A financial report Councilmember Don Rocha asked city staff to produce last month shows wasteful spending on labor and employee relations consultants and outside legal services, he says. Included in the staff report is a $222,000 study on whether the city should declare a fiscal emergency.
Some people at City Hall have said that Mayor Chuck Reed pushed for a fiscal emergency declaration last year to help buffer any pension reform ballot measure from legal challenges pertaining to vested rights. The fiscal emergency declaration was deferred multiple times, and when the city became aware of a $10 million surplus for the next fiscal year, and the unfunded liability for retirees was lower than expected, that plan was scrapped.
According to a report made public by City Manager Debra Figone and City Attorney Rich Doyle on Monday, the city paid more than $552,000 total in outside legal consulting fees. City attorneys have a conflict of interest since they get the pension benefits, so the city pays for outside council. However, almost half of that amount— $222,240.37—was spent on a fiscal emergency report done by Renne Sloan that will never be used.
“In terms of the timing, the administration could have done a much better job pending retirement costs,” Rocha says. “We had a $100-million swing from last June, and I’m troubled our administration didn’t see that coming.”
Rocha’s numbers come from a $50 million drop in retirement obligation’s for next fiscal year, and a projected $40 million deficit last June that is now a $10 million surplus.
Were it not for Councilmember Nancy Pyle’s request that the council discuss the obsolete report, it may not have come to light, Rocha says.
“It was recommended to be dropped, because retirement costs were significantly different than what we were told,” he says. “The mayor and council majority wanted to drop the entire item without discussion. Nancy Pyle raised issue to have an agenda item, and I seconded. Why not discuss rather than drop? If one councilmember requests the ability to ask questions, then it has to be allowed.
“They’ll argue that when they started this effort back in October, they didn’t know (about the change in numbers). But from the beginning, we’ve been discussing this fiscal emergency declaration it’s been deferred since May. It wasn’t a good policy proposal at any point, and it showed. And honestly, I think they should have realized that from the beginning.”
In a memo Rocha sent to the council on June 20, 2011, the councilmember asked that the council defer any fiscal emergency work until the council votes on the mayor’s march budget message, which will take place Tuesday.