The Citizens Investment
Trust Account (CITA) -
From Walter Burien
From Walter Burien <>

The initiative is written for the City of Prescott, Arizona, having a population of 34,705 as of 1998.
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.
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.
What the initiative does
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.
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.
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.
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.
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).
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.
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.
Yours Truly,
Walter J. Burien, Jr. C.E.V.I. and Candidate for Mayor - City of Prescott, Arizona P.O. Box 11444 Prescott, AZ 86304
Email: (520) 445-3532
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...
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
It's time for the citizens to start writing the rules.
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.
THE CITIZEN'S INITIATIVE Prescott, Arizona - Number: IN99-001
A. Establishing the Citizens Investment Trust Account (CITA)
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).
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.
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.
B. Responsibilities of the CITA
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.
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.
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.
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.
C. Powers of the CITA.
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.
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.
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.
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.
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).
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.
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.
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.
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.
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.
F. This initiative is effective immediately upon voter approval.