bowl half-time show.
If you chose d., repeat the quiz.
While we’re in the question-asking mode, you’re probably wondering why the U. S. government would bailout bankrupt foreign governments. This leads to the question, “Why do American banks eagerly lend money to corrupt and despotic governments? Pirates and robbers have no conscience. When they are approached by American banks, these pirates and robbers don’t hesitate a minute to agree to kick-back 20% of the loan proceeds to the American bank officers. Hence, when an American bank lends 100 million to the Mexican or Brazilian government, 20 million comes back, to be split among the American bank officers. When the Brazilian government defaults, don’t worry, the American banks won’t lose a penny – thanks to those buyers of U. S. Treasury and Agency obligations.
I’m not saying that American banks don’t like domestic gangsters. I’m just saying that looting the U. S. Treasury – and the bank – thru foreign gangsters is less subject to scrutiny than thru domestic gangsters. They’re both used; it’s just more flagrant when foreign gangsters are used.
This money is not recoverable from those who received it. Except for the first five or ten per cent of those demanding their money back, U.S. Treasury or Agency obligations are not collectible – see my article, ‘Bad News for Alternative Health Advocates’regarding the bankruptcy of the U.S. Treasury.
Hence, the longer it takes to recover city and county property, the less that will be recovered.
There will probably be three major objections to our proposal to return excess taxes to their rightful owners. One. it would destroy city governments; two, it would not be permitted by the State legislature and three, it would threaten city and county employees’ pension plans.
One. I am not suggesting the destruction of city or county governments, I am simply claiming they have no business collecting excess taxes and making them available to the crooked, foolish and insolent. On the other hand, if our opponents claim that city and county governments can’t survive without graft, waste and profligacy, perhaps it is time to abolish them.
Two. A major reason for executing a contract with each supporter is to create a status superior to legislative enactments. In other words, the American People are the highest authority in this country, and, when they speak, no court, no legislature and no constitution stands above this authority. We will draft our contracts so that, when our supporters send a candidate to office, their intent to recover their property will be unmistakable. Our contracts will override all legislative enactments and judicial orders based on the rule that “No state shall… pass… any law impairing the obligation of contracts.” Constitution for U.S.A. Art. 1, sec. 10.
Three. What shall we do regarding city and county employees’ pension plans? These are the people who listed themselves and their sugar-daddies (city vendors) as owners of the cities and counties. These are the people who engineered and supported the construction of palatial and subsidized condominiums for themselves. These are the people who delivered nine million ‘dollars’ to a local bank in exchange for a temporary building worth 300,000 ‘dollars.’ Now let us consider the nature of these city and county employees’ pension plans. These plans can be compared to the Social Security System. The purpose of the latter is, allegedly, to provide for the retirement of all taxpayers, private and public. The money collected for this purpose is kept in a “trust fund” which is all invested in U. S. Treasury and Agency obligations. These obligations, of course, are the first stop for the money while it is delivered to those KBG agents with a bad attitude. In other words, there’s nothing there. If the Social Security is to pay its “obligations,” it has to tax current taxpayers to support retirees. It’s a process which allows the retirees to cannibalize their own children – and grand children.
City and county employees are allowed to withdraw from the Social Security System if they set-up their own retirement plan, see ‘A Tale of Two Bribes’. This is an option chosen by many of such employees. Such plans are only partly invested in U. S. Treasury obligations. If these obligations become worthless, the plans would still have enough cash to pay all future commitments. The Costa Mesa golf course, for example, is more than sufficient to pay all the future obligations of the City’s pensions. The cash needed to pay these obligations was not generated by City employees, but by the other inhabitants of the City. The City and County pension plans differ from the Social Security System in that the former is a method of cannibalizing other people to support the city’s retirees. All that is required to make this method work is to keep the Costa Mesa cattle stupid and productive.
Furthermore, pensions have always been regarded as a form of bribery. The purpose of such bribery is to enlist the interest of government employees in pursuit of an increasing amount of plunder and the oppression necessary to collect it. Should we allow it?
What do you think we should do about their pension plans? Leave them untouched – or place them under review?
The accumulation of profits by cities and counties is being done all over America, especially in the West and Southwest. The reason this essay is primarily about Costa Mesa and Orange County is because they are local to me. The conclusions and observations in this essay apply to every city, county, and state governments – as well as school and special districts. From Moody’s Municipalities, which gives somewhat incomplete data, the following observations are indicated:
Austin, Texas collected excess taxes, i.e., realized a profit of 28 million ‘dollars’ for fiscal year 1991;
Bedford, Texas collected excess taxes of two million for 1991;
Dallas, Texas collected excess taxes of 105 million for 1992;
Fort Worth, Texas collected excess taxes of twelve million for 1992;
Mesa, Arizona collected excess taxes of twenty one million for 1991;
Phoenix, Arizona collected excess taxes of 487 million for 1993;
Piano, Texas collected excess taxes of fifteen million for 1992;
Santa Fe, New Mexico collected excess taxes of nineteen million for 1993 and
Scottsdale, Arizona collected excess taxes of five million for 1993.
The above numbers are indications only and subject to revision upon examination of more complete data.
If you’re curious about your area, simply contact the city or county of interest to you and ask for the latest “Comprehensive Annual Financial Report,” which is usually referred to as a CAFiR.
If an examination of this CAFiR reveals an accumulation of profits and if you’re interested in returning those profits to the People, locate three or four people who share your thoughts and contact us for further instructions. Organizing a campaign for a city council seat is not as difficult as most people would think. City elections are notorious for low voter turn-out: sometimes as little as ten per cent and probably never more than twenty five per cent. This means that anywhere from five to twelve per cent of the voters is sufficient to win a city election. Since the number of voters is generally half the total population, an election in a city with a population of 100,000 can be won with 2,500 to 6,000 votes. I think it wouldn’t be difficult to find that many people in such a city who want their property back.