Archive for September, 2011

The weather is changing here in central Virginia; a few trees are starting to show a little color, but it will be a few weeks before the real show begins. For now, the roadsides are flanked by lush green forests.

I took a side trip south of Richmond along State Route 5, which angles southeast of the city and serves as a scenic drive to Williamsburg.  My objective was not Williamsburg, but the heart of the Richmond National Battlefield Park at Fort Harrison (near the center of the map) and Shirley Plantation a little farther south on the banks of the James River (where the yellow highlighted line ends).

The route from Richmond to Fort Harrison and Shirley Plantation

The National Park Service uses a log cabin as its headquarters for the battlefield, probably similar to shelters both armies constructed to the rear of the fortified battle lines that stretched from Richmond to Petersburg.

Richmond Battlefield Park headquarters

The siege of the two cities was the culmination of Grant’s arduous effort to end the war using a strategy based on relentless fighting. The campaign started in May 1864 near Fredericksburg, about fifty miles north of Richmond.  Both Grant and Lee inflicted terrible casualties on each other from May into June – about 60,000 dead, wounded and missing for the Union and about half that for the Confederacy.  It was the bloodiest period of the war.

Morale was sagging in the North and Lincoln was worried about his chances for re-election.  His opponent was George McClellan, the former commander of the Army of the Potomac who had failed in his campaign against Richmond in June 1862.

A prolonged siege was not desirable because progress under such circumstances would be measured in feet, not miles.  The people of the North wanted results; they were growing tired of long casualty lists with little to show for the carnage….and the November Presidential election was looming ever so close by the time Grant’s army was immersed in the excruciating process of forcing Lee to extend his defenses in order to protect vital supply lines to the Confederate capital.

The battle for Fort Harrison was far from the largest fight in the war, but the Union Army’s success at capturing the position may have sealed electoral success for President Lincoln.  The fall of Fort Harrison secured a position threatening Richmond and forced Lee to divert troops from his southern flank to cover the approach to the city. Coming on the heels of General Sherman’s capture of Atlanta, it signaled the death knell of the South.  Lincoln was re-elected with ease in part because of these victories.

I took a guided walk led by a National Park Service ranger.  She pointed out a spot where Grant wrote an order to bring up reinforcements to secure the fort from an expected counterattack.  She also noted that fourteen African Americans soldiers (the official designation for black units was United States Colored Troops) were awarded the Congressional Medal of Honor in the short but intense fight.

Some of the many remnants of earthworks are visible behind the ranger. They have become overgrown with vegetation over the years. The area was largely devoid of trees at the time as it was agricultural land.

Shirley Plantation was a short drive down a scenic two-lane road alternating between woodlands and farms.

The late comic actor Leslie Nielsen probably would have said, “Surely, Shirley was the name of the owner of the plantation.”

Nielsen would have been wrong. Shirley was the name of the wife of a former colonial governor of Virginia who never set foot in America.

The great house was completed in 1738.  It is not in the mold of the popular image of Tara from Gone with the Wind. The Georgian style would be a better match for Williamsburg and England.

Shirley Plantation

Amazingly, the plantation has remained with the same family line since it was built.  The Carter family graciously allows visitors through a foundation that manages access and services.  The current Carter owner occupies the upper floors and the basement, all of which are closed to the public.

The tour takes you through the main floor.  All of the furnishings were accumulated by the family since the house was first occuppied.  Some of the paintings and furniture go back even later.

350-year-old willow oak onthe grounds of Shirley Plantation. The James River is in the background. How this specimen survived Hurricane Irene is a mystery to me.

The home escaped damage in the Civil War due to the kindness and care the Carter women provided Union wounded during McClellan’s retreat from the outskirts of Richmond in the summer of 1862.  McClellan was so touched by their kindness, he issued a general order forbidding his troops from ransaking the property.

There is some irony to the protection offered by the defeated Union general.  The house was where Anne Hill Carter married “Light-Horse” Harry Lee, a hero of the American Revolution.  Their son, Robert E. Lee led the Confederate Army that defeated McClellan.

I hope to make Shenandoah National Park my next foray this October when the fall foliage is at  its height.

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City Controller Wendy Greuel loves the periodic fifteen minutes of fame she receives when announcing the results of another performance audit.

The media does not press her with questions as to the underlying causes of inefficiencies and, more importantly, how she plans to pursue them. Her public announcements are nothing more than pablum for the voters to digest in connection with her run for mayor – the campaign for which was the sole reason she ran for controller in the first place.

Greuel’s latest announcement concerning her “audit scorecard” is just another example of form over substance.

A review of the actual scorecard reveals the poor response to audits going back to late 2009 and 2010.

Dennis Zine blames the poor response on untimely information from the departments.  His response to the managers is “work harder.”

Well, at least Zine is a little more forceful than Greuel, who avoids any criticism of City Hall managers’ failure to address findings.

However, both Greuel and Zine ignore the core issue underscoring the city’s abysmal efforts at dealing with inefficiencies: Mayor Villariagosa’s hands-off management style.

Issuing reports and scorecards do not solve problems; aggressive follow-up does, especially for deep-rooted situations created by incompetence. Handing off recommendations knowing that those responsible for addressing them are incapable of taking action amounts to negligence.

Greuel and Zine need to rattle the mayor’s cage.  It means taking an adversarial stance in public, even if it means shining a light on the empty suit running our city. They also need to make public the names of managers who are dragging their feet on implementing recommendations. I would have no reservations if I were in their shoes – they have a responsibility to the citizens to be outspoken advocates in the same way Laura Chick was.

Of course, that might cost Greuel and Zine direct or indirect support for their respective campaigns for higher office.

The public needs to get riled. It won’t with Greuel’s policy of poor follow-up and Zine’s whining about untimely receipt of information.

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The value of Federal tax credits and other breaks topped a trillion dollars, almost equaling the tax revenue received, according to an excellent article in the Washington Post.

Only 8% of the total went to corporations.  Corporate jet benefits were a mere .03% slice.

I don’t like corporate jet write-offs any more than most people, but political rhetoric focused on relatively insignificant inequities in the tax code while ignoring the larger scope of the deficit’s origin is nothing more than pandering. 

Obama  and Congress should be ashamed; we the citizens should admonish the lot of our officials and demand a real solution for the insanity that masquerades for tax policy. It is time to consider a flat tax.

The concept of a flat tax can mean many things to many people.  In truth, no proponent of such a tax has ever proposed one that is purely flat.

I support a flat tax that kicks in above a poverty level.  People can argue over what that level should be. Currently, it is defined as $22,350 for a family of four – way too low in the view of most people.  The poverty benchmark for applying a flat rate should be higher, but it must still be set to a level low enough to incent people to look for work.

There would be no deductions, exclusions or credits – period.  They have become nothing more than tools to buy votes. The economic consequences of all of this well-intentioned largesse have been disastrous.  The devastation in the real estate market is the most striking example…and the one with the most pervasive impact.

Everyone above the assumed poverty benchmark would pay the same rate for all sources of income: capital gains, social security, wages, interest – you name it.

Corporate income taxes should be replaced by gross receipts taxes set a low enough level to be factored into pricing strategies that do not constrict consumer demand.

It would no longer cost taxpayers to fork out $229 to prepare a 1040 with a Schedule A (more if other forms are required) and eliminate almost all of the 4 billion hours of time spent on preparing returns, not to mention reducing anxiety – the healthcare price of which is incalculable.

Corporate tax departments could be reduced, if not entirely replaced in smaller firms by less costly general accounting personnel.

The IRS could devote almost all of its audit and enforcement resources in smoking out tax evaders, including those in the cash-driven underground economy. It would also eliminate most simple calculation errors resulting from complex rules.

The GAO issued a report in June 2011 that stated the tax gap for 2001 (that’s ten years ago) was $345 billion. The gap is defined as the difference between what is owed and paid on time. God knows what the price tag is as of the current year – and He or She does not work for the government.

Nina Olson, the National Taxpayer Advocate and a guest at one of the Cal Society of CPAs annual tax nights,  states: “The causes of noncompliance vary, but simplifying the tax code could address many of them.”

What can be more simple than a flat tax?

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In National Lampoon’s Christmas Vacation, Clark Griswold’s boss Frank Shirley, when confronted over his decision to cut employee bonuses says, “”Look, uh, sometimes things look good on paper, but lose their luster when you see how it affects real folks. I guess a healthy bottom line doesn’t mean much, if to get it you have to hurt the ones you depend on.”

I can say the same about the chained CPI Index, which consistently calculates a lower inflation rate than the traditional CPI. 

While the theory behind it makes sense – people will trade down on their purchases when prices rise – the methodology used to measure those product substitutions will be very subjective.   If it is applied to determine annual increases in social security benefits will it adequately weigh the impact of medical expenses?  Substitution of goods and services would not be very practical when it comes to health expenditures. Using duct tape in lieu of a cast would not be an option.

There are other ways we can rein in social security costs:  for example, gradually raising the retirement age – at least up to seventy and even higher over time if life spans continue to increase. Why that isn’t on the table for immediate consideration is shocking. Do you think that might reflect a lack of courage on the part of Congress?

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For the record, President Obama’s visit to the University of Richmond was not the first time the campus hosted a White House occupant.

The first debate between Bill Clinton and George H.W. Bush was held on the campus.

The school even served as the backdrop for a fictional President played by Geena Davis in the ABC TV series Commander-in-Chief, which aired in 2005.

Her character was a former Chancellor of the University of Richmond, ex-Member of Congress and the Vice President of the United States, who ascends to the Presidency after the death of the sitting President.

For assorted coverage, follow this link.

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I received an e-mail from the Wendy Greuel for Mayor campaign.

It contained a pledge to improve public schools in Los Angeles, but with no recognition of the costs or the source of funding, but since when has Greuel ever been concerned with balancing a budget?

Here are some key excerpts:

“Given California’s unemployment rating as the second highest in the nation, we need to revolutionize the way we think about our education system. The only way to get out of the unemployment hole that we fine [sic] ourselves in is to ensure that our [sic] we are educating and training the next workforce right now–in our schools. By investing in education we will help our kids succeed, and get Californians back to work.”


“We must also improve the infrastructure at our school campuses so that they’re safer, more energy efficient, and last longer. Improving the infrastructure of our schools can save us money in the long run, and it can produce tens of thousands of jobs from the emerging green and clean energy industries.”

First of all, nothing even as noble as improving education is going to reduce high unemployment for the foreseeable future.  Growing our production capacity and exporting more products overseas must occur before we see any marked improvement in the economy…  and we need jobs in order to generate the tax revenues to support education.

Also, “tens of thousands of jobs from the emerging green and clean energy industries” will not emerge from improving the infrastructure of our schools, especially when China dominates the production of solar components and is likely to do so for years to come.

Greuel’s statements are typical of her superficial approach to financial management and represent political pandering to gain support from the teachers’ unions.

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The long-anticipated Neighborhood Council Congress is less than two weeks away.

A dedicated group of volunteers, under the leadership of Cindy Cleghorn of Sunland Tujunga,  have succeeded in wresting control of this event from DONE and City Hall.  For the first time, we will truly have a congress that represents the stakeholders and board members. 

While NCs have formed regional coalitions which have had some success in exerting influence and grabbing the attention of DONE’s stumbling bureaucracy, there is no substitute for a homegrown, citywide effort designed to promote participation and education – the steps vital to the future of the Neighborhood Council movement.  To paraphrase an old saying, we either stand together or collapse alone.

I regret I will be unable to attend due to business commitments. That’s too bad for me since I have been a frequent critic of City Hall’s disdain for NCs and DONE’s gross mismanagement of the system.

If I could attend, I would address one of the most glaring deficiencies perpetuated by DONE – the failure to establish financial control and reporting.

Neither DONE nor Council Member Paul Krekorian understand what is needed to establish a system of tracking expenses.  This is not a personal criticism – we all have our strengths and weaknesses, but accounting is a core function that should be left in the hands of competent professionals…not necessarily CPAs or MBAs, but people with real world experience in managing the finances of a company or organization.

Allow me outline what is necessary to establish a semblance of a system for Neighborhood Councils.

The most basic requirement is a uniform software application.

There are 95 neighborhood councils and I doubt if any two share the same process.  I suspect Excel is the application of choice for many (that’s what I use), but there are probably an assortment of others with comparable features.

Regardless of the system, the common denominator for effective accounting and reporting is the competence of the treasurer. So why should a neighborhood council with a savvy treasurer be interested in migrating to a uniform system?

Well, people come and go, and so do competent treasurers.  You might have a good one today, but there is no guarantee you will have one tomorrow.

A uniform accounting system will assure the existence of a common pool of knowledge.  When a treasurer leaves on short notice, help and advice would be a local phone call away – not to India.  Chances are, a neighboring NC could talk a replacement through the steps of posting an entry, running a report or reconciling activity to the US Bank statement or DONE’s records.

Quicken would be more than adequate to handle the needs of any NC.  It is essentially an electronic check book with basic reporting and reconcilement features. It is also easy to learn and use. A handful of experienced treasurers could train beginners in group classes.

NCs could submit transaction reports to DONE in a common format with a few clicks. But will DONE have the ability to manage the data once it is received?

If DONE restricts its monitoring to just preventing NCs from exceeding their annual allocations, maybe. If the department attempts to track actual expenses versus line budgets, I can assure you total chaos will reign. However, DONE has no business tracking budgets by line items – the staff couldn’t do it back in the days when the headcount was several times larger, so why would anyone think they could do it today?  Besides, budgets will generally be highly individualized. As long as expenditures are in accordance with the city’s purchasing policies and properly documented, it should not make a difference whether funds are spent to support a community project or conduct outreach.  Line item spending decisions are best left to those closest to the neighborhoods.

Even if DONE limits its expense tracking to the aggregate allocation level, I have my doubts they could maintain the process. This is why I strongly support establishing and empowering a Neighborhood Council Accounting Standards Board to assume responsibility for all consolidated reporting and financial supervision of the NCs.

The operations of the Standards Board would be funded by eliminating two positions at DONE and transferring the savings to an account monitored by the City Controller. The Board would draw against the account to fund training and provide personnel support to NCs in need of assistance. Each NC would also have a small portion of its annual allocation transferred into the account as a reserve for remedial interventions. For example, non compliance with funding policies by a neighborhood council could lead to the Standards Board transferring  accounting responsibility to a third-party (if not suspension of funding).

The members of the Standards Board would be elected by NCs (one vote for each Board in good standing) from a pool of candidates with proven skills and appropriate backgrounds.

Consolidation of NC accounting data will require basic balancing controls – simple for the average accountant or bookkeeper, but probably too complicated for DONE’s staff.

Ideally, checking accounts, or convenience checks connected to the US Bank purchasing card accounts, would facilitate a far less costly alternative to demand warrants.  I did submit procedural controls for checking accounts to Mr. Krekorian prior to his NC town halls, but he was reluctant to pursue the concept.

If Neighborhood Councils truly want to be independent, establishing control of finances will be an essential step.

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