THE CAFR SURPLUS REPORT FOR [government]

[ ]=Creator's comments or data required

  Introduction Back to Main Menu
  Summary of Findings  
  Action Requested  
  Economic Impact  
       Introduction  
       Conflict of Interest  
  The Economic Impact Analysis  
  Unemployment and Welfare  
  Summary  

Introduction

Government operations, except for retirement/pension funds, should be on a pay-as-you-go system. Governments should be non-profit organizations. Government potential surpluses, as used in this report, are funds that are not required or needed for the operation of all government operations, funds, accounts, agencies, etc., directly or indirectly, for the year(s) covered by the budget which is usually one or two years.

The purpose of this review of [government]'s Comprehensive Annual Financial Report(s) (CAFR) for the fiscal year [year] was to determine whether potential excess/surplus taxpayers' funds were being retained and invested by the government.

Summary of Findings

Based on our review we believe that [government] had, as of [fiscal year], potential excess/surplus funds of approximately $[amount] [billion or million] or $[amount] per capita or $[amount] for a family of 4.

A summary of the findings by fund/account/entity are contained in Attachment A to this report. [This attachment can be a cleaned up copy (deleting unused or non-potential surpluses rows) of the Review schedule(s) included in the review.]

[Use if applicable and substantial.] To get an appreciation that potential surpluses exist, on Page [ ] of the [year] CAFR, the "Unreserved/ Undesignated" amount indicated $[amount] billion. We believe that "Unreserved" means that the funds are not required to be reserved for any particular project. "Unreserved but designated" means that the funds are not required to be reserved for any particular project but [government] has decided to designate the funds to a particular project. To us, "unreserved and undesignated" means that [government] doesn't know what to do with this money. This one item, $[amount] billion, equals about $[amount] per capita or $[amount] for a family of 4.

{Optional.] In addition we identified some accounts/funds/activities (funds) that we were not able to determine whether potential surpluses existed. We believe these funds should be reviewed in more detail in order to determine what portion, if any, of the balance should be considered surplus. The funds identified are:

  1. Page [of CAFR] - [Fund] .................. [amount]
  2. Page [of CAFR] - [Fund]................... [amount]
  3. Page [of CAFR] - [Fund]................... [amount]
  4. Page [of CAFR] - [Fund]................... [amount]

Total (In Thousands)..................…. $[amount]

Action Requested

Based on our review we believe that a citizens' review committee should be established to perform an audit/detailed review of [government]s financial data and be authorized to determine what funds/ accounts/entities have actual surpluses. The committee, with consultation with the government, should be authorized to determine what surpluses should be returned to the taxpayers.

[However, you may only want the government to forego any proposed tax increases until the surplus issue is resolved beyond a reasonable doubt in the minds of the taxpayers. This report can really put a damper on the politicians' request for tax increases for a particular project or potential "short fall" in the budget which they like to claim. Education and the children are great tear jerkers for politicians' requests. The philosophy is that if you disapprove of their request you are against education and the welfare of children. One of these days someone is going to respond, "The hell with the children, just give us our money back. We'll take care of our children with or without you (politicians).]

[This item is left to the objectives of those that prepare this report. If it is to have an audit or detailed review, then so state all the conditions that should be considered.]

[If you decide on an audit/detailed review, don't agree to have an independent audit paid by the government. You will lose. We do not know of any living thing on earth that bites the hand that feeds it. Independent auditors are not really "independent" as history has shown. They want to be and have pioneered many accounting procedures that have materially helped the people, but survival says they have to walk a tight rope.]

[If you are forced to accept an independent audit, then insist on having your own team work with the auditors. Because if you do not monitor their work as decisions are made, the final report will be issued with no surpluses and you will have no recourse except to scream or go to court where you will lose twice. Once the bureaucrats and politicians realize that an audit/detailed reviewed is a sure thing, they will offer to have an audit performed by independent auditors they control. Be prepared.]

Economic Impact

Introduction

Funds spent or invested in [government]'s economic area will create a greater economic impact than if the funds are invested outside [government]'s economic area. Funds invested outside of [government]'s economic area, even though deposited with local banks, brokers or financial institutions, mostly do not benefit the local area's economy. These investments benefit others. For example, funds invested by the [government] are handled by Wall Street firms and other large financial institutions. These funds are invested all over the world, such as multinational corporations, banks or other world governments and/or their financial instruments. These surpluses are then invested in the economies of others, not [government]'s economy and many times not even the U.S. economy.

On Page [page of CAFR], it reads: [In Billions or Millions]

We believe these funds are not invested in [government]'s economic area. For the maximum benefit we believe that the potential surpluses in [government] should be invested in [government]'s economic area, i.e., returned to the taxpayers and let them do their thing for the maximum benefit of all the residents of [government].

In his testimony to the Senate Humphrey-Hawkins Committee, Alan Greenspan, Chairman of the Federal Reserve, in late July 1999 told the American people what he thought should be done when he stated: "I'm of the old fiscal school that you raise revenues for basic government purposes and if you don't have those purposes you give the money back or you don't tax it... My experience is that private rates of return are significant higher than governments' rates of return."

What he said was:

An August 1999 article in the Wall Street Journal is entitled "Whose Surplus Is it, Anyway?" The article was written by Lawrence B. Lindsey, a former governor of the Federal Reserve and currently a resident scholar at the American Enterprise Institute. This article deals with the "BUDGET" surpluses, not the "CAFR POTENTIAL SURPLUSES" in this report. However, this article has some interesting points to ponder.

"...Some Washington politicians play word games instead of speaking forthrightly...At the same time, this arithmetic allows Washington to return (in the above scenario) 53 cents on the dollar of the higher revenue to the taxpayer and call it a 'tax cut.' The convention behind these semantic acrobatics is the belief that the money belongs to Washington and that anything they let us taxpayers keep is a token of their beneficence."

"Gone, then, are the notions that earnings belong to those who earned them and that government should take only what it needs to fund necessary services."

"This is a fiscal path that will gradually sap the vitality that has made our economic success possible...But when it comes to the on-budget surplus, the best way for Congress to 'spend' this reserve is not to spend it at all. It is to give it back, in its entirety, to the people who earned it in the first place."

Although the above article deals with budget surpluses and not CAFR actual surpluses our recommendation for both are the same "...give it back, in its entirety..."

Conflict of Interest

Some of these potential surpluses are invested in [list -corporate bonds, corporate stock, international bonds, international stock, and derivatives]. We believe this creates a substantial conflict of interest when [government] own stocks or bonds in companies that they may have to regulate or discipline for the benefit of the people. We believe that if a government regulates utility rates, environmental or health issues and the government also owns bonds or stocks, directly or indirectly, in a company that benefits from certain actions or status, then how does a government make an unbiased decision regarding that company?

Returning surpluses will reduce the amount of government's investments in business activities, which should be left to the private sector and reduce the potential for conflicts of interest. We believe that governments, whether directly or indirectly, should not be placed in a position of having a conflict of interest that directly or indirectly can impede their ability to act as a government " ...of the people, by the people, and for the people..."

The Economic Impact Analysis

The following economic impact analysis will demonstrate that returning the surpluses being held by [government] will provide tremendous benefits to all the residents of [government].

We used economic principles which can be found in almost any elementary economics textbook and provide the following results:

ECONOMIC IMPACT ANALYSIS SUMMARY - [Government] S1 REVIEW - 1999.

FIRST YEAR BENEFITS PER CAPITA
Economic Principle Explanation Amount (In Thousands) Per Capita Family of 4
Actual Refund Total Potential Surpluses $11,115,578 $3,402 $13,607
Economic Output Multiplier (EOM)

For every $1 of refund to the people the economic activity increases by $2. This is the increase in Gross State Product (GSP). Results in increased sales for local buinesses.

$22,442,290    
  Increase in GSP - Sales 19.81%    
Economic Earnings Multiplier (EEM)

For every $1 of refund to the people the wages paid to each household wage earner increases by $.50.

$5,610,573 $1,717 $6,868
Employment Ratio (ER)

For each $100,000 in increased economic activity, one additional job is created

224,423 Jobs Created  
Increase in State Revenues resulting in a Reduction in Taxes

All governments earn revenue based on the economic activity in their respective taxing jurisdiction. For every $1 of economic activity, the State receives revenue of approximately $.10. This increase in revenue should result in reduced taxes.

$1,632,872 $500 $1,999
Increase in Federal Revenues

The Federal government earns approximately $.20 - $.24 on every $1 in economic activity.

$4,488,458 $1,374 $5,495
  TOTAL BENEFITS THE FIRST YEAR…   $6,992 $27,969

Unemployment and Welfare

Because of the increase in employment, unemployment and the costs of unemployment would be drastically reduced thereby reducing the tax burden for these costs. Likewise, with the increase in employment opportunities and wage increases, the welfare recipient may decide it is more profitable and easier to get a job than remain on welfare. This also will decrease the welfare costs to the taxpayers.

Summary

We are Americans and residents of [government] and believe that surpluses should be returned to the residents of [government] to benefit the residents and [government]'s economy, not other areas of the U.S. or foreign countries' economies.

In today's environment remember what Lawrence B. Lindsey said (provided above), "...The convention behind these semantic acrobatics is the belief that the money belongs to Washington, and that anything they let us taxpayers keep is a token of their beneficence. Gone, then, are the notions that earnings belong to those who earned them and that government should take only what it needs to fund necessary services."

Remember Thomas Jefferson, "We hold these truths to be to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable rights, that among these are life, liberty and the pursuit of happiness - That to secure these rights, governments are instituted among men, deriving their just powers from the consent of the governed."

We believe that the American people have NOT delegated to governments the power to own, dictate to and control either the people or their property. We believe governments own no property, but act as custodians of the peoples' property. Governments use the peoples' property to provide services to the people.

We believe that any and all surpluses disclosed as a result of any audit/detailed review are the property of the people of [government], and that any law, regulation, procedure or other practice, by any government, whether determined by the courts or not, which states or implies these surpluses are owned by the government and can not be returned to the people, is unacceptable and needs to be repealed, discarded and/or overturned.

If governments own property provided by the people and can do what they want with that property including the retaining of surpluses provided by the people, then we no longer have governments "...of the people, by the people, and for the people...", we have communism operating within a capitalistic society.

[Signature(s) of the preparer(s) or organization.]

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