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Profile: City’s new CFO has been here before

Monday, August 6, 2012 by Michael Kanin

Last week, Chief Financial Officer Elaine Hart’s led the presentation to Council of staff’s recommendations for the 2012-2013 budget year. But it was certainly not her first rodeo. She’s been here before, previously heading the city’s finance department.

 

Hart notes that, as Senior Vice President of Finance for Austin Energy, she worked in a building that she helped purchase for the city in the 1980s. “I actually got to occupy a building that I purchased that I never thought I’d office in,” she told In Fact Daily. “It’s kind of a twist.”

 

All of that is to say that Hart – who’s spent 24 years of service for the city and another three as a contract deputy auditor hired to watch over City of Austin funds – has had an insider’s view of the changes in the city during the last three decades.

 

“The mechanics are basically all the same,” Hart says. “But there are more issues, and there are more complex issues.”

 

As evidence, she points to the advent of city Tax Increment Finance (TIF) districts – a development mechanism that relies on future tax projections to finance infrastructure improvements.

 

“We’ve got four different TIFs right now and every one of them is structured differently,” Hart says. 

 

That presents Hart with an early opportunity to develop standard policy. “Because (they) seem to be a very popular financing mechanism, we’re looking at a comprehensive TIF policy to look at what we currently have in place and try and figure out how much of our tax revenue we’re willing to (commit in that way).”

 

She continues: “We have a growing general fund, a growing public safety budget, and we have to make sure that we have sufficient general fund tax revenues and sales tax to cover those things. We can’t TIF away everything.”

 

Hart’s municipal career began in 1975 as an external city contractor. “I audited the city for three years,” she says. “I actually got my job as an auditor because the City Council asked, when they were selecting the auditors, how many minorities worked for the audit firms. My firm told me that if they could use my name in the proposal, I could have the job.”

 

The firm won the contract, and Hart began her municipal career. “I never planned to be in government, but that’s how I ended up there.”

 

Hart continued her stint as a public accountant for a few years. Then, deciding that she wanted a “quieter life” with “less travel and less overtime,” she applied for a position with the city.

 

“At the time, about 10 percent of the accounting graduates were women – unlike today when it’s over 50 percent,” she says.

 

By the 1980s, Hart was at the top of the city’s financial department, a position that was the then equivalent of her new CFO title. Hart notes that, during the 10 years of her first stint with the city, “we had seven acting or permanent City Managers (and)…seven acting or permanent Finance Directors.”

 

“We had a period of time where there was not a lot of stability in upper management at the city,” Hart continues. “We also had an economy that was struggling; we had interest rates in the 10-12 percent (range).”

 

Those lean years might qualify as something worse than what the city is currently experiencing: They featured five consecutive “cut-back budgets” where the city was forced to issue layoffs. Also, Austin was involved in the construction of the South Texas Nuclear Power Plant project, which featured utility rate increases every year.

 

Hart singles out a meeting from her first stint with the city. There, she says, the city’s external audit partner “wanted to write off our investment in the South Texas project because he didn’t believe that the construction would be finished and he didn’t believe that it would ever operate. We were successfully able to talk him out of that,” Hart continues. “Interestingly enough, it’s one of our best-running plants today and that audit firm was Arthur Andersen that audited Enron.” Arthur Andersen went out of business in the early 2000s, about the same time as Enron failed amid financial scandal.

 

Hart worked in the city’s finance department for 10 years, and then took an eight-year break from government and then she came back to the city as Austin Energy‘s Senior Vice President of Finance. She served the utility for 14 years until her recent move to the CFO’s seat, where in April, she formally replaced Leslie Browder. When prompted, Hart suggests that her experience at Austin Energy proved even more valuable when she returned to head the city’s finance office.

 

“It’s the first time that I know of … that the CFO has had intimate knowledge of the utility business and industry – particularly Austin Energy,” Hart says. “We are financially so tied to each other with the general fund transfer and that policy that I think it is a benefit.”

 

Each year, Austin Energy transfers a chunk of its electric utility revenues to the city, money used to fund array of city services.

 

Roger Duncan, who retired as General Manager of Austin Energy in 2010, said, “Elaine’s knowledge of Austin Energy finance was incredible, from the fine, obscure details to the big picture. She always knew when something was important and when details were insignificant. As General Manager of Austin Energy I found Elaine to be an invaluable resource in managing that utility. I am sure that City Manager Ott will find the same to be true with her as the city’s Chief Financial Officer.”

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