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- The initiative is written for the City
of Prescott, Arizona, having a population of 34,705 as of 1998.
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- While written to consolidate surplus
revenue and reduction of taxation of the City for the benefit of the citizens,
the initiative will effect consolidation of County and State revenue as
would be applicable to the residents of the City of Prescott for the benefit
of the residents residing there.
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- The initiative is a fill-in-the-blanks
initiative which can be utilized for other Cities, Counties, or States.
The modifications would require changing the possible surpluses identified
initially from the CAFR and the economic impact data as listed.
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- What the initiative does
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- Changes the Principle of Operation of
the Government to make the citizen the inevitable beneficiary of the revenue
being generated outside of the direct requirements of the "Budgetary
Basis". The initiative affects and reaches every leaf, branch, and
tree of the forest (the government) for accountability to the residents
of that government.
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- By the citizens responsibly writing the
rules that are enacted through this initiative, it changes the principle
of operation of government from an entity whose many separate operations
(ALL) are financially monitored by the "private citizen" to the
inevitable financial benefit of the citizen through long-term investment
return which, upon prudent management, allows for the elimination of taxation
and probable direct dividend return after the elimination of taxation.
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- In effect, what is being created through
the initiative is an annuity pension fund for the taxpayer, established
in the first year of operation, that obtains its starting balance from
existing surpluses held by government. Additionally, this initiative and
the watch dog created through the initiative will have the effect of pin-pointing
profit centers operated by government, kept separate from the budgetary
basis, for re-appropriation of revenue, of which the revenue generated
therefrom prior to the implementation of the initiative did not directly
benefit the citizens.
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- Prescott is a small city. The initiative,
if applied as the principle of operation to all or any other cities, counties,
and states, would make the political arena change from the one as exists
now -- the politician being the one who is the best convincing (empty)
talker secretly dreaming of empire building and financial conquest for
his own interests -- to an arena where, based on sound economic data and
now verifiable annual revenue figures, a politician will only get his elected
votes based on one factor: The efficient financial operation and streamlining
of government which allows for the growth of the Citizens Investment Trust
Account (CITA) for the elimination of taxation and inevitable dividend
return to the public upon the elimination of taxation. Politicians should
be good qualified financial planners operating under established principles
of operation as outlined in the initiative to benefit the citizen.
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- If you opened up an investment account
with a bank, brokerage house, or investment firm, would you put revenue
in or allow them to take it from you if they said "Thank you very
much for the revenue, see ya"? No, you would not. It's time to change
the principle of operation of the forest (government) to make financial
accountability of the wealth taken from us directly benefit us, under specific
guidelines established and approved by us (We The People).
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- The initiative is written for a small
city. Upon identifying surplus revenue of other cities, counties, and states,
of which have established substantially greater surpluses, the implementation
and enforcement of the initiative can yield potentially staggering up-front
and long-term yield results for the resident citizens of those governments.
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- Let's see if we can make Prescott, Arizona,
and the initiative the BUZZ word across the nation. The initiative is being
filed with the city today, June 10th, 1999.
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- Yours Truly,
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- Walter J. Burien, Jr. C.E.V.I. and Candidate
for Mayor - City of Prescott, Arizona P.O. Box 11444 Prescott, AZ 86304
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- Email: cevi2000@aol.com (520) 445-3532
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- PS: Composite USA government liquid investment
funds currently equal sixty (60) trillion dollars plus. What are you waiting
for? It is time to write the rules...
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- There are two principles which determine
the course of every society: 1) He who controls the gold rules 2) He who
writes the rules wins
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- It's time for the citizens to start writing
the rules.
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- Be prepared for the "Distractions"
as of today that the 'boys' will throw out to obscure the public's comprehension
of this initiative. Email Spams, orchestrated news stories from the media,
etc.... I recommend tunneled vision for total effectiveness and mass communication.
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- THE CITIZEN'S INITIATIVE Prescott, Arizona
- Number: IN99-001
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- I. THE CITIZENS INVESTMENT TRUST ACCOUNT
(CITA) [creator:] Walter J. Burien, Jr.
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- A. Establishing the Citizens Investment
Trust Account (CITA)
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- 1. The CITA is a separate entity created
by the taxpayers of the City of Prescott, Arizona, hereafter referred to
as just "government", to locate and determine whether any excess
funds have been accumulated by the government as a result of the collection
of revenues or changes in expenditures by any activity undertaken by the
government. The CITA will assume an independent status separate from the
government(s).
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- 2. The CITA will be established specifically
and exclusively as an entity to manage and develop an annuity trust fund
for the sole purpose(s) of utilizing the interest, dividend and/or capital
gain income from excess fund investments, hereafter called the "surplus
income", generated from the CITA to benefit the taxpayers of the government
in the following order of progression to offset the government's budgetary
requirements: a. The surplus income will first be applied to eliminate
city property taxes that are levied by the government against the resident
taxpayers. b. The amount, if any, after applying 2a above will be applied
to the government's budgetary requirements that are and have been approved
by the taxpayers of the government. c. If a remainder exists after applying
2b above, the CITA will distribute an annual dividend payment to the taxpayer,
generated from the CITA, from this remainder to the resident taxpaying
property owners, through equal distribution based on the taxpayer's time
as a resident property owner, and property taxes paid to the government.
1) Eligibility of the taxpaying property owners, to receive annual dividend
payments from the CITA, will require the taxpayer, whether an individual,
small business, or corporation, to be a resident within the physical boundaries
of the government in which the property is located. 2) Property owners
who derive income from renting their property to resident(s) located within
the physical boundaries of the government, the annual dividend payment
made from the CITA will be paid and shared between the property owner and
the resident renter of the property as follows: Forty percent (40%) to
the property owner, Sixty percent (60%) to the renter of the property.
Corporations whose owners are non-residents within the physical boundaries
of the government will not be eligible to receive annual dividend payments
from the CITA.
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- 3. The CITA is not a government entity,
but a private entity managed by the authority granted through initiative
by the taxpayers for the benefit of the taxpayers. The CITA will have operating
personnel as follows: a. A general administrator, appointed by the head
publicly- elected executive of the government, after reviewing recommendations
and qualifications for the position, submitted by any interested party.
The administrator can appoint two (2) assistants. b. Initially, two (2)
certified financial planners preferably with CPA qualifications, hereafter
managers, who have demonstrated a consistent performance track record over
a period of at least 10 years on funds managed, with said performance being
superior to national standards for managed funds. Upon placement of the
managers, management of funds contained within the CITA by managers will
be in compliance with investment polices as accepted by GFOA (Government
Financial Officers Association) as would apply to prudent pension fund
management. c. Compensation for the personnel and operation costs of the
CITA will be funded by one and a half percent (1.5%) of the excess funds
determined for annual re-appropriated into the CITA. Additionally, one
and a half percent (1.5%) of the yield from the CITA will be applied to
cover operating and personnel costs as determined by the administrator.
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- B. Responsibilities of the CITA
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- 1. The CITA will determine: a. Whether
excesses exist, and the process for said excesses to be re-appropriated
to the CITA b. The process of how the yield excesses should be returned
to the taxpayers c. The method of redistributing the yield excesses d.
The approximate reduction in future taxes after the yield satisfies the
government(s) budgetary requirements.
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- 2. The CITA will determine whether excesses
exist in each activity in which the government has an interest, either
directly or indirectly, regardless of the location, legal status, or laws
pertaining to the activity. a. The government will annually provide to
the CITA a copy of the annual budget, the Comprehensive Annual Financial
Report (CAFR), and all other financial statements pertaining to government
funds, whether held directly or indirectly in the name of the government,
or any of its agents, OR any funds held for other governments, agents or
fiduciaries. In addition, CITA will have access to any actuarial reports
received pertaining to any funds/accounts handled by the government. The
actuary reports are essential for proper evaluation of the retirement/pension
funds, workmen's compensation, and self insurance/risk management funds.
Also, the CITA will have access to all data pertaining to the issuance
and collateral requirements of bonds outstanding. The bond data will identify
the potential for legally required surpluses to exist. b. The CITA will
have the final authority on whether any funds exist in excess of the government's
needs. Evaluations will be detailed by fund or account and in total. c.
CITA evaluations, recommendations, and findings will be determined annually,
published, and made available to the public. d. Prior to disclosing their
findings to the public, the CITA will discuss with government officials
their recommendations on any excess funds. e. In cooperation with the government,
the CITA will make recommendations in its annual report on what action(s)
should be taken to insure that excess funds are not accumulated in the
future in those areas where excesses are determined to exist. f. It should
be understood that the government employees and the teachers' retirement/pension
funds should be fully funded based on the retirement plans approved by
the taxpayers in order to protect these retirement funds. However, any
funds that exceed the fully funded concept can be considered excess and
be returned to the taxpayers based on the methods outlined elsewhere. g.
The surplus income from the CITA which offsets the budgetary requirements
of government will require the revenue raised by all government operations
in excess of said government operations' budgetary requirements to be designated
as surplus revenue for annual re-appropriation into the CITA to benefit
the resident taxpayers located within the physical boundaries of the government.
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- 3. Upon budgetary requirements of government
being satisfied by the surplus income of the CITA, determine whether any
excesses re-appropriated into the CITA should be returned to the residents
over the general principle of operation of the CITA a. The CITA will make
an economic analysis of the return on invested excesses versus the current
investment rate of return on invested funds to determine what course of
action will be best for the taxpayers. For example, if the excess funds
are making 20% return per year, then this analysis will probably show that
the surplus income should be reinvested at the same rate of return if possible
and not applied as outlined above. 1) The CITA will obtain the following
data from reliable sources: a) The economic multiplier applicable to the
government pertaining to excess funds being returned to the taxpayers.
"Basic to all theories of business-cycle fluctuations and their causes
is the relationship between investment and consumption. New investments
have what is called a multiplier effect: that is, investment money paid
to wage earners and suppliers becomes income to them and then, in turn,
becomes income to others as the wage earners or suppliers spend most of
their earnings. An expanding ripple effect is thus set into motion. Similarly,
an increasing level of income spent by consumers has an accelerating influence
on investment. Higher demand creates greater incentive to increase investment
in production, in order to meet that demand..." ("Business Cycle,"
Encarta(R) 98 Encyclopedia (c) 1993-1997) b) The government revenue ratio.
This is the amount of revenue collected by the government per dollar of
economic activity in the government. This will provide the percent of return
the government is receiving per dollar of economic activity. c) Job creation
amount. The amount of additional economic activity necessary to create
one additional job. 2) The CITA will compute the Return to Taxpayer Economic
Ratio (RTER) The RTER can be determined by the following formula: Economic
multiplier times the government revenue ratio. 3) The CITA will compare
the RTER to the Investment Rate of Return (IRR) of the funds/accounts that
have excess funds. a) If the RTER exceeds the IRR, then it is in the best
interest of the taxpayers to have the surplus income (interest, dividend,
and/or capital gain income) returned to the taxpayers or used by the government
to retire bonds payable. If the interest rate on any bonds payable exceeds
the RTER, then the excess funds should first be applied to retire the bonds
payable that have interest rates exceeding the RTER. The remainder, if
any, will be returned to the taxpayers. b) If the IRR exceeds the RTER,
then normally the surplus income should not be returned to the residents
if reinvestment is at the same rate of return, because the IRR will provide
more revenue than returning the surplus income to the taxpayer. In addition,
there are other determinations and considerations involved pertaining to
the principal amount of the excess funds in this category. (1) The return
from surplus income should be divided by the job creation amount. This
will determine the additional number of jobs that will be created if the
excesses are returned to the taxpayer. (2) The current economic condition
in the government pertaining to unemployment and the number of welfare
recipients that could find jobs if available could override the decision
to retain the surplus income in this category. (3) The CITA will decide
whether the surplus income in this category are returned to the taxpayer,
the amount of the refund, and the method of refunding.
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- 4) The CITA will determine the approximate
reduction in future taxes a) Budgets are a projection of anticipated future
revenues and expenditures. b) The economic impact analysis in this proposal
will determine the amount of additional revenue the government will receive
because of an increase in economic activity as compared to allowing the
government to retain and invest the surplus income. This means budgeted
future revenues can be increased and the amount of taxes/fees/assessments
required from the taxpayers can be reduced. This amount will be computed
by the CITA and provided to the government for consideration in preparing
future budgets. This computation will only be prepared for total excess
funds that will be returned to taxpayers. c) The formula for making the
computation for the amount of increase in future budgeted revenue, thereby
reducing the taxpayers requirements, is: Surplus income times the economic
multiplier times the government revenue ratio minus the investment income
received from the excesses returned. d) The percent reduction for future
budgeted revenues is computed as: Amount of future budgeted revenue reduction
divided by the total budgeted revenues.
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- C. Powers of the CITA.
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- 1. The CITA has no authority or status
in the operation of the government. CITA only deals with existing surplus
revenue, potential excesses, redistribution of these surplus income, and
the making of recommendations to the government on how to prevent these
excesses from occurring in the future. 2. In addition to making determinations
on whether excesses exist in the government(s) activities, the CITA has
the authority to evaluate other governments'/entities' budgets, CAFR, actuary
reports, and bond data for those governments/entities that have intergovernmental
or other agreements on services, expenditures, and revenues collect for
the government, either directly or indirectly. The government will assist
the CITA in obtaining the necessary data from other governments or entities
in order for the CITA to make these determinations. 3. If excesses are
identified in other governments'/entities' activities in which the government
participates, the CITA has the authority to make official requests for
refunds/receipt of additional revenues on behalf of the taxpayers of the
government.
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- II. POTENTIAL EXCESSES IDENTIFIED ON
THE CITY'S COMPREHENSIVE ANNUAL FINANCIAL REPORT (CAFR) AND OTHER SUPPORTING
DOCUMENTATION FOR CONSIDERATION OF RE-APPROPRIATION TO THE CITA
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- A. A preliminary review of the June 30
1998 government CAFR discloses approximately $41 million in "Cash
and Investments". After deducting for employee "Deferred Compensation"
and "Fiduciary Funds" held for others and allowing for cash on
hand for maintaining proper cash flow, the initial potential excesses amount
to approximately $36 million. B. However, this is just the beginning because
there are many questions that need to be resolved before a final amount
of fund excesses can be determined. This will be the responsibility of
the CITA, i.e. to evaluate every facet of the city's financial operations
and determine whether excesses exist, where excesses exist, and the amount
of these excesses. C. The following are just some of the areas that the
CITA needs to review in depth that are in addition to the $36 million starting
point: 1. The CAFR has $2,081,077 in six (6) funds that are called "Miscellaneous
Revenue/Income". If all of this $2,081,077 is really investment income,
then there are considerably more funds invested somewhere that are not
readily apparent in the CAFR. If these are investment income amounts and
considering a 6.00% return on the invested funds, the additional funds
would have to equal approximately $34.7 million. This would be in addition
to the $36 million starting point. 2. Regional Transfer Station Fund. This
Enterprise Fund is "to account for intergovernmental agreement between
the Government of Prescott and Yavapai County to provide waste trans. stations
services..." This fund shows a "Contributions from Other Sources"
of approximately $1 million. This also shows a "Retained Earnings
Unreserved" of $401,023 for a total fund equity of approximately $1.4
million. The June 30 1997 Yavapai County Single Audit Package has approximately
$41.4 million in a fund called "Agency Funds" i.e. "assets
that the government holds for others in an agency capacity". Does
Yavapai County have additional funds it is holding for the Government of
Prescott? 3. The CAFR pertaining to item II.B. above states "...all
profits will be used to retire debt and fund future expansion..."
With a $1.4 million total fund equity, then why does the government have
a Special Assessment Bond (Imp District #141) with an outstanding balance
of $46,800 in which the government is paying 12% interest? The government
earns 6% on its investments, but is paying 12% interest on some of its
debts. It would seem prudent to pay off the 12% interest bond. The CITA
would make the determinations as stated in Section I and determine what
is in the best interest of the taxpayer based on a sound economic basis.
4. The CAFR does not provide financial data on retirement and pension funds.
These have to be requested and examined separately. However, some actuarial
assumption data for the Public Safety Personnel Retirement System (police
and fire) were provided. The assumptions that need to be evaluated are
investment rate of return and projected salary increases. The assumptions
were 9% for investment rate of return and 6.5%-9.5% for projected salary
increases. a. If the investment rate of return is lower than what is actually
being received or what would reasonably be expected, then the government
costs increase and the fund develops excesses over fully funded requirements.
b. If the projected salary increases are not realized, but are continually
assumed from year-to-year, then government costs increase and the fund
develops excesses over fully funded requirements.
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- III. EXAMPLE OF THE ECONOMIC IMPACT OF
POTENTIAL EXCESSES IDENTIFIED TO DATE
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- A. This example will be using the follow
estimates: 1. Excess Funds: $36 million invested at a current rate of return
of 10% annually accomplished by the CITA. 2. Economic Multiplier: A 2:1
ratio, i.e. for every $1 returned to the taxpayer, the economy will expand
by $2. 3. Government revenue ratio: 8%, i.e. total revenue from all government
activities divided by the total economic activity in the government.
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- B. The Economic Analysis would produce
the following results over a ten year period of the operation of the CITA,
using only the projected first year starting balance of the CITA. The Analysis
does not account for the inevitable annual growth of the CITA during this
10 year time period which said growth would greatly enhance the return
to the taxpayer: 1. Resident property owners will no longer have to pay
city property taxes. 2. The $36 million at 10% over ten years will generate
$36 million in surplus income or approximately $1,000 per resident or $4,000
per family of 4. 3. The $36 million in surplus income will generate $153.4
million in additional economic activity or an average of $15.3 million
a year ($7.2 million the first year and $27.4 million the 10th year). 4.
The increase in economic activity will generate additional tax revenues
of $12.3 million over the 10 years, thereby reducing the government's revenue
requirements from taxpayers. 5. The total tax revenue required from taxpayers
over the ten year period will decrease by $48.3 million or $1,341 per resident
or $5,364 for a family of 4.
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- All of the above is possible because
it is based on economic principals and data, not on politicians' promises
and creative accounting. The CITA would be the vehicle to take the excesses
created out of the hands of politicians and be placed in the hands of the
people with the least amount of disruption in the current system(s).
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- IV. GENERAL PROVISIONS
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- A. The Arizona Attorney General, at the
request of the head of an agency, shall render an interpretation of this
initiative with respect to any question arising in the course of its administration.
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- B. No prior initiatives are repealed
by this initiative. To the extent that this initiative is inconsistent
with any provision of any prior initiative, this initiative shall control.
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- C. If any provision of this initiative
or the application of such provision is held to be invalid, the remainder
of this initiative shall not be affected.
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- D. This initiative is intended only to
improve the internal management of the government and is not intended to,
and does not create, any right to administrative or judicial review or
any other right or benefit or trust responsibility, substantive or procedural,
enforceable by a party, against the government, its agencies or instrumentalities,
its officers or employees, or any other person.
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- E. In compliance with state law pertaining
to commingling of agency funds, agency funds will not be commingled, only
funds determined as excess or surplus revenue will be re-appropriated as
such to the CITA. Any controversy arising therefrom, the Arizona Attorney
General, on a case by case basis, shall render an interpretation.
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- F. This initiative is effective immediately
upon voter approval.
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- WJB
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