Wednesday, December 12, 2018

A Finance Committee Can Mitigate Oro Valley's "Agency Conflict"

Do you trust that Oro Valley's town staff will serve your best interests? 
We ask because there is an inherent conflict of interest between the interest of the staff of any town and the residents of that town. While residents might be interested in slowing down the rate of growth of a community, for example, town staff generally is not. The goals of the town staff and of the residents are different, in this instance. This is called "agency conflict."  The agents' (town staff) personal goals are at odds with the owner's (residents) goals .

We see "agency conflict" in Oro Valley
Oro Valley's  "Main Streets" is an example of "agency conflict".  It is a project "...focused on creating a town center in Oro Valley". The intersection of LaCanada and Lambert Lane is under consideration for this. The "Main Streets" project is the creation of the town's planning staff. We see it as a make work project for those who had worked on the 2016 General Plan. It is a project for which no citizen asked. It is not mentioned in the 2016 General Plan.

"Main Streets" may or may not be a good thing for Oro Valley. But it most certainly spends money when money could be saved.

It is the job of town council to mitigate the agency conflict
In business, the goals of management and ownership can be harmonized. One way to do this is for management to be compensated based on achieving shareholder wealth goals establish by ownership. For example, management can earn a bonus based on achieving a target earnings per share.

There is no similar mechanism in the public sector.

A Finance Committee can mitigate the agency conflict
We think that the only way to do that is for the citizens to take tight control of the town's budget for 2019-20. That is done by council with the assistance of a Finance Committee.

Oro Valley once had a Finance Committee.  It was comprised of resident members. Mayor Hiremath and his cohorts abolished it. This move was brilliant on the part of Mayor Hiremath because, from his perspective, it eliminated a major obstacle to the way he wanted to run the town. He did not want community input regarding how the town spends your money.

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