Desert Hawk golf course at Pueblo West 2012 financial reports have obscured the writeoff of nearly $4 million in debt service and operating loans from Pueblo County – labeled “transfer,” thus obscuring the “bad debt” taint – and the ongoing future county contributions have been reflected in Desert Hawk’s 2014 operating budget as “revenue,” thus creating the illusion of future operating profit, while obscuring the highly likely reality of continuing operating losses.
Now it appears that Pueblo West metro district also engages in a bit of obfuscation in its own financial reporting.
Pueblo West metro district’s recently available audited 2012 Comprehensive Annual Financial Report also employs a bit of curious financial reporting wizardry.
The money budgeted each year by Pueblo West metro out of its property tax revenues and loaned to Desert Hawk golf course to fund its debt service payments and supplement payment of its operating expenses is paid out of its General Fund – “Governmental Funds.”
Typically, a loan made by any enterprise or any governmental entity is reported on its own balance sheet as an asset, but not here.
In this case, the loan is reported as an asset in the “Statement Of Net Position” (alternatively the balance sheet) of the Water Enterprise Fund, a fund that charges fees for services and operates like any business enterprise.
In fact, the column in the report where the asset is recorded is headed “Business-Type Activities – Enterprise Funds.”
The asset amount of $4,229,883 is reported on page 20 of the 2012 report. (The independently audited 84 page report was prepared from financial data provided by the metro district.)
The asset amount is made up of “Deferred Water Payments” amounting to $1,279,813 that is appropriately reported as a Water Fund asset because it represents unpaid golf course water bills originating there; but the remaining $2,950,070 is accumulated debt service and operating expense loans, made to Desert Hawk out of the district’s General Fund – “Governmental Funds” – not the Water Enterprise Fund.
Moreover, the asset isn’t identified as a Desert Hawk golf course loan; it’s simply labeled “Notes Receivable.”
There are notations on pages 38 and 39 that acknowledge the county/metro intergovernmental agreement vis-a-vis Desert Hawk; but they don’t explain why the annually appropriated loan money – $317,782 in 2012 – is removed from the General Fund to the Water Enterprise Fund via an obscure “Transfer Out”/ “Transfer In” entry.
It appears to be done to divert attention from restrictions contained in CRS 24-75-601.1 on investment of public funds by governmental agencies.
The report generously reassures: “This financial report is designed to provide our residents, taxpayers (etc.) with a general overview of the District’s finances and to show the District’s accountability for the money it receives.”
Arguably, information in these financial reports has been carefully designed to obscure reality.
Again, it appears that the spendthrift politicians want to keep the public comfortably blindfolded while they contemplate asking voters for more money through a sales tax ballot initiative.
Bill Clemens, Pueblo West
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