American support for conspiracy theories and armed rebellion isn’t new

We just didn’t believe it before the Capitol insurrection

Amanda J. Crawford, University of Connecticut

Rioters are tear-gassed as they storm the U.S. Capitol on Jan. 6, 2021.
 Lev Radin/Pacific Press/LightRocket via Getty Images

Americans had to confront a new reality when an angry mob attacked the U.S. Capitol on Jan. 6, 2021: Some of their fellow citizens were in the grips of a false reality and had resorted to violence to support it.

Conspiracy theories about the 2020 presidential election and the strange alternate universe of QAnon helped drive the attack, which has prompted concerns about further domestic upheaval.

In the year since, a flurry of studies and analyses have tried to gauge the American appetite for conspiracy theories and the likelihood of more violence – even civil war. 

As someone who has studied the conspiracy theories that followed the December 2012 mass shooting at Sandy Hook Elementary School, I keep revisiting a May 2013 poll about gun control that found widespread doubts about that shooting and shockingly high support for armed rebellion.

Almost eight years before the Capitol was attacked by partisans bent on reversing the results of an election, nearly one-third of Americans surveyed – and a whopping 44% of Republicans – said in a 2013 PublicMind poll by Fairleigh Dickinson University that armed rebellion might soon be necessary in the U.S. to protect liberties.

Philip Bump, in The Atlantic on May 1, 2013, called the poll
‘a doozy of a survey.’ Screenshot, The Atlantic.

The finding was so disconcerting that the poll was dismissed by some prominent political observers as too unbelievable to be true.

Motivated reasoning

I recently interviewed the political psychologist who designed the poll, as well as a journalist who blasted its conclusions and now writes about the fallout from the Jan. 6, 2021, insurrection.

Daniel Cassino, a professor of government and politics at Fairleigh Dickinson University and director of the FDU poll, said the 2013 survey sought to gauge the impact of motivated reasoning around gun policy. Motivated reasoning is the emotional bias that can influence judgment or cause someone to dismiss facts that don’t align with their beliefs.

“If reality doesn’t fit what you want it to be, you have to change what you believe – or you have to change reality,” Cassino explained.

That’s where conspiracy theories come in. If you oppose firearm restrictions, then the slaughter of 20 first graders and six adults at an elementary school with an AR-15 is a real problem for you. Cassino explained: “It’s easier for people who believe strongly in gun rights to say it didn’t happen rather than change their minds” about guns.

Smoke fills the walkway outside the Senate Chamber on January 6, 2021,
as supporters of President Donald Trump are confronted by
U.S. Capitol Police. AP Photo/Manuel Balce Ceneta

One in four people surveyed in the 2013 poll said they believed the truth about the school shooting was being hidden to support a political agenda. 

Many others were unsure. People who opposed new gun control measures were more likely to have doubts about the shooting.

Cassino said the question about armed rebellion explored a belief that is normally attributed only to members of militias and extremist groups. The finding didn’t necessarily indicate that regular people would pick up arms, but it did show this notion was becoming part of the Republican partisan identity, Cassino said.

“That is scary because once something becomes part of that belief structure, it becomes self-fulfilling,” he said. The notion of a possible armed rebellion has since spread through the Republican Party and has been espoused by party leaders and elected officials.

“The actual armed insurrection that happened in January [2021] showed us this is a real strain in American politics that has gotten stronger and is not going away,” Cassino said.

Motivated coverage

When the poll came out, some commentators used it to ridicule Republicans. Comedian Bill Maher, for example, tweeted about the study: “So … 44% of Rep.s think an ARMED REBELLION might be necessary in the next few years. So if u say most Rep.s r f–king nuts u’d be off by 7%.”

Others dismissed the findings entirely. The Atlantic slammed the “doozy” of a poll as “highly questionable.”

“The poll is at-best semi-scientific and should probably not be taken seriously,” Philip Bump wrote. “It certainly should not be written about by other media outlets.”

Today, Bump is a national correspondent at the Washington Post who specializes in the numbers behind politics and has written about the Jan. 6 insurrection.

In a recent phone call, he told me he thinks his reaction to the 2013 poll was “over the top.” He still thinks Cassino’s numbers seem high compared to some recent findings, but Bump said he would not dismiss the poll today like he did back then.

“It obviously takes on a much different light given the last eight years,” he told me.

A second Civil War

After the 2013 poll, Cassino said he was inundated with phone calls from people accusing him of being part of a conspiracy to take away guns. Many of the calls were made to his home number and were threatening. The calls, along with the negative media coverage, dissuaded him from asking about armed rebellion in future polls, he told me. Now, he wishes he had collected that data.

Just after the 2021 insurrection, a Zogby Poll found nearly half of Americans – 46% – thought another civil war was likely. The American Enterprise Institute found that 4 in 10 Republicans thought political violence may be necessary. 

A more recent survey published in November 2021 by the nonprofit Public Religion Research Institute found that nearly one-third of Republicans – 30% – agreed with the statement “true American patriots may have to resort to violence in order to save our country.”

Even the pragmatic folks at the nonpartisan Brookings Institution recently cautioned that the possibility of a second civil war should not be dismissed: “We should not assume it could not happen and ignore the ominous signs that conflict is spiraling out of control,” Brookings fellows William G. Gale and Darrell M. West warned.

Opposition to vaccines in the face of a global pandemic and obstinate belief in Trump’s debunked claims about the 2020 presidential election have shown journalists and the public just how much strongly held beliefs can shape the perception of reality, Cassino said.

“People’s beliefs about reality are infinitely malleable,” he said. “I wish it wasn’t the case, because it is really bad for society. I wish I had been wrong.”

[Get the best of The Conversation, every weekend. Sign up for our weekly newsletter.]

Amanda J. Crawford, Assistant Professor of Journalism, University of Connecticut

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Rhode Island COVID crimes and misdemeanors

It’s almost like some state politicians go out of their way to be stupid

By Will Collette

Tuesday, Charlestown’s embarrassing state Representative Blake “Flip” Filippi started off the new session of the RI General Assembly by bringing his best clown act.

Filippi presented his fellow members of the House with a manifesto from his minions in the House Republican Caucus that they will not wear masks on the House floor and the leadership can’t make them….nyah, nyah, nyah.

I can’t believe that with record-high new daily infections and the stress on all the state’s E.R.’s and hospitals this mask-hole would declare:

“The Minority Caucus has determined that maskless House Members may not be involuntarily relegated to the House Gallery. They have a right to conduct legislative business on the House Floor. No rule of the House can de facto usurp this right. Committees [sic] attendance is afforded the same protections.”

Charlestown – and especially Flip’s main supporters in the CCA – this jerk has got to go.

Another one who needs to go is our accidental Governor Dan McKee. News over the weekend is that McKee is allowing workers with COVID to continue to work the wards at the Eleanor Slater State Hospital as well as a private nursing home.

This drew swift condemnation from the state’s largest nurses’ union which released the following statement: 

Lynn Blais, R.N., President of the United Nurses and Allied Professionals (UNAP), the state’s largest healthcare union, representing more than 7,000 nurses and health professionals, issued a statement today in opposition to the state’s recently implemented policy that allows health care workers who are COVID positive to return to work in our state’s hospitals in crisis situations.  

“The UNAP is unequivocally opposed to the state’s decision allowing COVID-19 positive health care workers to work in Rhode Island health care facilities. 

First and foremost, we believe that it's critically important to ensure a healthy workforce in which health care workers are not spreading the virus to other workers and, more importantly, to at-risk patients who are susceptible to the most harmful effects of the virus. 

Second, this policy will likely come with the unintended consequence of exacerbating staffing shortages when more workers in hospitals become infected with COVID-19, get sick, and are forced to quarantine. 

The UNAP believes that only health care workers who are asymptomatic, have a negative test, and continue to wear a mask should be returning to the workforce after 5 days. 

Lastly, we again urge all Rhode Islanders to get vaccinated and boosted if they haven’t already. This is the one proven solution to limit hospitalizations and the resulting staffing issues that these hospitalizations create, and most importantly prevent avoidable death and suffering.” 

In my opinion, health care workers who are not vaccinated against COVID are not really health care workers. I would not want any such person treating me or any member of my family nor should they be working in any health care facility or institution. 

Some say we have to let these COVIDiots continue to work so the health care system can continue operating. I agree with the nurses' union that their presence in the health care system is one of the factors driving the system to collapse. 

Then the Boston Globe discovered that McKee lied when he claimed he didn’t know COVID was spiking in the weeks before Thanksgiving and, had he knew the pandemic was surging, he would have done some things (what, we don’t know) differently.

According to a November 16 internal memo uncovered by the Globe, McKee KNEW COVID was spiking more than a week before Thanksgiving. He issued no precautions and changed no state policies before the holiday gatherings that have led to the worst surge of cases since the pandemic began. 

McKee has been a terrible Governor and I worry how badly things will go if he is allowed to stay in office. I may be premature at raising this, but the Rhode Island Constitution does offer a remedy.

ARTICLE XI - OF IMPEACHMENTS

Section 1. Power to impeach -- Procedure -- Suspension from office impeachment. -- The house of representatives shall have the sole power of impeachment. A resolution of impeachment shall not be considered unless it is signed by one-quarter (1/4) of the members. For the purposes of impeachment, the general assembly and committees thereof shall have the power to compel the attendance of witnesses and production of documents. A vote of two-thirds (2/3) of the members shall be required for an impeachment of the governor. Any officer impeached shall thereby be suspended from the office until judgment in the case shall have been pronounced.

Section 2. Trial of impeachments. -- All impeachments shall be tried by the senate; and when sitting for that purpose, they shall be under oath or affirmation. No person shall be convicted except by vote of two-thirds of the members elected. When the governor is impeached, the chief or presiding justice of the supreme court, for the time being, shall preside, with a casting vote in all preliminary questions.

Section 3. Officers subject to impeachment -- Grounds and effect of conviction. -- The governor and all other executive and judicial officers shall be liable to impeachment. The governor or any other executive officer shall be removed from office if, upon impeachment, such officer shall be found incapacitated or guilty of the commission of a felony or crime of moral turpitude, misfeasance or malfeasance in office. Judges shall be removed if, upon impeachment, they shall be found incapacitated or guilty of the commission of a felony or crime of moral turpitude, misfeasance or malfeasance in office or violation of the canons of judicial ethics. Judgment of incapacity or guilt in a case of impeachment shall not extend further than to removal from office. The person convicted shall, nevertheless, be liable to indictment, trial and punishment, according to laws.

Give us an example of organized crime

 

New funding to help survivors of sexual assault

Almost $600,000 to expand the quality of service to Rhode Island survivors 

Sierra Shelton

Senators Jack Reed and Sheldon Whitehouse and Congressmen Jim Langevin and David Cicilline  announced that Rhode Island Hospital will be receiving $599,966 from the Department of Justice’s Office of Victims of Crime to establish Rhode Island’s first SAFE (Sexual Assault Forensic Examiner) program. 

This federal funding will enable Rhode Island to provide equitable access to quality, trauma-informed medical and forensic care for survivors of sexual assault, and support community resources that prioritize healing and justice.

Here we go again

Return of Environmental Bills Held for Further Study Planned for New General Assembly Session

By ROB SMITH/ecoRI News staff

Rhode Island legislators return to the General Assembly chambers this week, and environmental advocates are hoping to pass an ambitious agenda. 

The Legislature is expected to consider a number of environment and climate-related bills that fell by the wayside last session, which did see the Act on Climate bill signed into law.

At the top of the list of legislative priorities is the reintroduction of the Renewable Energy Standards Act. 

The 2021 bills (H5762 and S0629A) codified an executive order signed by former Gov. Gina Raimondo by requiring energy providers to source 100 percent of electricity sold in Rhode Island from renewable energy by 2030. 

It passed the Senate last year with 30 votes, before stalling in a House committee.

What will 2022 bring in the way of misinformation on social media?

Absent regulation, it's likely to get worse

Anjana Susarla, Michigan State University; Dam Hee Kim, University of Arizona, and Ethan Zuckerman, UMass Amherst

A cutout display at a protest highlighted the connection between
social media and the real-world effects of misinformation. 
Caroline Brehman/CQ-Roll Call, Inc. via Getty Images

At the end of 2020, it seemed hard to imagine a worse year for misinformation on social media, given the intensity of the presidential election and the trauma of the COVID-19 pandemic. 

But 2021 proved up to the task, starting with the Jan. 6 insurrection and continuing with copious amounts of falsehoods and distortions about COVID-19 vaccines.

To get a sense of what 2022 could hold, we asked three researchers about the evolution of misinformation on social media.

Absent regulation, misinformation will get worse

Anjana Susarla, Professor of Information Systems, Michigan State University

While misinformation has always existed in media – think of the Great Moon Hoax of 1835 that claimed life was discovered on the moon – the advent of social media has significantly increased the scope, spread and reach of misinformation. Social media platforms have morphed into public information utilities that control how most people view the world, which makes misinformation they facilitate a fundamental problem for society.

There are two primary challenges in addressing misinformation. The first is the dearth of regulatory mechanisms that address it. Mandating transparency and giving users greater access to and control over their data might go a long way in addressing the challenges of misinformation. But there’s also a need for independent audits, including tools that assess social media algorithms. These can establish how the social media platforms’ choices in curating news feeds and presenting content affect how people see information.

The second challenge is that racial and gender biases in algorithms used by social media platforms exacerbate the misinformation problem. While social media companies have introduced mechanisms to highlight authoritative sources of information, solutions such as labeling posts as misinformation don’t solve racial and gender biases in accessing information. Highlighting relevant sources of, for example, health information may only help users with greater health literacy and not people with low health literacy, who tend to be disproportionately minorities.

The Charlestown Shell Game, Part 2

Inconvenient Truths

By Stephen Hoff

Introduction

On January10, 2022, the Charlestown Town Council is expected to consider at least one proposal to solve the absence of an actual policy for dealing with our large and growing Unassigned Fund Balance (UFB). I discussed this issue in Part 1 (CLICK HERE to read it). 

In this installment, I will walk you through the four competing versions of a new Charlestown Fund Balance Policy. How many of these will actually be on the agenda won’t be decided until the Council holds its agenda meeting on January 5th. 

Charlestown  collects significantly more money every year than it budgets, but rather than lower taxes, the Town Council, controlled by the Charlestown Citizens Alliance (CCA), chooses to let our Unassigned Fund Balance grow, as well as other surplus pockets of cash inside and outside the General Fund.  At issue are four very different views about how to deal with YOUR money that range from the sensible to the ridiculous. 

Here is my best effort to help you understand the differences in the four proposals so you can decide for yourself and hopefully weigh in. 

Here we go. 

There are a number of Inconvenient Truths related to the Budget Commission’s Proposed Fund Balance Policy. The key ones are: 

First, the Town Council has actually received four different proposals for Charlestown’s first-ever Fund Balance Policy (FBP). 

Council President Carney's proposal was not even
considered by the Budget Commission

Council President Deb Carney’s Draft proposal was not even provided to the Budget Commission (BC) or to the Government Finance Officers Association (GFOA) for evaluation, consideration, and discussion as were the other three.  The 4 documents in order of their submission were:

1.   Council President Carney’s Fund Balance Policy Draft in October 2019

2.   Town’s Staff Fund Balance Policy Draft sometime in 2020

3.   Government Finance Officers’ Association (GFOA) Risk-Based Analysis & Stress Test of General Fund Reserve Requirements in May 2021

4.  Budget Commission’s Fund Balance Policy Draft in December 2021           

Second, before adopting Charlestown’s first Fund Balance Policy, Council and Budget Commission members as well as taxpayers need to examine the major differences in the assumptions made in these four documents, because some of them will lead to higher taxation than needed.   

Third, the Budget Commission is wrong when it presumes its version of a Fund Balance Policy is consistent with the GFOA’s Risk Management analysis and that it vindicates their past financial policies and practices.  

Fourth, the Budget Commission provided no opportunity for public comment prior to formally presenting their written fund balance policy draft to the Town Council for approval. It was presented by Dick Sartor to the commission and adopted by the Budget Commission members with less than 25 minutes of internal discussion without making a single change.

This makes one wonder how often it may have been previously discussed outside the public arena since their only previous meeting was in June, six months earlier where consensus had not been demonstrated.  

At this point, we don’t know if the CCA majority on the Council will simply vote on the commission’s proposal or give the issue the care and attention, not to mention public involvement, it deserves.   

How the four proposals differ

How much cash do the proposals recommend Charlestown keep in reserve?

 1.   President Carney’s Fund Balance Policy (FBP) proposes a maximum of 25% of budgeted expenditures or ($7.5 million).   

2.   Town staff proposes neither a maximum nor minimum.  This is surprising and concerning, because our professional staff should have had an opinion long before the Budget Commission weighed in on this very important issue. It’s their job and they should have done it even if it carried some political risk for them, such as contradicting the CCA’s laissez-faire attitude.    

3.   The GFOA analysis recommends we hold a minimum of 14.3% of our budget - ($4.3 million based on the current budget). It leaves the maximum level up to the town based on the town’s confidence it has enough cash on hand to handle  reasonably foreseeable risks. 

When the GFOA presented its Report to the commission on May 19, 2021, the GFOA manager of the study stated that the Town’s most efficient level of confidence was the range between 85% to 90% of budgeted expenditures or $5.5 million to $7.8 million (See video at time interval 37:30). 

The GFOA pointed out that moving past a 90% confidence level to just over a 91% confidence level is increasingly unjustified on a cost benefit basis. For instance, increasing the confidence level to just over 91% from 90% would require an additional cash reserve of $1.2 million or $9.0 million. Remember: the Fund Balance is YOUR tax money. Is a 1% increase in confidence worth a permanent increase of $1.2million in taxes? 

Also note that this $9 million is still below the BC’s recommendation of $10 million.  

The "non-risk factor"

My theory to explain why the Budget Commission proposes to put so much additional money away in cash reserves above what the GFOA recommends relates to what the real risk factors are when calculating the amount of cash required should one or more risks present themselves unexpectedly.   

The Budget Commission is including a non-risk management factor that the GFOA did not itself adopt in its core recommendation. 

The risk management factors that the GFOA considered were the types that actuaries consider such as the likelihood of unusual and unexpected events such as hurricanes, floods, recessions, and sea level rise to name just a few.  

The Budget Commission appears to be including at least $1 million of reserves to insure that it can always pay cash for large capital projects instead of bonding them.  

An example: We are paying cash for much needed renovation and
expansion of the town's animal shelter rather than funding it with a bond.

This is not a traditional real risk factor and that is probably why the GFOA didn’t include it in their core recommendation.  However, if the Budget Commission's recommended fund balance policy is adopted, you will be taxed so that there will always be surpluses so that this questionable financial practice can be sustained.  

For at least the past six years, the Town continued to accumulate un-budgeted surpluses annually (averaging $1 million per year) in order to pay cash for large capital projects instead of bonding them.   

The GFOA ultimately decided to allow Charlestown to continue doing so, apparently because the BC wanted to continue doing what it had been doing, and after all the Town was paying $50,000 for their opinion. 

This practice of paying cash for long-lasting capital projects has been sold to taxpayers as prudent fiscal policy, except that it’s not.  The GFOA recommends a Debt Management Policy as a best practice just as it recommends a Fund Balance Policy as a best practice, surprisingly which neither have yet been adopted by the town.   The GFOA states: 

“Utilizing municipal bonds to fund public infrastructure is a valuable strategy for governments to spread the cost of significant long term assets over their useful life.  It is also important to involve all stakeholders in the decision to issue debt.”

Why didn’t the Budget Commission or the Council include those stakeholders in these decisions since they are the ones actually paying the taxes?  

The GFOA included the “allowance” for Charlestown to continue to use cash instead of bonds only because that has been Charlestown’s peculiar preference. However, it should be stressed that this “allowance” is not a GFOA recommendation, but only an option if the Town chooses to tax residents in advance to maintain it.  

Page 7 of the GFOA’s proposal states: 

“The Town might wish to use reserves for purposes other than mitigating risks - for example building a capital project using cash financing” as opposed to bonding.   Adopting this option in the BC’s FBP would actually be a Debt Policy decision by the Town and not a FB Policy decision.  It makes absolutely no sense to adopt a Debt Management Policy disguised as a Fund Balance Policy just to perpetuate a previously unexamined past practice.

 4.  The Budget Commission’s Fund Balance Policy proposes 33% of budgeted expenditures or ($10 million). That’s 33% of its annual expenditures or approximately $10 million. To find out how much of that $10 million would be yours, simply divide your annual real estate tax bill by 3. For a $300,000 property that would be $818 at this year’s tax rate. $10 million is over 250% more than the Town maintained in 2014 which was $3.9 million.    

How do the four proposals take into account excess cash reserves held in OTHER accounts such as legal reserves, educational reserves, etc.?

1.   President Carney’s FBP would keep 100% of the $7.5 million in the Unassigned Fund Balance (a.k.a. surplus) of the General Fund. 

Her policy states: 

“All amounts approved for expenditure by referendum and Transferred Out of the General Fund to Other Funds for various stated purposes must be returned to the General Fund if those amounts are no longer required for the reasons that they were originally appropriated.” 

Carney’s proposal would simply consolidate all the Town’s surplus cash in the General Fund’s Fund Balance.  Total Reserves would then be used only for unexpected significant contingencies such as failed annual budgets, catastrophic weather events, and other unusual occurrences including the risk of rising sea levels, e.g. emergencies.  It is no surprise why the CCA “disappeared” President Carney’s FBP. 

Further, all town surplus funds would as a result be made accessible and transparent. Currently, taxpayers have to file an open records request and then be charged exorbitant amounts just to see how much surplus the Town has in its various pockets in its various Funds, assuming they know where to look. 

What’s not to like about the simplicity and elegance of this solution unless one has ulterior motives?  

2.   Town staff’s Fund Balance Policy would keep identified cash in the Unassigned Fund Balance of the General Fund but doesn’t discuss what to do with the other possible pockets of cash inside or outside the GF such as counting them toward the  maximum surplus amount ultimately determined by the Council to maintain.  

3.   The GFOA focused its analysis only on the General Fund.  GFOA did acknowledge that the ultimate amount required by the Town could be divided into more than one specific location if the Town desired.  Unfortunately, this would reduce transparency and make it harder for taxpayers to keep track of all the pockets of cash .    

4.   The Budget Commission’s proposal would turn the status quo into formal policy without addressing all the problems I’ve identified above. It also does not discuss how their recommended number would be adjusted, if at all, if there are other pockets of cash previously set aside to address the same risk factors that the GFOA proposal addressed.  

How much cash could be available for appropriation in each of the four Fund Balance plans? 

The amount of cash that could be appropriated would be the difference between the bottom of the range in a FBP and the maximum total amount of cash approved in the same FBP document.  

In President Carney’s FBP, the cash available could be $1.5 million ($7.5 less $6.0).  Anything in excess of $7.5 million would be used to lower the tax rate in the following fiscal year and not be available for other uses.  If another use were to be required, it could be easily included in the same budget where the tax levy reduction would occur and be approved at referendum. 

There would be no change in appropriation procedures that call for a taxpayer referendum for any new capital project costing less than $1 million. If over $1 million the capital project would  be required to be presented as a separate warrant item for taxpayer approval.  

In the Town’s FBP, the cash available is unknown because the amounts are not specified.

The GFOA’s analysis doesn’t apply. 

In the Budget Commission’s proposal, the cash available could be at least $3 million ($10 million less $7 million), and perhaps more if any new un-budgeted surplus falling to FB causes UFB to exceed $10 million.   

The commission states, “Any portion of the year-end operating surplus that contributes to the general fund unassigned fund balance in excess of the minimum target range will be deemed available for allocation to:

Replenish any other established assigned, committed, or restricted funds

Transfer to capital project funds for the capital improvement program and/or deferred maintenance needs

Offset one-time shortfalls anticipated in the general fund operating budget”

There is no provision to possibly return any surplus to taxpayers.  In fact, it is basically forbidden by stating that the use of UFB in excess of target levels shall not normally be applied to recurring annual operating expenditures.  

The language above doesn’t discuss cash “available for appropriations” from UFB, but instead uses the term cash “available for allocation”.  Does this new language remove the taxpayers’ right to approve expenditures at a budget referendum or does the language allow for the TC to now approve the cash for allocation by majority vote?    

1.   To put this in historical terms, could this allow the TC to move $3 million plus to a generic Construction Fund without taxpayer approval?  Out of sight, out of mind, and perhaps out of taxpayer control?

2.  This new language changes and turns on its head the concept of Unassigned Fund Balance being only for “emergencies”.  If this language is allowed to stand, and this “allocation” is made, it will soon follow that tax rates will be increased or remain high.   That is because cash will be reduced in UFB in the GF once it is reclassified, renamed, and/or Transferred Out of the GF leaving a pocket no longer filled to its maximum.  Voids and vacuums will always be filled. 

How does each proposal plan handle all the cash scattered into “Other Funds” so surpluses and appropriations can become more transparent and accountable to the voters?

1.   President Carney’s FBP specifically addresses this issue.  Anything in excess of $7.5 million would be used to lower the tax rate in the following fiscal year and thus not be available for other uses.”  It also requires any surpluses in any other funds outside the GF to be returned to the GF, if not prohibited by Fund restrictions, if it is no longer needed for the purpose for which it was originally appropriated. 

2.   Town’s Staff FBP does not address this issue.

3.   The GFOA’s document does not address this issue.

4.   The BC’s FBP does not address this issue.    

Currently, the budget referendum is the primary way that cash moves from the General Fund to Other Funds outside the GF. It requires taxpayer authorization.  

Once an annual budget is approved, the TC by majority vote can move cash out of the GF to Other Funds, as long as long as the total GF budget is not violated, and authorize its expenditure in any way it sees fit.  

Recently, the Town Council took the position that it by majority vote can re-purpose cash outside the GF for uses other than those approved by taxpayers at referendum, such as $415,000 to cover the 100% unexpected increase in the Animal Control Building. By doing so, there is now an added temptation for the TC to prefer surplus cash to be moved out of the GF to Other Funds, thus giving the TC total control of spending decisions that no longer would be required to be approved by taxpayers at a referendum.  

That is why there needs to be a mechanism in the Town’s 1st Fund Balance Policy that requires unneeded surplus cash to be returned to the GF. That would allow taxpayers to regain their right to control spending through the budget process or by ballot measure. By allowing the Town Council to re-purpose how our budgeted cash is to be spent without taxpayer approval we give them the incentive to continue setting taxes at higher levels than necessary. 

As we’ve seen, high surpluses get used as play money by the Council for pet projects rather than  taxpayer-approved projects. 

 What is the core of GFOA’s Risk Based Analysis? 

The GFOA’s Core Risk Based Analysis includes (1) Primary Risk Factor Extreme Events, such as hurricanes, coastal storms, floods, extreme snowfall, extreme lawsuits, as well as sea level rise.  It also includes (2) General Fund Revenue Volatility & Liquidity Risks, i.e. property taxes, State Aid, other revenues, and liquidity risk.  It also includes (3) Extreme Events Risks, i.e. hurricanes and coastal storms, flooding, extreme snowfall, sea level rise, lawsuits, and hazardous material spills.  All of these are core risk management considerations identified by the GFOA.  

Not known: why the GFOA has two categories (#1 and #3) for “Extreme Events.” 

The GFOA analysis also analyzes (4) Secondary Risk Factors, i.e. leverage, claims on Fund Balance, expenditure spikes, growth, microbursts, and earthquakes.  However, these risks are not included in their core model recommendation because of their deemed low probability of occurrence. 

The GFOA analysis also discussed but did not include in their Core Risk Analysis (5) Risk Factors Not Included In Report, i.e. unknown unknowns, non-historical data, and allowing reserves to be used for purposes other than mitigating risks such as building a capital project using cash financing.   

It is the use of this option that appears to have caused the discrepancy between the GFOA’s core recommendation and the BC’s claim that its proposed fund balance policy is fully supported by GFOA’s recommendation.  

The GFOA then determined that an:  

85% confidence level requires $5.5 million equal to 18.2% of the Unassigned Fund Balance (UFB) 

90% confidence level requires $7.8 million equal to 25.8% of UFB  (an increase of $2.3 million in reserves  raises the confidence level by 5.6%) 

91%+ confidence level requires $9.0 million equal to 29.8% of UFB which the GFOA considers to be questionable when considering its cost/benefit 

What types of expenditures should our total cash reserve be used for?

Proposal	Type of expenditures
Deb Carney proposal	Emergencies
Staff proposal	Emergencies related to economic uncertainty, extreme events and working capital issues (emergencies)
GFOA core recommendations	Emergencies
GFOA Core plus allowance for Budget Commission preferences	Emergencies, surplus accumulations and capital projects
Budget Commission draft	Emergencies, surplus accumulations and capital projects

What specific language concerns does the Budget Commission’s Fund Balance Policy draft raise? 

Richard Sartor of the Charlestown Budget Commission
(photo by Will Collette)

The GFOA Core Risk Analysis document addresses a Total Reserve concept focused only on risk management variables.  It recognized that the Town may have other pockets of Reserves both inside and outside the GF, but it focused only on emergency reserves in the General Fund.  

The Commission draft seems intent on adding non-risk management variables that help justify its past financial practice of over-taxing residents annually and using the taxes raised to pay cash for large capital projects instead of bonding them.  This additional focus by the BC will cost taxpayers several million dollars more in UFB retention than would otherwise be required.  

The BC FBP specifically states that any annual audited GF surplus that normally would  automatically fall to UFB increasing it beyond the Minimum amount required to be maintained, would be deemed available for allocation and could therefore be “repurposed” by the TC either within the GF or outside the GF, including ultimate allocation to capital projects not as yet approved by taxpayers at referendum (think Community Center on steroids).  

In 2019, the CCA wanted to take $3 million from Charlestown's
budget to build a "community center" that was not needed and for
which there were no plans, designs or even location. This led to voters
rejecting the entire town budget for the first time in years.

This, coupled with the BC’s statement that the use of UFB in excess of target levels shall not normally be applied to recurring annual operating expenditures virtually assures that any future surplus could not be used to reduce a future tax levy.  The Town has recorded a consistent average of $1 million surplus each of the past 7 years.  

This would not be expected to change if the above language is adopted and thereby sanctioned by the Town Council.  This represents one example of how the Town’s UFB will be used independent of “emergency” situations examined in the GFOA’s Risk Management analysis. 

By annually transferring un-budgeted surplus’ out of the GF’s UFB into other pockets, the more possible taxation that can occur.  That is because the total surplus cash available in all Town pockets could easily exceed $10 million because it would be considerably less visible without any prohibiting language. 

Changing the allowance for repurposing surplus cash available for allocation to amounts exceeding the Maximum instead of the Minimum amount would be a constructive change to the currently proposed language if an alternative is required, and there is no consensus that all surplus reserves be maintained in the GF’s UFB. 

The BC FBP also specifically states that the Town shall also consider financial resources available in other funds in assessing the adequacy of unassigned Fund Balance in the General Fund. 

This is a good step, but falls short of stating that their $7 million to $10 million proposed range of cash to maintain is not just for the UFB of the GF, but would be reduced by the other of pockets of cash that are also set aside for the same risks analyzed in the GFOA’s risk management document, both in the GF and those Other Funds outside the GF.  

This additional step would not be required if the UFB in the GF were the only designated location to maintain “emergency” reserves.  This would eliminate a great deal of confusion and debate as to what the true number was.  

The BC FBP also specifically states, “The Town will strive to maintain an unassigned fund balance in an amount equal to 23% to 33% of its annual operating expenditures and a cumulative probability of adequacy of 90+%.” 

However, it should be noted that the percentage of confidence determined by the GFOA to be 90+% confident is 29.8% of expenditures and not 33% of expenditures or $9 million, a difference of $960,000 (See Page 6 of the GFOA analysis). 

The BC FBP also specifically states, “Year-end surpluses are an appropriate source for replenishing Fund Balance.” 

Yes, they can be, up to a point, but when they are systemically large there is a problem.  Over-taxation is not fiction.  It can and does exist. 

Adopting the above statement eliminates the need for the BC to use a sharp pencil when they are recommending a budget, and it allows the BC to feel justified in doing so.  

If the Town needs to increase UFB to be in a desired place within a desired range, then create an unbalanced budget with more revenues (taxes) than expenditures showing that there is reason why a surplus needs to be budgeted and taxed. The taxpayers did just that in reverse a few years ago when $854,000 was brought back into the General Fund after the budget had been voted down at referendum.  

While the GFOA compared us to other Towns with similar demographics, neither they or the BC ever listed even 1 town that had approved a Fund Balance policy authorizing a 33% level, much less 3 or more towns. Nor did they provide an example of another similar Town in demographics to Charlestown that opted to allow un-budgeted surpluses to replace bonding for large capital projects.  In fact, the GFOA never even mentioned 33% in its risk analysis document.  

Despite the often-repeated claim that Charlestown’s tax rates are very low, I hope I’ve made it clear that they can and should be lower still. Simply put, our town leaders are holding on to far more surplus cash than we need to meet foreseeable needs – and that’s OUR money, and OUR money needs your voice. 

Stephen Hoff is a CPA with an MBA in Finance, a former municipal finance director who has prepared municipal budgets, financial statements for audits and has conducted municipal audits. He and his wife have lived full-time in Charlestown since 2008 but have family ties going back to the 50’s.

Some examples of CRT in action

For more cartoons by Ruben Bolling, CLICK HERE.

How do you milk sheep?