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How The District’s “Central Services” Costs Are Allocated (According to Us)

IVGID 101 Posted on by

As we’ve discussed elsewhere, according to staff the District’s “central services” represent “services (allegedly) provided by the General Fund under Board [of Trustees (“Board”)] policy”1 to the other District divisions and departments from which monetary transfers are made. But are they really? And if so, under what authority? NRS 354.613(1)(c)2 would appear to be that authority given it addresses “transfer(s of) money from (a local government’s)…enterprise fund(s as long as)…for a cost allocation for employees, equipment or other resources related to the purpose of the enterprise fund(s)” from which those transfers are made. However, given the District’s non-compliance with the mandates of NAC 354.865 through NAC 354.8673 (discussed below), perhaps they are based on no authority whatsoever. Regardless, we believe the District’s “so called” Central Services Cost Allocation Plan4 represents nothing more than another financial “plug” or “subsidy” which pays for the shortfall between budgeted revenues and intentional overspending assigned to the District’s General Fund. Consider the following:

These Same Kinds of Transfers Existed Prior to Passage of NRS 354.613: Pardon us for beginning this discussion by strolling down memory lane. But for decades prior to the passage of NRS 354.613, IVGID staff routinely transferred sums from the District’s enterprise funds to its General Fund as a matter of course. And their admitted intent was was nothing more than to cover the difference between budgeted revenues and expenses so as to balance the budget5. Listen how the District freely admitted this practice at Note 12 to its various Comprehensive Annual Financial Reports6 (“CAFRs”) labeled “Transfers:”

“Each year the District makes transfers between its General Fund and (its) Enterprise Funds in an amount equal to the excess or deficiency of revenues over expenditures7 of the General Fund. The purpose of th(ese) transfer(s) is to…cover General Fund expenses8…(and to) maintain the General Fund’s fund balance at a sufficient level to (financially) support operations9 from year to year.” In other words, a balanced budget5.

And They Were Arbitrarily Determined: from the only revenue sources available to the District, rather than reimbursing the General Fund for the cost of services allegedly provided to operations assigned to the funds from which those transfers were made. That was, the RFF assigned to the District’s Community Services Fund, and the rates and charges collected for the public water and sewer services it furnished. Fixed in the ratio: 50% from the Utility Fund, and 50% from the Community Services Fund10.

On April 30, 2008, the District created the Beach Fund (see Resolution No. 1783) effective July 1, 2008. To avoid the appearance that beach expenditures were being paid by those whose properties were denied beach access, necessary transfers to balance the District’s General Fund budget were modified just as arbitrarily: “50% to Utilities, 45% to Community Services and 5% to the Beach Funds.”11 No mention of “central services.” No equitable distributions nor allocations. And just as we have represented, nothing more than an arbitrary subsidy required to plug the financial deficiency between revenues and expenses assigned to the General Fund.

The Justification For These Transfers: Because the District used those moneys for operating expenses, rather than reimbursing the General Fund for the cost of services allegedly provided to operations assigned to the funds from which those transfers were made, the simple answer to this query was using a means to justify the ends. Similar to what the City of Ely was doing12 which was the subject of former Assembly person Marilyn Kirkpatric’s testimony before the Senate Committee on Government Affairs on such transfers on May 11, 201113 (see discussion below). There “the City of Ely (had) requested a (solid waste) rate increase and transferred the funding to (its) General Fund. When asked how they could increase the rates for trash pickup and then deposit the money into the general fund, Ely officials indicated (because) the law does not say they cannot.”14 In other words, the ends justified the means.

And No One Came Forward to Argue The Law Does Not Declare IVGID Can Take Whatever Means: necessary to justify the ends. For as far back as we’ve been able to research, rather than reducing expenses assigned to the District’s General Fund in order to live within its financial means, staff have simply transferred the monies required from its Utility and Community Services15 Funds16 to balance the General Fund budget. Therefore just like Recreation (“RFF“) and Beach (“BFF“) Facility Fees17 are the financial subsidy to the District’s Community Services and Beach Funds, respectively], central services cost transfers are really nothing more than another involuntary subsidy intended to pay for intentional staff overspending assigned to the District’s General Fund!

Yet That‘s Exactly What Dillon’s Rule Instructs: Given Nevada is a Dillon’s Rule state18, and the Rule is applied to county, city and other local governments19. As elsewhere stated, Dillon’s Rule20 instructs:

“That a (local government) possesses and may exercise only the following powers and no others: (a) Those…granted in express terms by the Nevada Constitution or statute; (b) Those…necessarily or fairly implied in or incident to the powers expressly granted; and (c) Those…essential to the accomplishment of the declared objects and purposes of the (local government) and not merely convenient but indispensable.”

So where in NRS 318 does it instruct in express terms that a general improvement district’s (“GID’s”) General Fund can subsidize the costs of an enterprise fund activity? Where did it instruct back in 2011-12 that revenues realized from a GID’s enterprise fund activity could be transferred to its General Fund? The answers are nowhere, and nowhere! “The absence of cases involving…application (of Dillon’s Rule to) special districts…most probably…stems from the fact that such districts are created to carry out relatively narrow, statutorily specified purposes with the method of financing those activities also prescribed by the underlying statute. This is far different from the situation Nevada cities and counties face: an increasing myriad of functions imposed by the state or federal governments, with a taxing regime almost fully centralized and controlled by the state government.”

And not that there is any doubt, let alone reasonable doubt, but NRS 244.137(4) and NRS 268.001(4) instruct that should there be any, it “is (to be) resolved against the (GID) and the power…denied.” Therefore advancing the narrative that because the law does not expressly say that a GID may not engage in such activities means it’s free to do so, simply doesn’t cut it! And it didn’t cut it prior to 2011-12.

And to Prove Our Point, Examine The Facts: The reader can see the above observations played out in the summary spreadsheet below which depicts relevant General Fund entries for the seven (7) year period immediately preceding 2012.

YearRevenuesExpensesDeficiencyTransfersExcess
(Deficient)
Transfers		Fund
Balance
200521$ 2,615,088$ 2,640,436$ 25,348($ 560)($ 25,348)$ 415,774
200622$ 2,694,291$ 2,589,711($ 104,580)$ 128,798$ 128,798$ 415,774
 200723$ 2,619,260$ 2,808,582 $ 189,322$ 389,322 $ 200,00024$ 615,774
200825$ 2,493,880$ 2,956,832$ 462,952$ 462,952$ 0$ 615,774
200926$ 2,227,172$ 3,090,704$ 863,582$ 863,532$ 0$ 615,775
201027$ 1,961,140$ 3,154,747$ 1,267,842$ 1,267,842$ 0$ 615,775
201128$ 2,109,201$ 3,507,420$ 1,398,219$ 1,395,963($ 2,256)$ 615,775

Note how the numbers in the Deficiency column above fairly consistently match those of the Transfers column. In other words, transfers represent the amounts required to plug the shortfall between budgeted revenues and intentional overspending.

The Legislative Response to Enterprise Fund Transfer Abuse: According to former Assembly person Kirkpatric14:

“Enterprise funds have become a mechanism for local governments to transfer funding from the intended use to be used for other things. It is happening in our smallest and largest cities. As an example, the City of Ely requested a (solid waste) rate increase and transferred the funding to (its) General Fund. When asked how they could increase the rates for trash pickup and then deposit the money into the general fund, Ely officials indicated (because) the law does not say they cannot. In North Las Vegas, City officials have been practicing this type of transfer since 1977. My constituents have received an increase of 35 percent in their water and sewer rates, and most of the money is placed in the General Fund…This is a practice being utilized across the State. As ratepayers, we continue to pay these rates and the increases keep coming. The money brought in by the rate increases is being utilized for…new equipment, computers and other things rather than just water and sewer service…When enterprise funds were originally created, they were supposed to ensure (that) the money (generated from operations assigned to these funds would be)…used for specific items…Now enterprise funds are being transferred on a regular basis…This is not fair to the ratepayers who continue to pay these increased fees…We…need to change how the enterprise funds are being utilized. These entities need to stop using these enterprise funds as a revenue source because it has become a way to increase fees on constituents…Enterprise funds are not meant to be a mechanism for moving dollars from one category to another.”

Assembly person Kirkpatric’s legislation (which became NRS 354.613) was intended “to stop…these entities (from)…using…enterprise funds as a revenue source.”14 For this very reason, NRS 354.613(1)(c) instructs that:

“The governing body of a local government may (not)…loan or transfer money from an enterprise fund, money collected from fees imposed for the purpose for which an enterprise fund (i)s created29(,) or any income or interest earned on money in an enterprise fund (but)…(c) for a cost allocation for employees, equipment or other resources related to the purpose of the enterprise fund.”

Hence creation of the “cost allocation exemption for (the costs of) employees, equipment or other resources related to the purpose of the enterprise fund.” Which explains why staff were quick to change their initial description of “interfund transfers” to “central services cost” transfers (see discussion below). In other words, staff’s current explanation for its enterprise fund transfers was “undoubtedly drafted with [NRS 318.197(1)] firmly in mind!”30

Thus Everything Changed With The District‘s 2011–12 Transfers: On June 10, 2011 NRS 354.613 was adopted. This legislation provided that after July 1, 2011 “loan(s) or transfer(s of) money from an enterprise fund” were made unlawful31 unless the loan or transfer were made:

“(a) In accordance with a medium-term obligation issued by the recipient in compliance with the provisions of chapter 350 of NRS…

(b) To pay the expenses related to the purpose for which the enterprise fund was created;

(c) For a cost allocation for employees, equipment or other resources related to the purpose of the enterprise fund…or

(d) Upon the dissolution of the enterprise fund.”

And unsurprisingly, the District’s description of these transfers changed32 as well:

Because “the District’s General Fund(‘s) primary function is to provide administrative support for (its) Proprietary Funds (and) the General Fund incurs costs for Executive Management, Accounting, Information Technology, Human Resources, Risk Management and other activities(,) these costs, net of other revenues received by the General Fund, are recovered through an allocation plan that results in maintaining a static fund balance for the General Fund.”33

Then for fiscal year 2012 the District’s practice of transferring funds from its Utility, Community Services and Beach enterprise Funds to its General Fund continued, however, the labeling of these transfers changed to “Central Services Cost Allocation(s).” And their description changed34 as follows:

“The District allocates the shared costs of Accounting and Human Resources…under a plan which considers wages, benefits, full time equivalents and services and supplies as…bas(e)s for determining charges. The charges are (treated as)…budgeted expenses. (And) the revenue generated by the allocation is recorded separate of…expenses.”35

And now you know!

Yet Today, These Same Transfers With a Different Name, Continue Unabated: The reader can see from the summary spreadsheet below how Central Services Cost transfers continue to cover the financial shortfall between budgeted revenues and expenses rather than reimbursing the General Fund for the cost of services allegedly provided to operations assigned to the funds from which those transfers were made. With one slight deviation. As the transfers have increased, so has the overspending. In other words, “fund balance creep.”

YearRevenuesExpensesDeficiencyCentral Services
Cost Transfers		Excess
(Deficient)
Transfers		Fund
Balance
201118$ 615,775
201236$ 2,458,945$ 3,164,826$    705,880$ 1,074,000$ 368,120$ 983,893
201337$ 2,547,137$ 3,648,330$ 1,032,060$ 1,000,200($ 100,930)$ 886,667
201438$ 2,618,192 $ 3,196,367 $  577,370$ 1,068,996 $ 490,821$ 1,391,021
201539$ 2,793,122$ 3,783,856$ 990,734$ 1,101,000$ 110,266$ 1,501,287
201640$ 3,035,284$ 3,589,578$ 554,294$ 1,123,020$ 568,706$ 1,819,993
201741$ 3,017,379$ 3,752,102$ 734,723$ 1,177,200$ 442,477$ 1,862,249
201842$ 3,266,537$ 3,700,016$ 433,479$ 1,094,000$ 600,521$ 2,522,786
201943$ 3,653,450$ 4,054,406$ 400,956$ 1,169,400$ 768,444$ 3,765,586
202044$ 3,876,422$ 4,079,259$ 202,837$ 1,367,400$ 1,164,563$ 4,630,149
202145
202246
202347
202448

So as the reader can see, historically the purpose of these transfers has been nothing short of securing “the net amount needed from…other District functions to cover General Fund” overspending. Again, nothing related to central services. Nothing related to equitable distributions nor allocations. And nothing related to payment for services allegedly furnished by the General Fund to other District departments from which those transfers were made.

General Fund Balance Creep: As can be seen from the above-summary, “at the end of the (2010-11) fiscal year(, the beginning of the 2011-12 fiscal year), the District’s General Fund balance remained unchanged at $615,774.”49 Yet the “unassigned fund balance of $6,010,867…as of June 30, 2022…serve(s) as a useful measure of a government’s net resources available for spending at the end of the fiscal year.”50 This sum represented a $5,395,093 increase over ten (10) years, or an average increase of $539,509 per year for each and every one of those ten (10) years! Please explain to us how this can happen when the District intentionally budgets to spend more in its General Fund than revenues, and Policy No. 7.1.0 instructs otherwise51?

2020-21 Transfers: Let’s examine budgeted revenues assigned to the District’s General Fund for 2020-2152 to see if staff’s same subsidy pattern is repeated. The reader can see that yearly revenues total $3,571,80053 broken down as follows: $1,782,000 in property taxes, $1,656,000 in consolidated and LGTA taxes, $131,400 in interest, and $2,400 in other income. Now let’s examine budgeted expenditures54 of $5,170,249 broken down as follows: $529,996 for General Administration, $437,805 for the General Manager, $216,018 for the District’s trustees, $1,013,025 for Accounting, $1,016,687 for Information Technology, $985,733 for Human Resources, $42,646 for Health and Wellness, $278,189 for Communications, and $650,150 for Capital Outlay. Subtracting budget expenditures from revenues, the reader can see we’re left with $1,598,449 of overspending. Now this $1,598,449 doesn’t include $1,471,440 of budgeted central services cost transfers55. When these transfers [a bit forty-one percent (41.2% to be exact) of all budgeted General Fund revenues from all sources combined are factored in, the reader can see that essentially all of the District’s General Fund overspending (but for $127,009) was covered. And we presume this deficiency was covered by excess fund balance.

2021-22 Transfers: Let’s examine budgeted revenues assigned to the District’s General Fund for 2021-2256 to see if staff’s same subsidy pattern is repeated. The reader can see that yearly revenues total $3,918,240 broken down as follows: $1,960,610 in property taxes, $1,889,530 in consolidated and LGTA taxes, $65,700 in interest, and $2,400 in other income. Now let’s examine budgeted expenditures57 of $4,135.303 broken down as follows: $713,393 for General Administration, $480,969 for the General Manager, $256,492 for the District’s trustees, $347,403 for Accounting, $1,270,899 for Information Technology, $164,534 for Risk Management, $155,798 for Human Resources, $23,228 for Health and Wellness, $281,149 for Communications, and $441,438 for Capital Outlay. Subtracting budget expenditures from revenues, the reader can see we’re left with $217,063 of overspending. Now this $217,063 doesn’t include $1,546,624 of budgeted central services cost transfers58. And it doesn’t include “a drawdown of fund balance” by this $217,06359 “to support one-time capital program appropriations.” And it doesn’t include a one time “contingency appropriation of $100,000.”60 And since staff budget to overspend, how can there be an excess fund balance to support one-time capital program appropriations? And even more bothersome, why then the need for $1,546,624 of central services cost transfers? The answer is excess past and current transfers intended to create a slush fund for future unidentified, unbudgeted, and unappropriated “pet” expenditures. When these transfers [nearly forty percent (39.47% to be exact) of all budgeted General Fund revenues from all sources combined are factored into the equation, the reader can see that all of the District’s General Fund overspending was covered. And nearly $1.33 million was manufactured to add to the General Fund’s fund balance.

2022-23 Transfers: Schedule B-9, at page 7 of the District’s 2022-23 budget (“the 2022-23 Budget“) depicts budgeted revenues assigned to the District’s General Fund61. Putting aside the fact history demonstrates that the public cannot rely upon the accuracy of financial information staff choose to share, this page depicts $4,117,002 of budgeted yearly revenues62 broken down as follows: $2,020,769 in property taxes, $2,080,405 in consolidated and LGTA taxes, $13,308 in interest, and $2,520 in other income. Now let’s examine budgeted expenditures63. The reader can see they total $6,773,40564 and include: $922,124 for General Administration, $689,351 for the General Manager, $236,318 for the District’s trustees, $1,335,408 for Accounting, $1,369,322 for Information Technology, $183,290 for Risk Management, $1,012,647 for Human Resources, $86,222 for Health and Wellness, $305,723 for Communications, and $633,000 for Capital Outlay. Subtracting budgeted expenditures from revenues, the reader can see we’re left with $2,656,403 of overspending. This $2,656,403 doesn’t include $1,887,589 of budgeted central services cost transfers65. And it doesn’t include “a drawdown of fund balance66 by $768,81467 to support one-time capital program appropriations.”68 When these transfers [which represent over forty-eight percent (48%) of all budgeted General Fund revenues from all sources combined], and the drawdown of fund balance is factored in, the reader can see that all of the District’s General Fund overspending was covered to the penny!.

Assembly Person Marilyn Kirkpatric’s Prohetic Words of Wisdom: According to former Assemblyperson Marilyn Kirkpatric69. And on May 11, 2011 she gave testimony before the Senate Committee on Government Affairs Committee70 concerning adoption of her bill. In that testimony she stated that “when enterprise funds were originally created they were supposed to ensure that revenues realized from enterprise fund activities would not be transferred to a local government’s General Fund as they (we)re being transferred here. As can be seen from the District’s behavior both before and after adoption of NRS 354.613, the District is circumventing the very reasons why NRS 354.613 was enacted.

IVGID’s Staff’s Admissions: On May 26, 2022 staff inadvertently admitted what many in our community have been alleging for years. That is, that staff’s assertion that the District’s Central Services Cost Allocation Plan represents an “equitabl(e) distribut(ion of) general, overhead and administrative costs Incurred by the District’s General Fund (to)…support the operations of (its)…Enterprise Funds”2 is untrue. Before you listen to staff’s very descriptive words, recall that rather than allocating all of the District’s costs for “employees, equipment or other resources related to the purpose of the enterprise fund” which is assessed73. Now on with what staff tell us:

“Eligible costs to be allocated in the FY2022/23 fiscal year are based on the final General Fund budgets for Accounting (activity 120) – net of interest earnings revenue credited to the General Fund – and Human Resources (activity 150)…Eighty percent (80%) of the eligible costs of the Accounting budget is allocated based on each Fund/Department/Division/Activity’s percentage of District-wide budgeted non-personnel costs, exclusive of capital, debt and transfers. These would include Professional Services, Services and Supplies, Utilities, and Cost of Goods Sold. One-hundred percent (100%) of costs of the Human Resources budget plus twenty percent (20%) of the eligible costs of the Accounting budget are allocated based on each Fund/Department/Division/Activity’s average percentage of District-wide full-time equivalent (FTE) positions, wages and benefits. The combined amounts of Central Services Overhead costs thus allocated to each Department/Division/Activity represent the amounts budgeted as Central Services Overhead costs within each Fund/Department’s budget….The total of the amount of Central Services Overhead charged to all applicable budgetary units for the accounting period (is)…recorded in the General Fund as a credit (against) expenditures within the Accounting (activity 120) and Human Resources (activity 150) budgets, reflective of each activit(y’)s share of recovered costs.”74

In other words, staff want the Board and the public to believe that the District’s central services cost transfers pay for the financial shortfall in its General Fund limited to accounting and human resource expenses. But in reality, that’s not the truth. Those transfers extend to all non-personnel costs assigned to the District’s General Fund exclusive of personnel, capital and debt. Page 114 of the 5/26/2022 Board packet depicts a statement of estimated 2022-23 sources (i.e., revenues) and uses (i.e., expenses) budgeted to the District’s General Fund. That is $4,117,002 of revenue, and $6,773,405 of expenses. Given budgeted personnel costs total $4,279,462, and budgeted capital improvement costs total $633,000, all remaining expenses total $1,860,943. And given there are $1,887,589 of budgeted central services cost transfers, it’s clear that this subsidy pays for all remaining operational expenses and not just those assigned to Accounting and Human Resources. In other words, just as we represent, central services cost transfers are nothing more than a financial subsidy which covers the difference between budgeted revenues and operational expenses assigned to the General Fund. Moreover, they allow staff to disingenuously proclaim they have passed a balanced budget75.

The Legislative Response to Enterprise Transfer Abuse: According to former Assembly person Kirkpatric6, “when enterprise funds were originally created they were supposed to ensure (that) the money (generated from operations assigned to these funds would be)…used for specific items.” Her legislation (which became NRS 354.613) was supposed “to stop…these entities (from)…using…enterprise funds as a revenue source.”6 For this very reason, NRS 354.613(1)(c) instructs that “the governing body of a local government may (not)…loan or transfer money from an enterprise fund, money collected from fees imposed for the purpose for which an enterprise fund (i)s created76(,) or any income or interest earned on money in an enterprise fund (but)…(c) for a cost allocation for employees, equipment or other resources related to the purpose of the enterprise fund.” Hence creation of the “cost allocation exemption for (the costs of) employees, equipment or other resources related to the purpose of the enterprise fund.” Which explains why staff were quick to change its initial description of “interfund transfers” to “central services cost” transfers. In other words, staff’s current explanation for its enterprise fund transfers was “undoubtedly drafted with [NRS 318.197(1)] firmly in mind.”77

Which Extends to Fee Increases From Enterprise Funds: This is an issue closely related to central services cost transfers given “the governing body of a local government may (not)…loan or transfer money from…fees imposed,” and they are separately addressed at NRS 354.613(2)78. For 2020-21 the IVGID Board increased the BFF from $125 to $50079. For 2021-22 it increased the BFF from $500 to $68080. Nowhere was any mention made of whether either of these increases was prohibited by law. Nor that they were necessary for continuation of the purpose(s) for which the Beach Fund was created. Nor whether these increases would be used solely for the purposes for which the fees were collected. Simply transfers from fee increases.

The District’s Response to the Legislature: In 2011 a Central Services Cost Allocation Plan (see discussion below) was adopted by the IVGID Board to arguably comply with the new requirements of NRS 354.613(1)(c). And because NRS 354.613 prohibits most enterprise fund loans and transfers, notwithstanding some are allowed to pay for legitimate central services costs, starting in fiscal year 2014-15 staff chose to change the District’s Community Services and Beach Funds from enterprise4 to special revenue51 (see discussion below). This change rendered the prohibition of NRS 354.613 irrelevant.

The District’s Central Services Cost Allocation Plan: As stated above, in 2011 the IVGID Board adopted a “Central Services Cost Allocation Plan”81. The Plan instructs [in accordance with NRS 354.613(1)] that “except as otherwise provided in this section [i.e., for a cost allocation for employees, equipment or other resources related to the purpose of the enterprise fund], the governing body of a local government may not loan or transfer money from an enterprise fund. Given the District had been guilty of these prohibited transfers for decades, with the enactment of NRS 354.613(1) staff was faced with the obligation of having to concoct some type of cost allocation plan expressly for employees, equipment and other resources in order to be in compliance if it expected to continue business as usual. And as a result, each year thereafter the District has approved a Plan which allegedly allocates a number of such costs and transfers to the General Fund from its Utility, Community Services, and Beach Funds. Notwithstanding, the District disingenuously claims it does not allocate all of these costs. Rather, staff tell the public and the Board that “the District…limit(s) the allocation (of) allowable administrative overhead costs to Human Resources and Finance/Accounting expenditures (only). These costs…are (then) in turn allocated as overhead costs to other programs based upon a methodology that uses staffing [i.e., Full-Time Equivalent (‘FTE’) positions], payroll costs, and services and supplies expenditures.”82

The Committee on Local Government Finance’s (“CLGF’s”) Regulations Insofar as Central Services Cost Allocation Plans Are Concerned: As elsewhere stated, in order to comply with CLGF regulations83, local governments which make transfers from their enterprise fund(s) must determine whether those transfers:

1. Result in “an equitable distribution of general, overhead, administrative and similar costs of the local government;”84

2. Only allocate costs for services and property that have been properly “assignable or chargeable to the cost objective(s) of th(os)e (enterprise) fund(s) for which an allocation has been made85;

3. Only allocate indirect costs for services and property provided “on a centralized basis;”86

4. In any manner allocate payments for any “costs which are billable directly to a specific department, agency or enterprise fund;“87

5. Are “necessary and reasonable for the proper and efficient administration and performance of the enterprise fund(s)” for which an allocation has been made88;

6. Are “of a type generally recognized as ordinary and necessary for the operation of the (enterprise) fund(s)” for which an allocation has been made89;

7. Are reasonable insofar as “market prices for comparable services or property” are concerned90;

8. Are “consistent with sound business practices;”91

9. Are “consistent with…uniform…policies, regulations and procedures;”92

10. Are the product of “prudence under the circumstances considering (staff’s) responsibilities to each pertinent governmental unit (they have assessed)…its employees, and…the general public;”93

11. Have been “adequately…documented…for independent verification;”94 and,

12. Have been “determined in accordance with generally accepted accounting principles”95 (“GAAP”).

Yet when the IVGID Board approves staff’s proposed “Central Services Cost Allocation Plan,”96 no one ever asks, let alone determines, any of these mandatory inquiries. Take a look at the process the IVGID Board went through on May 26, 2022, for instance, when it approved its 2022-23 “Central Services Cost Allocation Plan.”97 Nowhere did IVGID staff raise nor answer any of the questions mandated by the CLGF’s regulations35 before recommending approval of $1,887,589 of transfers to the District’s General Fund. Moreover even if they had, do the answers to these questions (assuming anyone knows what these services actually are) support the cost allocations staff proposed for approval? We submit that the answers to these questions are a resounding “no” and “no.”

Why then was the Plan approved? Because the ends justified the means. In other words, since according to staff it required a $1,984,124 subsidy in the General Fund, rather than making expense reductions so staff could live within their financial means, these transfers were approved. Stated differently, don’t confuse the IVGID Board with unnecessary justifications. Just go ahead and “rubber stamp” staff’s request for funds. That’s exactly what the IVGID Board did. And it does every budget cycle.

Examining the Parameters of IVGID’s Allocated Central Services Cost Transfers: So with the foregoing matters as a primer, let’s examine NRS 354.613(1), the District’s Central Services Cost Allocation Plan, and those regulations promulgated by the CLGF21 on December 20, 201298. In response, the District’s Plan allegedly “allocate(s)…eighty percent (80%) of the eligible costs of the Accounting budget…based on each Fund/Department/Division/Activity’s percentage of District-wide budgeted non-personnel costs, exclusive of capital, debt and transfers. These would include Professional Services, Services and Supplies, Utilities, and Cost of Goods Sold. One-hundred percent (100%) of (the) costs of the Human Resources budget plus twenty percent (20%) of the eligible costs of the Accounting budget are allocated based on each Fund/Department/Division/Activity’s average percentage of District-wide full-time equivalent (FTE) positions, wages and benefits.”99 So with these factors in mind, let’s review the District’s Plan for the fiscal year beginning July 1, 2022100 to determine what it really allocates, if anything at all.

Schedule B-9, at page 7 of District’s 2022-23 budget (“the 2022 Budget“) depicts budgeted revenues assigned to the District’s General Fund101. Putting aside the fact history demonstrates that the public cannot rely upon the accuracy of financial information staff choose to share, this page depicts $5,436,402 of budgeted yearly revenues. Now examine budgeted expenditures assigned to the General Fund. You can see they total $7,773,405102. Subtracting expenditures from revenues, the reader0 can see we are left with $2,337,003 of overspending! But this $2,337,003 doesn’t include $1,319,400 of budgeted central services cost transfers103. When these transfers [nearly twenty-five percent (24.27% to be exact) of all budgeted General Fund revenues from all sources combined] are factored in, we see that overspending really totals a whopping $3,656,403! And rather than the $1,319,400 of central services cost transfers represented, the real number is $2,0362,441104.

Recall that according to former Assembly person Kirkpatric6, when enterprise funds were originally created they were supposed to ensure that revenues realized from enterprise fund activities would not be transferred to a local government’s General Fund as they are being transferred here. Clearly the District is circumventing the very reasons why NRS 354.613 was enacted.

Examining Some of the Particulars of IVGID’s Allocated Central Services Cost Transfers: Contrary to staff’s representations, every operational expense which is assigned to the General Fund other than personnel! Therefore expenses such as the District’s auditing costs, are paid by this subsidy. As are the legal fees the District incurs with Josh Nelson’s firm to attend Board meetings. And the legal fees the District incurs to defend litigation such as citizen Mark Smith’s public records concealment lawsuit. And the Dr. Bill therapy sessions intended to get all of our trustees to work together. And membership fees in the League of Cities and Chamber of Commerce. And expensive accounting and HR software costs. And their annual licensing renewal fees. And Government Finance Officers Association (“GFOA”) membership and conference attendance fees. And the fees to buy a prestigious GFOA “certificate of excellence” for our Comprehensive Annual Financial Report (“CAFR”). And the funds necessary to replace the ad valorem tax revenue lost by Washoe County’s offset to pay for court ordered tax refunds due to the county’s improper assessment methods. And the fuels management/defensible space services which benefit the entire Incline Village/Crystal Bay community rather than just those whose parcels/dwelling units which are assessed105.

We could go on-and-on. It’s everything, and everything that has absolutely nothing to do with providing necessary services to the District’s various enterprise departments.

Therefore the District’s Allocated Central Services Cost Plan Woefully Fails to Equitably Distribute Legitimate District General, Overhead, Administrative and Similar Costs: As stated above, the District’s allocated central services cost plan must result in “an equitable distribution of general, overhead, administrative and similar costs of the local government.”22 So with these requirements in mind, let’s review the District’s Central Services Cost Plan for the fiscal year beginning July 1, 202238 to determine what it really allocates, if anything at all.

The Plan assigns $568,189 to utilities, $524,073 to ski, $231,348 to champ golf, $141,787 to the Rec Center, $141,184 to the beaches, $106,807 to facilities, $77,236 to mountain golf, $60,810 to parks, $20,649 to community services administration, and $15,496 to tennis24 for their fair share of central services costs furnished by the District’s General Fund. Out of 272.4 FTEs, Public Works employs 14.77% of them. Yet it is assessed a whopping 24.77% of all alleged central services costs. In contrast, the central services costs assessed to the District’s other venues by-and-large match the percentage of FTEs employed. For instance, Diamond Peak employs 28.25% of all District FTEs, and it is assessed 27.76% of central services costs. The Champ Golf Course employs 11.41% of all District FTEs, and it is assessed 12.25% of central services costs. The Rec Center employs 8.34% of all District FTEs, and it is assessed 7.5% of central services costs. The beaches employ 8.8% of all District FTEs, and they are assessed 7.48% of central services costs. Facility sales employ 3.37% of all District FTEs, and they are assessed 5.63% of central services costs. The Mountain Golf Course employs 4.26% of all District FTEs, and it is assessed 4.09% of central services costs. The parks employ 3.07% of all District FTEs, and they are assessed 3.22% of central services costs. Community services administration employs 1.39% of all District FTEs, and it is assessed 1.09% of central services costs. Finally, tennis employs 0.81% of all District FTEs, and it is assessed 0.82% of central services costs. Why are the numbers so out-of-whack insofar as Public Works is concerned? We offer two explanations.

First, the more staff assign to Public Works, the less needs to be allocated to the District’s other money losing recreational/beach venues. This means less of these venues’ revenues need to be spent on central services costs. And their net cash flow can be manipulated to show better than actual results (which is exactly what staff do). And second, follow the money. But for possibly Diamond Peak, every one of the District’s other recreational/beach venues loses money and is subsidized by the RFF/BFF, respectively. But that’s not the case insofar as the revenues (water and sewer rates, tolls and charges and solid waste disposal franchise fees) assigned to Utilities are concerned. Without subsidy, the money is there to pay whatever alleged central services costs staff can conjure up! So does this sound equitable to you the reader?

What about the District’s Internal Services Fund106? Even though the number of FTEs (15.4) assigned to this fund totals more than facility sales (9.2), tennis (2.2) and community services administration (3.8) combined, no central services costs whatsoever are assigned. Was this inadvertent or intentional? We submit the latter. Why? Because again, staff is able to artificially report less in expenses than would otherwise be the case. And since these expenses are “passed through” to the District’s other departments which allegedly benefit from the services Internal Services provides, here there is less to “pass through.” And since essentially all of the District’s recreational/beach venues already lose money, and here there are less internal services expenses to pass through, their net cash flow can be artificially manipulated to show better than actual results. Which is exactly what staff do! So does this sound equitable to you the reader?

Next let’s consider that according to staff, its allocation of central services costs is in part based on “one-hundred percent (100%) of (the) costs of…Human Resources.”46 The 40.2 FTEs assigned to Public Works are essentially all full time employees who have worked for the District for many, many years. Moreover, they are unionized. Thus their demands on Human Resources are by-and-large nonexistent. Not so for the employees assigned to the District’s various recreational/beach venues. By-and-large those employees are seasonal, part time, transient, non-benefited, and non-unionized. Their turnover is great. And according to our HR staff, their payroll accounting software is so unique and expensive that we’re unable to economically outsource payroll. In other words, their demands upon Human Resources are monumental compared to Public Works’ measly 40.2 FTEs. Yet the central services costs assigned to Public Works are twice the level they should be when compared to the District’s other funds/functions. So does this sound equitable to you the reader?

Finally, let’s consider payroll costs. And let’s forget for the moment that the District should not be handling payroll for its 1,012 or more other employees107 in-house. What percentage of those payroll costs are legitimately being incurred by Public Works’ 40.2 employees compared to the District’s remaining employees? Yet the central services costs assigned to Public Works are at least twice as much as they should be! So does this sound equitable to you the reader?

Our bottom line conclusion is that these and other similar central services costs are not being equitably allocated.

And the District’s Central Services Cost Transfers Represent Nothing More Than a Financial Subsidy For All Overspending Assigned By Staff to the District’s General Fund: For decades prior to adoption of NRS 354.613 in 2011, IVGID staff routinely transferred sums from the District’s enterprise funds to its General Fund without consequence. Their stated intent was was nothing more than to cover the deficiency between revenues and expenses assigned to the General Fund11. Although afterwards the Board adopted a Central Services Cost Allocation Plan (see discussion above) which members asserted represented an “equitabl(e) distribut(ion of) general, overhead and administrative costs Incurred by the District’s General Fund (to)…support the operations of (its)…Enterprise Funds108, in-truth-and-in-fact the transfers were as they had always been; to cover the deficiency between revenues and expenses assigned to the General Fund. And on May 26, 2022 staff inadvertently admitted this fact was true.

Although staff represent that only “eighty percent (80%) of…eligible costs of the Accounting budget is allocated based on budgeted non-personnel costs exclusive of capital and debt transfers,” and that “one-hundred percent (100%) of (the) costs of the Human Resources budget plus twenty percent (20%) of the eligible costs of the Accounting budget are (similarly) allocated based on…full-time equivalent (FTE) positions,”46 the truth of the matter is that those transfers extend to all non-personnel costs assigned to this fund exclusive of capital and debt. Page 114 of the 5/26/2022 Board packet depicts a statement of estimated 2022-23 sources (i.e., revenues) and uses (i.e., expenses) budgeted to the District’s General Fund. That is $4,117,002 of revenues, and $6,773,405 of expenses109. Given budgeted personnel costs total $4,279,462, and budgeted capital improvement costs total $633,000, all remaining expenses assigned to the District’s General Fund total $1,860,943. And given there are $1,887,589 of budgeted central services cost transfers, it’s clear this subsidy really pays for all remaining operational expenses and not just those assigned to Accounting and Human Resources.

One can affix any label one wants to the subsidy. And one can come up with any methodology one wants which produces the end result staff intends. But at the end of the day a subsidy is still a subsidy. And just as just as we represent, central services cost transfers represent nothing more than a financial subsidy which plugs the difference between budgeted revenues and operational expenses assigned to the General Fund.

Numbers Don’t Lie. But Liars Who Tell Us What Those Numbers Represent Do: This saying is a deviation of the maxim attributed to Mark Twain (i.e., that “figures don’t lie, but liars do figure” (go to https://quoteinvestigator.com/2010/11/15/liars-figure/) more than ninety-five (95) years ago. According to Carroll D. Wright, a prominent statistician employed by the U.S. government at the time, who used the expression earlier on June 25, 1889, while addressing the Convention of Commissioners of Bureaus of Statistics of Labor, “it is our duty, as practical statisticians, to prevent the liar from figuring; in other words, to prevent him from perverting the truth in the interest of some theory he wishes to establish.” And insofar as District staff and our “rubber stamp” Board of Trustees are concerned, they’re not truth tellers! It is for the above-reasons we conclude that the District’s central services cost transfers to its General Fund exhibit the very ills identified by former Assembly person Kirkpatric6. And they are really no different than the forced RFF/BFF subsidies the District levies from local parcel/dwelling unit owners. In other words, the RFF pays for budgeted overspending assigned to the District’s Community Services Fund. The BFF pays for the same overspending assigned to the District’s Beach Fund. And now that you understand what the District’s central services cost transfers really represent, we submit they accomplish the very same thing insofar as the District’s General Fund is concerned. “If it looks like a duck, walks like a duck, and quacks like a duck, then it just may be a duck.”110

So What ‘s the Consequence For Violating NRS 354.613? NRS 354.613(7) provides the answer: “The sole remedy for a violation of this section is the penalty provided in NRS 354.626. (Thus) any person who pays a fee for the enterprise for which the enterprise fund is created111 may file a complaint with the district attorney or Attorney General alleging a violation of this section for prosecution pursuant to NRS 354.626.”112

And as Evidence of “Consciousness of Guilt,”113 Consider How the District Attempted to Circumvent the Protections of NRS 354.613 by Converting its Community Services and Beach Funds from Enterprise to Special Revenue: Faced with added scrutiny over the central services allegedly provided to the District’s various funds other than its General Fund, starting in fiscal year 2014-15, staff chose to eliminate that scrutiny altogether by changing the District’s Community Services and Beach Funds from enterprise4 to special revenue114 Staff’s explanation for this change appears at Note 19, at page 46 of the District’s 2014-15 Comprehensive Annual Financial Report (“the 2014-15 CAFR“): “Effective July 1, 2015, with its new fiscal and budget year, the District began utilizing Special Revenue, Capital Projects and Debt Service governmental fund accounting for (its) Community Services…and…Beach Fund(s), which have to date been accounted for as enterprise funds. The District has changed its approach to the pricing of services and in particular recognizes that the use of the facility fee to provide (financial) resources for capital expenditure and debt service (allegedly) cannot be displayed in a readily understandable fashion for its constituents” in enterprise funds.” Absolute hogwash!

What we had here was nothing short of circumventing the protections created by NRS 354.613! After all, if transfers are made from a fund other than an enterprise one, how can they be prohibited or limited by NRS 354.613? And to further demonstrate that these fund conversions represented circumvention, for fiscal year 2021-22 a new IVGID Board took charge and transitioned the District’s Community Services and Beach Fund(s) back to enterprise fund-types115.

Conclusion: Although you won’t find it clearly stated in the 2011-12 Budget, back then the District budgeted for $771,961 of central services cost transfers116; roughly half ($385,981) came from its Utility Fund117, and the other half came from its Community Services118 and Beach119 Funds120 combined. Given the District’s 2022-23 budgeted transfers of $2,362,44142, allocated central services costs have more than tripled in just ten (10) short years! And this is in spite of the fact the District’s ad valorem and consolidated tax revenues have increased (from $2,405,716121 to $4,101,174122) by a whopping nearly 70.5% during the same time period! And if central services cost transfers increase by an additional $1.2 million for 2023-24 should expenses associated with the District’s public parks and athletic fields be transferred to its General Fund, as staff are proposing, the increase in central services cost transfers within ten (10) short years will be a mind boggling 461%!

As bad as these numbers are, the increase in central services cost transfers from the District’s Community Services and Beach Funds123 has been greater. Nearly 330% (from $357,38256 to $1,178,206) from the District’s Community Services Fund, and nearly 494% (from $28,59857 to $141,19442) from its Beach Fund! Given the District’s Community Services and Beach Funds are budgeted to overspend nearly $7 million annually, this level of overspending is directly subsidized by the RFF and BFF, respectively, and General Fund overspending is largely subsidized by central services cost transfers from these two funds, hopefully the reader sees that overspending budgeted in the District’s General Fund is actually paid for by the RFF, BFF, and the District’s water and sewer rates and charges124. And now you know!

  1. See page 157 of the 2019-20 Budget.
  2. We submit NRS 354.474(1) which instructs that “the provisions of NRS 354.470 to 354.626, inclusive, apply to all local governments,” and general improvement districts (“GIDs”) are local governments. NRS 354.474(1)(a) instructs that “’local government’ means every political subdivision or other entity which has the right to levy or receive money from ad valorem or other taxes or any mandatory assessments, and includes…districts organized pursuant to chapter…318.” The Incline Village General Improvement District (“IVGID”) was created pursuant to NRS 318 (see Washoe County Ordinance No. 97, Bill No. 57 effective June 1, 1961). And NRS 318.225 gives it “the right to levy or receive money from ad valorem…taxes.”
  3. Regulations pertaining to the “Allocation of Costs to Enterprise Fund(s).”
  4. “The documentation of a local government that identifies, accumulates, allocates or develops billing rates for the allocation of the cost of services and property provided by the local government on a centralized basis to its departments, agencies and enterprise funds” (see NAC 354.8654).
  5. ¶1.1 of Board Policy No. 6.1.0 mandates adoption of a balanced operating budget.
  6. See page page 44 to the District’s 2004-05 CAFR, page 43 to its 2005-06 CAFR, page 42 to its 2006-07 CAFR, page 38 to its 2007-08 CAFR, page 43 to its 2008-09 and 2009-10 CAFRs, and page 42 to its 2010-11 CAFR.
  7. Isn’t this an admission staff used these transfers to plug the financial shortfall between budgeted revenues and intentional overspending just as we have represented?
  8. See page 17 of the District’s 2004-05 CAFR.
  9. In other words, to “maintain” intentional overspending while keeping the General Fund fund balance static.
  10. See pages 23, 25 and 26 of the District’s 2007-08 CAFR.
  11. See Note 12 at page 42 of the 2010-11 CAFR.
  12. In 1964 IVGID was forcing its solid waste collector to pay a twenty-percent (20%) fee (i.e., a “franchise fee”) in consideration of a ten (10) year franchise because the District needed money to pay for other intentional overspending [see Whiston v. McDonald, 85 Nev. 508, 512, 458 P.2d 10 (1969)]. Given that fee was passed through to rate payers, solid waste disposal customers were in essence indirectly paying the fee.
  13. See pages 39-40 of the minutes of the May 11, 2011 public hearing session for AB471 before that Committee.
  14. See page 39 of Marilyn Kirkpatric’s May 11, 2011 testimony.
  15. That is, recreation other than the beaches.
  16. The only sources available from which revenues were and currently are consistently generated.
  17. The precursors to today’s central services cost transfers.
  18. In Nevada’s jurisprudence, the Nevada Supreme Court has adopted the Rule[see Tucker v. Mayor and Bd. of Alderman, 4 Nev. 20, 26 (1868); State ex rel. Rosenstock v. Swift, 11 Nev. 128 (1876)].
  19. See Waltz v. Ormsby County, 1 Nev. 370, 377 (1865). In fact to cement the case Dillon’s Rule is the mainstay in Nevada, it has been formally embodied into the NRS [see NRS 244.137(2) and 268.001(2)].
  20. See NRS 244.137(3) and NRS 268.001(3).
  21. See page 26 of The District’s 2004-05 CAFR.
  22. See page 24 of The District’s 2005-06 CAFR.
  23. See page 25 of The District’s 2006-07 CAFR.
  24. For 2006-07 staff retained its description of these transfers (see Note 12 under “Transfers” at page 42 of the 2006-07 CAFR). However, it expanded their purpose to “increase the District’s governmental fund balance…accomplished through ‘Residual Fund Equity Transfers’ (as)…part of the financial plan to provide coverage in (the) General Fund if an extraordinary event occurred” (see page 17 of the 2006-07 CAFR). Thus resulting in an increase in the amount required to balance the District’s General Fund by $200,000.
  25. See page 23 of The District’s 2007-08 CAFR.
  26. See page 23 of The District’s 2008-09 CAFR.
  27. See page 23 of The District’s 2009-10 CAFR.
  28. See page 23 of The District’s 2010-11 CAFR.
  29. That is, user fees.
  30. See Rider v. County of San Diego, 1 Cal.4th 1, 15, 820 P.2d 10 (1991).
  31. NRS 354.626(1) was amended to read that “no governing body or member thereof, officer, office, department (n)or agency (could), during any fiscal year…willfully violate…NRS 354.470 to 354.626.”
  32. See Note 12 at page 42 of the 2010-11 CAFR.
  33. In other words, another way of saying a subsidy to plug the financial deficiency between revenues and expenses assigned to the General Fund.
  34. See Note P at page 33 of the District’s 2011-12 CAFR.
  35. Although this description has slightly changed in the last nearly fifteen (15) years, today it essentially reads the same (see Note S at page 34 of the District’s 2022-23 CAFR).
  36. See page 22 of The District’s 2011-12 CAFR.
  37. See page 23 of The District’s 2012-13 CAFR.
  38. See page 23 of The District’s 2013-14 CAFR.
  39. See page 23 of The District’s 2014-15 CAFR.
  40. See page 28 of The District’s 2015-16 CAFR.
  41. See page 26 of The District’s 2016-17 CAFR.
  42. See page 27 of The District’s 2017-18 CAFR.
  43. See page 27 of The District’s 2018-19 CAFR.
  44. See page 25 of The District’s 2019-2020 CAFR.
  45. See page 21 of The District’s 2020-2021 CAFR.
  46. See page 23 of The District’s 2021-2022 CAFR.
  47. See page 23 of The District’s 2022-2023 CAFR.
  48. See page 2? of The District’s 2023-24 CAFR.
  49. See page 16 of the 2010-11 CAFR.
  50. See page 14 of the 2021-22 CAFR.
  51. ¶2.0 of Policy No. 7.1.0 instructs that “the policy of the District shall be to maintain a target fund balance within the General Fund equal to 15% of annual budgeted expenditures (less transfers and debt), to provide for economic uncertainty, fluctuations in General Fund revenues and unforeseen events that may require of unbudgeted expenditures.” 15% of 2021-22 budgeted General Fund expenditures ($4,135,303) [see page 9, Schedule B-10 of the 2021-22 Budget] totaled $620,295. A whopping 9.69 times the maximum permissible fund balance!
  52. See schedule B-9 at page 8 of the District’s 2020-21 budget (“the 2020-21 Budget“).
  53. Note that we have deducted $1,471,440 of reported “central service(s) cost” revenues to make it easier to compare the apples-to-apples we will be comparing. We will add back in (below) the correct central services cost number before making our final conclusions.
  54. See schedule B-10 at page 9 of the 2021-22 Budget.
  55. See ¶I(a) at page 13, ¶2 at page 15, and page 47 of the 5/27/2020 Board packet.
  56. See schedule B-9 at page 08 of the District’s 2021-22 budget (“the 2021-22 Budget“).
  57. See schedule B-10 at page 09 of the 2021-22 Budget.
  58. See ¶I(a) at page 33, ¶2 at page 35, and page 47 of the 5/26/2021 Board packet.
  59. See ¶2 at page 35 of the 5/26/2021 Board packet.
  60. See ¶2 at page 35 of the 5/26/2021 Board packet.
  61. “The (District’s) General Fund covers the overall Management and Administration of the District…General Fund staff includes Human Resources, Information Technology, Finance and Accounting, and the General Manager’s office. All Staff within the General Fund provide support services to the respective departments with(in) the District as well as an outward presence” to the public [see page 112 of the packet of materials prepared by staff in anticipation of the Board’s May 26, 2022 Board meeting (“the 5/26/2022 Board packet“)].
  62. Note that we have deducted $1,319,400 of reported “central service(s) cost” revenues to make it easier to compare the apples-to-apples we will be comparing. We will add back (below) the correct central services cost number which differs from the $1,319,400 figure before making our final conclusions.
  63. See schedule B-10 at page 8 of the 2022-23 Budget.
  64. To make it easier to compare apples-to-apples, we have deducted $1,000,000 of reported General Administration expenses which rather than being an expense represents a “transfer out” to the District’s Utility Fund (see the $1,000,000 “capital contribution” entry on schedule F-1 at page 19 of the 2022 Budget).
  65. See ¶I(a) at page 030, ¶2 at page 032, and page 045 of the 5/26/2022 Board packet.
  66. “The residual difference between assets and other inflows and liabilities and other outflows, (generally referred to as Fund Balance) for budget purposes” (see page 159 of the 2019-20 Budget).
  67. Since staff budget to overspend, how can there be an excess fund balance to support one-time transfers to the Utility Fund, and one-time capital program appropriations? The answer is past excess transfers intended to create a slush fund for future unidentified, unbudgeted, and unappropriated “pet” expenditures like these.
  68. See ¶2 at page 032 0f the 5/26/2022 Board packet.
  69. Assemblyperson Kirkpatric was the sponsor of AB471 which subsequently became NRS 354.613
  70. See pages 39-40 of the minutes of the May 11, 2011 public hearing session for AB471.
  73. See NRS 354.613(1)(c).71, staff tell the public that “the District…limit(s) the allocation (to) allowable administrative overhead costs to Human Resources and Finance/Accounting expenditures” only72See page 24 of the packet of materials prepared by staff in anticipation of the Board’s May 27, 2020 meeting (“the 5/27/20 Board packet“).
  74. See pages 043-044 of the packet of materials prepared by staff in anticipation of the Board’s May 26, 2022 meeting (“the 5/26/2022 Board packet“).
  75. ¶1.1 of Board Policy No. 6.1.0 mandates adoption of a balanced operating budget.
  76. That is, user fees.
  77. See Rider v. County of San Diego, 1 Cal.4th 1, 15, 820 P.2d 10 (1991).
  78. “The governing body of a local government may (not) increase the amount of any fee imposed for the purpose for which an enterprise fund was created (unless and until it first)…determines that: (a) the increase is not prohibited by law; (b) the increase is necessary for the continuation or expansion of the purpose for which the enterprise fund was created; and, (c) all fees that are deposited in the enterprise fund are used solely for the purposes for which the fees are collected.
  79. See pages 33-179 of the packet of materials prepared by staff in anticipation of the Board’s May 26, 2021 meeting (“the 5/26/2021 Board packet“).
  80. See page 52 of the 5/26/2021 Board packet.
  81. See Policy No. 18.1.0.
  82. See page 24 of the packet of materials prepared by staff in anticipation of the Board’s May 27, 2020 meeting (“the 5/27/20 Board packet“).
  83. See NAC 354.865, et seq.
  84. See NAC 354.8668(5)(a).
  85. See NAC 354.8668(5)(b).
  86. See NAC 354.8654.
  87. See NAC 354.8668(3).
  88. See NAC 354.867(1)(a).
  89. See NAC 354.867(2)(a).
  90. See NAC 354.867(2)(c).
  91. See NAC 354.867(2)(b).
  92. See NAC 354.867(1)(b).
  93. See NAC 354.867(2)(d).
  94. See NAC 354.867(1)(d).
  95. See NAC 354.867(1)(c).
  96. NRS 354.613(1)(c) mandates that such a plan be approved.
  97. See pages 043-045 of the 5/26/2021 Board packet.
  98. Based upon the mandate of NRS 354.613(8) which states that “for the purposes of paragraph (c) of subsection 1, the CLGF shall adopt regulations setting forth the extent to which general, overhead, administrative and similar expenses of a local government of a type described in paragraph (c) of subsection 1 may be allocated to an enterprise fund” with the understanding those “regulations must require that: (a) Each cost allocation makes an equitable distribution of all general, overhead, administrative and similar expenses of the local government among all activities of the local government, including the activities funded by the enterprise fund; and, (b) Only the enterprise fund’s equitable share of those expenses may be treated as expenses of the enterprise fund and allocated to it pursuant to paragraph (c) of subsection 1.”
  99. See page 043. of the packet of materials prepared by staff in anticipation of the Board’s May 26, 2022 meeting (“the 5/26/2022 Board packet“).
  100. See pages 042-045 of the 5/26/2022 Board packet.
  101. The fund used by staff to report system wide revenues and expenses assigned to governmental functions.
  102. See Schedule B-10, at page 8 of the 2022 Budget.
  103. See Schedule B-9, at page 7 of the 2022 Budget.
  104. See page 045 of the 2022 Budget.
  105. So you tell us. What do any of the services represented by any of these costs have to do with necessary, reasonable or equitable costs the General Fund incurs on the District’s other departments’ behaves?
  106. “The District operates three Internal Services divisions that provide direct support to all District venues and services” (see page 174 of the 5/26/2022 Board packet). Their services and tasks are billed out at what is supposed to be a cost recovery/break even rate.
  107. Go to https://transparentnehttps://transparentnevada.com/salaries/2019/incline-village-general-improvement-district/vada.com/salaries/2019/incline-village-general-improvement-district/.
  108. See page 043 of the 5/26/2022 Board packet.
  109. The statement only discloses $4,885,816 of expenses. But this number is deceitful because $1,887,589 of central services cost revenue is depicted as a negative expense. When this negative is reversed and removed from the equation, the reader is left with $6,773,405 of expenses just as we represent!
  110. A test devised by the US labour leader Walter Reuther (1907–70) in the McCarthy era (Go to https://www.oxfordreference.com/display/10.1093/acref/9780199916108.001.0001/acref-9780199916108-e-4080;jsessionid=624359E7E817E1DEDF4DECF3605AA43B#:~:text=and%20Legal%20Notice).-,If%20it%20looks%20like%20a%20duck%2C%20walks%20like%20a%20duck,just%20may%20be%20a%20duck.&text=A%20test%20devised%20by%20the,era%20(seeMcCarthyism%20…&text=PRINTED%20FROM%20OXFORD%20REFERENCE%20(www.oxfordreference.com).,-(c)%20Copyright%20Oxford).
  111. And as the reader will learn, the subject central services cost transfers were funded by various ” fees” paid by local parcel owners.
  112. NRS 354.626(1) states in part that any “officer or employee of a local government (who) willfully violates NRS 354.470 to 354.626, inclusive, is guilty of a misdemeanor and upon conviction thereof ceases to hold his or her office or employment.”
  113. “Consciousness of guilt is the inference that (a) defendant knows…he is guilty of a crime because he has taken one or more of the following actions…a false alibi or explanation for one’s actions…In a criminal trial the District Attorney or prosecutor can show that this type of conduct was due to a defendant’s criminal conduct and…would have not occurred otherwise” (go to https://gambonelaw.com/what-is-consciousness-of-guilt-and-why-its-a-problem/).
  114. NRS 354.270 defines a Special Revenue Fund to mean one “used to account for specific revenue sources, other than sources for major capital projects, which are restricted by law to (the) expenditure for specified purposes.”
  115. See page 38 of the 5/26/2021 Board packet.
  116. See the “transfers in/out” entry at pages 83 and0 103 of the 2011-12 Budget.
  117. See the “transfers in/out” entry at page 114 of the 2011-12 Budget.
  118. See the $357,382 of “transfers in/out” entry at page 153 of the 2011-12 Budget.
  119. See the $28,598 of “transfers in/out” entry at page 253 of the 2011-12 Budget.
  120. This is because for decades, staff arbitrarily transferred: 50% of this deficiency from the District’s Utility Fund, 45% from the District’s Community Services Fund, and 5% from the District’s Beach Fund.
  121. See page 104 of the 2011-12 Budget.
  122. See page 66 of the 5/26/2022 Board packet.
  123. The two funds subsidized by the District’s Recreation Facility Fees.
  124. Which are higher than “just and reasonable.” In Springfield Gas & Electric Co. v. City of Springfield, 292 Ill. 236, 126 N.E. 739, 744 (1920) [affirmed at 257 U.S. 66, 42 S.Ct. 24], and cited with approval by the Nevada Office of Attorney General (“OAG”) at A.G.O. 53-231 (February 9, 1953), it was declared that a public utility’s rates and charges must be just and reasonable. And this term was defined as “simply high enough to produce revenue sufficient to bear all costs of maintenance…operation…interest charges on bonds and…accumulation of a surplus…sufficient to (service) all outstanding bonds,” and none other.

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