A group has sued the City of Chicago because they do not believe that there was public input regarding the City's decision to lease its parking meters. The Institute for Truth in Accounting believes there are some important questions that need to be answered.
Citizens should ask the following questions:
1. Did the City establish criteria and strategies
to make sure that the parking meter deal was for the long-term good of the City
and its citizens, not done just to fill short-term cash needs? In other words, did the politicians, whose
horizon may be limited by the next election, only think of the immediate
resources needed for short-term budget relief rather than the government
long-term needs?
2. Where all aspects of the lease of the asset
considered, including whether the company had the capacity to serve the needs
of the citizens?
3. Were the economics of the deal studied? How was the value of lease of the parking
meters determined?
4. Can the private company run the parking meters effectively
and efficiently?
5. Of course a private entity will work to make as
much money as possible. Did the City
establish a system with procedures to oversee the company’s operations?
6. When the City negotiated the contract, were
conditions included to ensure that the public needs would be served?
7. Did the
contract outline:
·How the parking meters had to be maintained and
operated?
·The rates that could be charged?
·How penalties were collected?
·Cancelation criteria if lease was not meeting
the City expectations?
This transaction was decided
during the budget process, when there may have been little time to consider all
of the consequences and issues surrounding the decisions. The transaction generated one-time cash
infusion used to fill a large budget hole, but the Institute for Truth in
Accounting is concerned about such deals.
While private sector individuals who negotiate
such deals with governmental entities, like the City of Chicago, may stand to
make large profits, the public sector may be unprepared to negotiate with the business
people involved in these transactions.
Another concern is one of inter-period equity. When a governmental entity sells or leases an
asset, it essentially collects all future net revenues immediately.While the transaction’s proceeds can be used
to balance the current budget, it takes away future revenue streams.Current elected officials and taxpayers
receive current benefit from the sale or lease of the assets, while future
taxpayers may need to pay additional taxes to off-set the revenues that would
have been received from the assets.
About the Institute for
Truth in Accounting
The Institute for Truth in Accounting (IFTA) is dedicated to
promoting honest, accurate, and transparent accounting at all levels of
government. As a non-partisan,
non-profit organization, the IFTA works to expose accounting deficiencies while
promoting better, more accessible delivery of accurate government financial
data—and, in turn, providing a foundation for more informed public policy. The
IFTA provides its expertise to develop more effective accounting standards and
deliver accurate government financial information to policymakers, opinion
leaders, and citizens so that they can work for a more secure financial future.
To learn more, please visit our website at www.truthinaccounting.org.
