Haunted by lingering $9 million debt
The United Democratic Party (UDP) is nearing the end of its three-year term at the City Hall in Belize City, and will next Wednesday be seeking re-election for another. There is no outgoing independent audit of the Belize City Council, but on Wednesday, in light of a resurgence of allegations over financial mismanagement at City Hall and its failure to pay in Social Security deductions and contributions (and also income tax deductions withheld from its over 300 workers), Amandala sought an interview with Mayor Zenaida Moya to get some answers on some of the more global questions about City Hall finances.
“We’re surviving. The Council is surviving,” said Dwain Davis, Director of Finance at City Hall.
While the discussions in the news have dealt with individual transactions, there is a bigger problem at City Hall – the fact that it continues to be burdened by a $9 million debt that stubbornly holds its ground even as the Council tries to pay it down. So what is the problem?
An un-audited financial report provided to us by the Belize City Council indicates that it has been running a deficit of over a million dollars for every financial year since April 1, 2006.
Debt service, sanitation, and salaries and personal costs ate up 80% of the council’s revenues during 2008/2009, according to the figures supplied by the Council. The Council depends largely on the payment of property taxes, trade license and traffic license fees, and a subvention from Central Government, to pay the bills.
With the subvention from Central Government included, the Council collects just over $800,000 a month during what it calls its off-peak months – June to November, and roughly $1.7 million a month at the peak – December to May. However, its monthly expenses are over $1 million, according to a document provided to us today by former City Administrator, Englebert Perera.
Davis says that during the off-peak months, City Council falls into arrears for quite a number of its bills. City Hall does not only owe the Social Security Board (SSB), it also owes Income Tax roughly $40,000 deducted from workers’ salaries but not paid in by the Belize City Council, said Davis.
These things, according to Moya and Davis, are nothing new, because the former People’s United Party (PUP) Council left behind a $307,571 debt to Social Security and a $204,623 debt to Income Tax for monies withheld from workers’ salaries (this way back in 2006). The SSB payments had always been in arrears, Davis told us.
The Council was also bound to two garbage collection contracts that are now costing the Council $100,000 every week ($400,000 monthly) to meet. Today, the Belize City Council is faced with arbitration proceedings brought on by the Belize Maintenance Limited (for the cleaning of streets and drains) involving $2 million in arrears. Additionally, the Council owed Sanitation Enterprises Limited (SEL) $840,000 at the end of January. The total debt of City Hall was reported at $8.5 million (See accompanying details).
Davis told us Wednesday that City Hall’s debt is currently $9 million. Roughly $3.6 million of that debt is to the Alliance Bank, and $325,000 to the Belize Social Security Board.
According to Mayor Moya, when she assumed office back in March 2006 she met a $9.18 million debt waiting for the new Council (including an $18,000 debt to Amandala), and they were short $2.18 million in revenues they should have had to run the Council’s affairs, because the departing People’s United Party council pre-collected $2.18 million in property taxes.
To add to that, said Moya, within the first months of their entering City Hall, former Minister of Finance, Said Musa, then the head of the PUP administration, pressured her Council to pay off the bank debts left behind by the PUP Council, despite an additional $700,000 from Musa’s Ministry for City Hall during their outgoing year ending March 2006).
The Council found it self in a financial quagmire, claimed Moya, saying that, “as soon as we got into office they began to pressure us.”
Apart from that, said Moya, they were hit “left, right and center” by other creditors – people she did not even know existed – who came to the Council demanding their money.
The outgoing Council was about to default on a debt with Scotia Bank, and Central Government, which had guaranteed the loan, ended up paying the bill. That $420,000 debt (due since the December before they assumed office) was to be reimbursed by City Hall in 10 monthly installments, beginning June 2006, through direct deductions by the Ministry of Finance from the subvention.
The City Council’s finance personnel advised Central Government that this would have eaten up 55% of the subvention, leaving the Council in a much tighter financial spot, given that June to November is the time of the year when the council is always in the red. (According to Davis, there are only five months in the year, December to May, that the Council is able to comfortably meet its bills.)
Moya has come under fire in recent months for paying hundreds of thousands to her brother, Silvino Moya, and her sister-in-law, Sharon Wade – even while the Council was deducting social security and income tax payments from workers’ salaries while not turning those funds over to the SSB and Income Tax.
We asked Moya how this could have happened, and she claimed that she did not know, and it would have never happened had she known. (More on this issue in a separate article.)
The Council had paid down some of the old debt, but accrued new ones. However, Moya said, while the former Council sold off a lot of the property of City Hall, under her tenure they acquired new assets for the various departments.
For example, the Council got a $3 million overdraft facility from the Bank of Nova Scotia, with which, Moya said, they were able to build a replacement building for $375,000 for the Works Department at Mile 4½ on the Western Highway. The new building was needed because the former Council sold the Pound Yard property where it was based, along with other assets such as the North Front Street temporary market.
From the overdraft funds, said Moya, they paid $106,000 to fix the roof of the Commercial Center, because the occupants had been complaining about leakage, and a further $60,000 was spent to renovate a building acquired for the Transport Department on Youth for the Future Drive. Funds were also spent on constructing a sidewalk for vendors just outside the Fort Street Tourism Village.
They also admitted to using funds from the bank overdraft for paying day-to-day expenses plus.
Moya told us that were it not for the pre-collection of $2,188,484 in taxes by the previous Council, they would have a surplus, and not the almost $1 million deficit reported at the end of January 2009. (Note, however, that the 2005/2006 year showed a surplus on account of the additional $700,000 subvention by the then Central Government to the outgoing PUP council.)
Moya claims that with all the financial challenges at City Hall, there have been some noteworthy milestones: the acquisition of assets such as the Works building, the relocation of the Traffic Department to its own building, the construction of the Fort Street Sidewalk Vendors Market, the Albert and Regent Street infrastructure project, the Battlefield Park project, and the Northside roundabouts and traffic gazebo at the northern ascent of the Swing Bridge, which she said was a replacement of one that had been there in the 1940’s.
She claims that now that Central Government has made legislative changes requiring businesses to pay to the Council garbage collection fees, or face suspension of their trade licenses, the City should be better able to manage and pay for sanitation services. With the changes in effect, she said, we should have a cleaner city.