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The reason for this is that the city of Newton has a insatiable desire for more of your money and have
figured that the easiest way to get it is simply to increase electric rates then just transfer the money from
the electric fund to where they want it, give away all the TIF money? no problem just transfer some more in
from the electric department.
The city uses Kemper CPA group to do the required yearly audit and while they do point out the
inter-fund transfers they do not mention in the audit that what is being done is illegal even though they
are well aware it is. You really have to wonder what the point of having a "independent audit" is.
In the past to get around the statute that requires inter-fund loans to be repaid in the same fiscal year they
would borrow the money from the bank for one day, repay the inter-fund loan then the next day make
a new inter-fund loan then repay the bank. Eventually the size of the 1 day borrowing to circumvent the
law Inter-fund loans scheme increased to the point that the 1 day borrowing caused the city to excede the
statutory debt limit in the 2012 audit the auditors pointed out that this was not legal, the city council
heeded the advice and quit the 1 day borrowing and just let the inter-fund loans run year after year.
In audits after 2012 the auditors say that these inter-fund loans "may not be repaid within the next year"
when they know that they are already from previous fiscal year(s) and there is no possibility that they will be
repaid within this fiscal year. I really wonder how independent the audit is and why they fail to point
out what they know is happening, It appears that the auditors are OK with breaking the inter-fund loan
statute but not with breaking the debt limit statute.
This is on top of the fact that the city of Newton already takes 7% of the gross receipts of the electric
department and 4% of the gross of the water and sewer department as a additional hidden tax.
Coincidently (or not) this permanent inter-fund loan practice started at about the same time that the
city council did away with electing the city treasurer and starting on 5/1/13 they now appoint the city
treasurer. They wanted to appoint a city clerk also but the pesky state statutes do not allow for that
so instead they reduced the salary from $36,000.00 to $8,000.00 per year to discourage anyone
from wanting the job, the job is listed as a 8 hour per week job plus "other duties as the City may request
from time to time". "Additional compensation for hours worked in excess of eight (8) hours per week
shall be at the City’s established rate for part-time employees". So now instead of having 2 independent
elected officials accountable to the voters working at city hall they now have a appointed treasurer who
could be un-appointed at any time and a city clerk who is dependent on the city council giving enough
work hours to make a living. I actually seriously doubt that paying a elected official hourly is
legal but hey its just another pesky state law that apparently does not apply to Newton either.
From audit for the year ended 4/30/17 page 21
Inter-fund balances between the Electric Fund and the TIF Fund resulted from
cash shortfalls in the TIF Fund. $117,000.00
An interfund loan was made from the Electric Fund to the Water Fund to finance
the city square water main project. $152,571.00
An interfund loan was also made from the Electric Fund to the Waste Water
Fund to finance waste water improvements. $100,642.00
An interfund loan was also made from the Capital Development Fund to the
ITEP Eagle Trail Fund to finance the sidewalk beautification project. $39,753
Note (capital development fund gets its funds from the electric fund).
They are expected to be repaid as cash balances in those funds allow,
but may not be repaid within the next year.
From Illinois compiled statutes.
(65 ILCS 5/8-1-3.1) (from Ch. 24, par. 8-1-3.1)
Sec. 8-1-3.1. Borrowing from financial institutions. The corporate authorities may borrow
money for corporate purposes from one fund for the use of another fund providing such borrowing
shall be repaid within the current fiscal year.