J. Rick Normand
Sedona AZ (April 25, 2013) – The following is an Open Letter to the City of Sedona Council and Sedona taxpayers and visitors written and submitted by J. Rick Normand, a Sedona resident:
Dear Councilor(s),
If your Budget Oversight Commission doesn’t know what the chart below is telling them about forecasting excise tax collections over the next couple of years, then I would suggest that they shouldn’t even be holding a meeting this week, or any other week, to discuss each line item of anticipated budget expenses.
Why? Because the trend in this chart CLEARLY tells an astute economist two things they must know in order to generate an accurate forecast of retail small business sales, and the capacity of tourists to afford discretionary spending.
They are 1.], since most American’s retirement accounts are invested in Treasury notes and bonds and muni-bonds, those investments are rapidly declining in value, and therefore, so is discretionary spending ability, and 2.] if the Treasury note/bond market tanks, so does the municipal bond market which takes out more spending ability of the public and will, furthermore, deny the City of Sedona any further access to the muni-bond market since its bond (credit) rating has already been downgraded twice, and likely will be for a third time when the rating agencies realize that declining tax revenues in Sedona are resulting in diminution of the annual allocation of general funds revenues to the CAFR Waste Water Enterprise Fund.
If all the Budget Oversight Commissioners can’t understand what I’ve just said above, then their deliberations over line item review of projected expenses will be an exercise in futility, as well as a deliberate diversion of public budget scrutiny, since there can be no meaningful discussion of expenses until they can ascertain if the revenues will be generated to pay for them. You may take my meaning herein and apply it to Staff as well! (see April 19 chart below)
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I would like to explain to the reader’s of this article the significance of the little embedded chart in the article.
All the “econ” analysts at the U.S. Federal Reserve Bank and its regional banks, as well as all those at the U.S. Department of the Treasury, the IRS, the U.S. Government Accounting Office, and all those at all the giant hedge funds, the International Monetary Fund, the Bank of International Settlements, the Bank of England, the Bank of Japan, the European Union Central Bank, and all the Central Banks of the western world, on a daily basis, scan and review thousands of economic charts from which they try to deduce reliable signals as to trends in the U.S. economy. Amongst all those charts, you are looking at the GRANDDADDY OF THEM ALL…the one chart they all look at first.
This is the annualized Ten Year (maturity) U.S. Treasury Note/Bond Price Index chart. What it tells an analyst is the trending direction of the investment trading value of the U.S. Treasury Bond market. The chart is sending out an ominous signal right now! U.S. Treasury Bonds are the mainstay of most of the retirement accounts of individual Americans…the consumer base, if you will. Therefore, if there is to be a Treasury Bond Market price collapse, then so too will there be in the U.S. Stock Market, which could cause a collapse of several major Wall Street Banks (because of derivatives exposure which are extraordinarily sensitive to Treasury Bond market conditions), all of which, together, could result in a serious national economic setback, to say the least.
Major economic setbacks always cause a major decline in U.S. consumer discretionary spending which includes tourism and, in particular, destination traveler activity. Any Sedona City budget forecast on the revenue side of the ledger, as opposed to the expense side of the ledger, must input the signals from this chart and so does any destination marketing proposal from the Sedona Chamber of Commerce. When the next fiscal City Budget and the Chamber’s new Destination Traveler Marketing Plan are presented to Council and the Mayor, the public need to be sure that consideration to the flashing signals in our little chart were given due weight.
Problem is, our Mayor, City Council, Staff and Chamber look to the future with rose colored glasses, projecting pie in the sky tourist dollars and spending them before they are here. Could we be in line for an ‘Enronesque’ collapse? Enron is a company that spent money like it was going out of style and justified their irresponsible behavior by including future ethereal profits in their imaginary bottom line.
Problem is, our Mayor wants to believe our financial future is great and surrounds himself with people who will tell him just that. Does anyone besides J. Rick Normand have the courage to tell Mayor Adams that ‘The Emperor has no clothes’?
Congratulations, Rick. It’s great to see your name appearing in a publication that actually has readers who dare to make comments. Perhaps the reason for that is because they have assurance their opinions will appear, even though they may be in disagreement with those of the publisher.
In fact, it’s been curious to me that since your article a few days ago, notably you received comments from people who in the past have totally panned Sedona Eye for reasons beginning but not ending with a solid statement that they “didn’t like the name or quality of articles” which I have a hunch also had a connection with my own name as being a contributor to Sedona Eye.
Anyhow, your knowledge and expertise I know for a fact was missed when your columns no longer appeared in the hard copy editions of Sedona Times. Even though comments for my own efforts have been reduced to giving advice on availability of transportation from the VOC to Sedona, it will not discourage me from at least trying to reach out with researched and authentic information to convey for others to at least ponder.
Best of luck,
Eddie
Readers;
I’ve already had a couple of people ask me, in person, why I used the words “property taxes” rather than “bed taxes” in the article header. At a Council recent meeting on the 2014 budget, the first of 3 meetings over the past couple of weeks, I believe that Councilor Martinez advocated a 2% increase in the bed tax and happened to mention that he is open to an increase in the sales tax and the implementation of property taxes, hence my headliner since I have a strong feeling that is where all this is eventually heading.
The thing is, regardless of whether or not the overall economy is good or bad, improving or getting worse, the City has no business promoting any kind of business, tourist-related or otherwise.
Let’s make Sedona a crony capitalist free zone. Let’s make Sedona a corporate welfare free zone.
At the very end of the April 23rd Council meeting, at about the 8 pm hour, someone on Council asked about the ‘Property Tax’ to cover our drainage problem. Another Councilor said that would have to be voted in by the residence, at which time Adams cut the conversation and said something about ‘later’. Am I the only one that heard this?
Get ready for their explaination of how we need $$$ for drainage to save our city, while on the other hand there is plenty for Adams special projects. If it weren’t so serious I’ld be laughing My head off.
Our big-spending City Council is currently working on its 10-Year Capital Improvement Plan (CIP). There’s a significant difference in the cost of the humongous number of projects listed and the funds available. The City needs to identify what projects absolutely have to be done, but has not. At this point it looks like City Hall will need more revenue.
A few additional major problems related to the CIP:
(1) The City is already planning to spend on the FY 2013-14 projects in the Plan, so they are pretty much cast in concrete.
(2) Capital projects, including land purchases, will no longer come before the Council on a case by case basis BEFORE funds get budgeted. Transparency and public comments on individual capital projects are at risk.
(3) CYA public participation/comment meetings on the CIP serve to legitimize what has already been done.
you folks need more reasons to avoid shopping or being in sedonaland???? in cottonwood we say you’re the land of the new-voo-rich weirdoods and old pervy dirters and red rocky (deleted by editor)!!!!
I am confirming what Rick said about hearing mention of “property taxes.” In fact, I heard references to these this past Tuesday, April 23rd in the last portion of the City Council’s meeting.
It is ridiculous for the City to continually held hostage to the Chamber and all the other non-profits with their collective hands out.
Any councilor who suggests property taxes before eliminating the Chamber and the non-profit “subsidies” should not expect to be reelected if he or she decides to run again.
I’ve said it before; the council has core objectives and responsibilities to manage the city’s business. It is not the council’s job to give hand outs for every charity, art project or tourist promotion. Council members do not know everything, NO person knows everything. However when someone gets elected, local, state or national, for some reason they think their IQ on everything is escalated to an incredible level of smarts.
Our politicians should be managers, decision makers based on policies that they ran on, and have the sense to hire the professionals to give the proper advice, analyze that advise, and act on it or not. If the advice that is given is inaccurate, bad or going down the wrong track, council must FIRE those who “don’t get it”. You wanted to get elected. Do not expect to be everyone’s friend. If you expect that, don’t run for office.
The COUNCIL has the sole responsibility to hire the right people, and manage a budget within its means. If the council can’t live up to those core beliefs, then the people need to throw them out.
Mike, Mike, Mike. Managers? Like someone said if it weren’t serious I’d be laughing my arse off!
Perfectly stated Mike!
I think Rick should run for mayor, then we would have someone with a brain running the city. I sold all my properties in Sedona, because I saw what crazy irresponsible decisions the city “leaders” where making and planning to make. It is a shame, Sedona used to be a great city to retire and vacation, now with the higher taxes and local city government intruding on locals lives, why stay?
Has anyone looked into the salaries for some of these city servants?? It is appalling, Sedona needs someone who can make smart decisions to run the city, before it becomes a ghost town.
Thank you Mark Quest,
The problem is that two of the disqualifiers for getting one’s name placed on the ballot for position of Mayor are…1] having a brain and 2] having experience in economics and capital markets. God forbid!
Well folds you got what you voted for, are you happy now? You voted to incorporate so what did you expect to get from that but government spending and control. To me the Sedona area had no major problems for the previous 50 years before incorporation but you sure have more than your share now.
One can draw a chart to prove just about anything. If you go to Mr. Normand’s source, stockcharts.com and run the same product ($UST) for a 3 year chart you will see that investors in the 10 year T-Note have done quite well indeed. But of course he didn’t do that. He picked the precise high point and drew from there. I don’t have a horse in this race, I think the council is doing fine, but I hate to see people put up selected info and have their readers swallow it hole. If I wanted to do that I would watch Fox or MSNBC.
1 question and 1 disagreement regarding your article: 1) can you substantiate “since most American’s retirement accounts are invested in Treasury notes and bonds and muni-bonds”? Everything I’ve read states that over 60% of investments in retirement accounts is in equities and no one should have muni bonds in their retirement account. 2) “those investments are rapidly declining in value” – the 10-year Treasury price is up slightly since April 1 of last year (index was at 131.89 vs. 132.67 on your chart) and is up approximately 13% from its close 3 years ago.
Mr. Gordon,
Stockcharts.com is NOT the source of this chart, they merely print the chart released by the Treasury Department and the exchanges. Not to mention, it signals what it signals which is that the U.S. Treasury Market has hit four successive lower highs in the past year which all the world sources that I mentioned clearly recognize as a reliable indicator that the US sovereign debt market in a tailspin. That trend must necessarily be measured from the last highest high point which happened to be a year ago. I can assure you that only God himself could pick that point, not little ole me! This is not something that I’ve surmised sir, it’s something that the Feds and AARP are worried about. Finally Mr. Gordon, as to my readers “swallowing selected info,” trust me when I tell you that most of my readers are better educated in these matters that are you.
and to Jim,
You must not belong to AARP. Ask them about the positioning of most member’s retirement portfolios. As to your statement…”no one should have muni bonds in their retirement account,” I wholeheartedly agree with you, but I would like for you to tell our Councilors that? That would be fun to see.
Robb Gordon
Branch Manager
Bay Equity LLC
(Home Mortgages)
NMLS# 199255
You said “One can draw a chart to prove just about anything…” Isn’t that what got all you residential mortgage brokers in so much trouble in 2008? I’m talking about liar-loans, of course! As I recall, your industry was notorious for just making up financial information that was utterly false to the extent of hundreds of billions of dollars. Yet, now you make an accusation like this! Do’th protest too much, me thinks!
BTW Mr. Gordon,
Since you like to write comments, maybe you should read them as well, especially those about your business at: http://www.yelp.com/biz/bay-equity-home-loans-san-francisco
Just how fine is our fiscally irresponsible City Council doing, Robb?
Except for the 50% General Fund reserve requirement, the City has budgeted to spend the last 20-plus years’ savings over two-years time.
The Mayor and Councilors are spending 69% more and saving less this current fiscal year than last.
There will be no money available for non-WW capital projects when next fiscal year (FY 2013-14) ends.
WW enterprise funds that 60% of us pay into for sewer service–not to mention bond debt service–will be spent down by 50% to pay for non-WW capital projects such as streets and drainage.
The City has over $50 million left in drainage projects. Ref: Jan 22nd “Sedona Storm Water Plan Incomplete After Spending Millions” article by Councilor Ward. $3.5 million will be spent on drainage in FY 2013-14.
What is the solution to the financial crisis the Council is creating for fiscal years beyond 2013-14?
According to Mayor Adams, “GO-Bonds can go before the voters in even years in the fall.” As is known, General Obligation Bonds are paid for annually by businesses and homeowners via property tax bills.
Re: Mayor’s statement that the City can issue General Obligation Bonds
Apparently the Mayor isn’t aware that the City’s bond rating (credit rating) has been dropped twice on his watch and will likely be dropped another grade soon when the rating agencies realize the magnitude of the reduction of the annual General Fund allocation to the CAFR WWEnterprise Fund mentioned by Jean Jenks. At that point, nobody’s going to fund Sedona GO Bonds. More LaLaLand stuff from Council and Staff I would say.
As a business owner in Sedona I’ve see many flaws in our City budget. When revenues are down, City spending should follow suit. This is common sense in any business or government. If our City Council/Mayor cannot accomplish this simple task, as Mike Schroeder stated, “then the people need to throw them out.”
In reading this article, I recognize economic knowledge and leadership. Sedona desperately needs this kind of representation. J. Rick Normand would make an excellent candidate in our next City Council/Mayor election.
Enterprise funds? You mean government collected taxes redistributed? As a California reporter said about enterprise funds in an article, enterprise funds “let city and counties slap a coat of lipstick on the pig to keep the people from smelling it” and in the case of an Illinois lawsuit brought against a parking garage funded with ENterprise funds, and a decade of lawsuits that kept it from being completed including a court trial, the only enterprise funding went into the lawyers pockets before they were all fired after 30 million in fees and losing the case. Who paid? You. Parking garage? No. Eyesore? Yes. Anyone say Dome?
The truth is they don’t care about any chart all they want is more money no matter where it has to come from and that is the bottom line. You can show all kinds of graphs that an intelligent person would pay attention to but remember you are dealing with government thinking they give a damn. Surprise Surprise!
Wall St Journal did big story on airlines losing traffic to most markets but NYC and Boston (pre bomb Boston). Check it out. Midwest, West, Southwest losing big and pointedly the Grand Canyon losing, Vegas & California losing big and because we rely on those economies to push ours that makes Sedona lose big. What about it chamber? What about it city? No one can beg, borrow and steal tourists and dollars that don’t exist. Not enough travel dollars around here to keep an armadillo in boot polish.
Mike S. – Sorry to disagree with you on Council having “sole” responsibility “to hire the right people”…Council’s “sole” responsibilities only relate to Health, Safety and Welfare issues and to represent their Citizens for the betterment of this little town and by virtue of the Open Meeting Laws. Council hires only three: City Manager, Judge and Police Chief. Council does not hire any other Staff. So it all comes down to how the City Manager allows his staff to deal with council and his support of their (Staff) ideas – as he sits back quietly….just waiting to gain more power….or having to remind the Mayor that we don’t have the money to fill Council’s wish list.
Council should be letting the City Manager know what levels and projects and directions they want Staff to take – rather than Staff initialing and dictating/educating to Council by virture of their own committees filled by thier choices of citizens. Hey – were is the balance there or the accountably of balance? I do agree that Council is responsible for managing a budget that should stay within the City’s financial means.
So what is Councils “sole responsibility”? To take responsibility for all aspects of how the Open Meeting Laws work in developing any input to Council for action. I seriously doubt that the new staff driven committees, which are supposed to work off of Council priorities, would survive AG scrutiny and once the people understand the situation, that just may be the way to throw them out. Remember Council members are the ones held Responsible (as elected officials) rather than those hired by the City Manager.
Think Rick and Jim need to slow their row and stop their back and forth and find the way to move forward. Stop the personal stuff. Not too pretty. Both have points. Think you two should combine your talents and speak with one focus.
Rick if you are looking to run for council or mayor, step up and say it.
Kim is very correct about making cuts due to economy; think City Staff took it in the shorts (+ police) yet I just don’t remember any of Councils Grand Plans going under the ax……or did I miss something?
Just my thoughts and my hopes that those of us who vote will start paying attention and either attend the meetings or watch them on Channel 4 and have plenty of popcorn ready..quite the show.
Sharlett
Sharlett,
You said “…think Rick and Jim need to slow their row and stop their back and forth and find the way to move forward. Stop the personal stuff. Not too pretty.” Sharlett, one diametrically opposed comment to one another does not constitute a “row” much less “back and forth.” I don’t even know who Jim is.
As for just stepping up and saying I’m running for Council or Mayor, OK…here it is…no way, never, not in this lifetime would I consider running for any elective office in this town. You assume way to much!
I agree with Sharlett. Pop the popcorn, pour your favorite drink, kick back and be prepare to be entertained. City Council in action on local Channel 4 is reminiscent of the classic Abbott and Costello routine, “Who’s On First? What’s On Second? And ‘I Don’t Know’s On Third!” http://thecelebritycafe.com/feature/2012/12/jerry-seinfeld-billy-crystal-join-jimmy-fallon-who-s-first-sequel-video The reason these Council meetings are confusing to watch is because Council and Mayor are often confused about the issues. J. Rick Normand is right. Not a’ one of them knows anything about economics. Nor do they care to be enlightened. “Boding economic forecasts be damned”, their ‘touchy’ ‘feely’ approach to “decision making” suits them just fine. During one of the recently televised Council meetings, Tim Ernster informed the Mayor that the City cannot afford to buy properties.
The Mayor nearly threw a tantrum – chastised our City Manager for telling him something that he didn’t want to hear – then proceeded to review properties he’d like the City to look into buying (“condemn if necessary”). Adams ended up making a motion for staff to research the City’s purchase of the ADOT property at the Y and one other property. Why buy these properties? Who knows? With no clear direction, cavalier fiscal accountability and pet projects o’plenty, I fear that the inevitable statement to Mayor Adams may eventually be the classic line that Oliver Hardy once said to Stan Laurel, “It’s another fine mess you’ve gotten us into.”
Mr Normand –
1: Look up the term “ad hominem” – I think it describes your personal attacks on me, a person you don’t know – perfectly.
2, I will give you $10,000 if you can locate one so-called “Liar Loan” that was originated by me.
3. It is true that somebody in San Francisco had a grudge against the parent company of the company I work for. Please tell me what that has to do with me.
4. The Treasury Department doesn’t release price charts.
I do apologize for trying to have an intelligent, rational colloquy with you. Very bad judgment on my part. Be assured I will not darken the door of this site again.
To others:
My commentary was not meant to suggest that interest rates are NOT going up – we certainly hope they WILL go up as they have been laid low by a soft economy and Fed stimulus which one hopes will no longer be necessary. I merely suggested that the “sky is falling” mentality displayed here and elsewhere is not necessarily rational. I also would love to see data that support the statement that “most American’s retirement accounts are invested in Treasury notes and bonds and muni-bonds”. I do not think this is true, but I could be wrong. I think the real concern is that the median net worth of an American 65 year-old is $170,000.
I am very disappointed that my integrity would be questioned because I didn’t agree with somebody. I have spent my adult life on Wall Street where I served on the Board of Directors of the American Stock Exchange and served on its adjudiciary council as well as chairing market performance and disciplinary committees.
My avocation has been tournament bridge, where I serve on the ACBL Laws Commission, the National Appeals Committee, and the Goodwill Committee.
What have you done to improve your community, Mr. Normand?
BTW Mr. Normand if you wish to quote Yelp about my business, why not send them to the actual location – http://www.yelp.com/biz/hometown-lending-sedona#atb_alias:AboutThisBizHistory/query:hometown%20lending
Rob Gordon,
My remarks to you were not ad hominem, they were industry specific. As to the “liar loans,” you know quite well that they were all bundled up into Mortgage-backed securities and sold to offshore banks who are now litigating against your industry, and the brokers who sold them, for non-disclosure and false representation. You know very well that the MBS investment packages were designed to make it almost impossible to track individual borrower files. Read Dan Amerman and find out how it was done. Just Google his name. As to your service as a floor specialist and governor of the AMEX, all that tells me is that you were part of the MBS and derivatives problem that is taking down our banking system. And, that fact, in no way means you understand economics. As to your statement that the Treasury Dept doesn’t release price charts, that is correct, the Bureau of Labor Statistics does that. The chart in my article is not a price chart. What are you talking about?
Furthermore, we did not have a dialogue, conference or discuss a literary work, thus no colloquy. Neither did I attack your integrity, rather, I questioned your knowledge. You do need to understand the difference! As to your statement “What have you done to improve your community, Mr. Normand?” this is an ad hominem attack which makes you look somewhat hypocritical, doesn’t it? BTW, the answer is, “far, far more than you and for a much long period of time!” I hope you’re not implying that your hard money loans are a community service (such as mentioned in the SF yelp reviews of your parent company).
P.S. Mr Gordon:
That Treasury Market Chart I used in my article is NOT a price chart [notice in the name caption it says “Price Index”], it’s an INDEX chart. Here are the definitions setting out the differences between the two. You keep confusing stock exchange operations and securities analysis with economics. I suggest you quit trying to be more than you are.
[Securities] Price Chart-as used by Gordon:
A horizontal histogram plotted on the [SINGULAR, or SPECIFIC] chart of a security, which corresponds to the volume of shares traded at a specific price level. Price by volume histograms are found on the Y-axis and are used by technical traders to predict areas of support and resistance.
Price INDEX-as used by Normand:
An INDEX of the changes in the PRICES of GOODS, SERVICES, and FINANCIAL INSTRUMENTS [not a single security], based on the prices of the same goods and services at a period arbitrarily selected as a base, usually expressed as 100.
We are staying in Cottonwood Arizona and found you on Google. Sedona has very pretty mountain area scenery and we liked the drive through it yesterday and took pictures and walked around the Bell. We plan to visit the Grand Canyon by a train ride from here before heading to Zion National Park in Utah for two days. Our rental car is getting an unlimited miles work out. Plan a visit to our homestate Ohio and see green countryside.
I agree with M. Shroeder core values statement and personally like a few of the people on the council. They aren’t all illiterate boobs. A couple but not all.
Read about oak creek transportation meeting. This should answer some congestion problems uptown but it must be simple, free and an open trolley or multiple golf cart style to keep pollution and costs to a minimum. Unfortunately this idea has failed recently here so my support is conditional on trial costs.
Consider these ideas. Social welfare programs require massive funding and the rich in Sedona can be the ones to pay for the city taxes and programs, no one needs a big house when others live in apartments and trailers. If you make under $50,000 you should be exempt from city taxes above 3%. Let the 99% of the Sedona rich pay for city needs. The IRS and banks can coordinate a redistribution to government programs when people file taxes. No one needs big savings accounts or retirement programs if they support a strong social government. If you build a house in Sedona that exceeds 350 sft for every person officially living in it, a city tax at 7% of your income and a one time construction penalty ($500 for every extra foot built) to get an occupancy permit. Trailers should be exempt from taxes and that will encourage more apts and trailers in the city for plenty of affordable housing and they should be allowed even in restricted HOAs because HOAs are elitist and that is wrong.
Constantinople:
Thank you so very, very much for your comment. You can’t imagine how much I appreciate it! Now I can prove what I’ve always said…that “Sedona really does have communists.”