Fiscal Emergency Report Cost $222K

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.

Josh Koehn is the news editor for San Jose Inside and Metro Newspaper. Email tips to josh@metronews.com or follow him on Twitter at @Josh_Koehn.

4 Comments

  1. “Attorney Rich Doyle on Monday, the city paid more than $552,000 total in outside legal consulting fees.”

    What’s up with that?!  Our crack City Attorney and his band of dummies can’t handle the legal work and must hire outside assistance?  We should immediately implement a new rule for all City employees:  “IF YOU CAN’T DO IT, YOU CAN’T STAY!”

    • “City attorneys have a conflict of interest since they get the pension benefits, so the city pays for outside council.”

      Did you miss that part of the article, Greg?  And name-calling does not contribute to civil discourse.  Every attorney or other staff member I have dealt with at the San Jose City Attorney’s Office has been nothing short of professional, considerate, and highly skilled.  And they provide services at a far lower cost than outside council.  Unfortunately, for the City of San Jose, much of this institutional knowledge, skill, and experience will be disappearing as the abysmal City Leadership decimates its work force.

  2. “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.”

    The “swing” was more like $125million as City Manager (in Nov 2011) estimated that the deficit was $1115million and now says we have a $10million surplus.

    The swing in teh deficit doesnt compare to the outright lie that was Chuck Reed/Russell Crosby’s estimate that pension costs would be $650mil in 2014-15 cinoarted to the current fact based estimate of $294mil.  and we all know that costs over time tend to increase but from a current cost of $245mil to $294 mill is only $48mill which is considerably less than what the City under Chuck Reed owes the county ($70million) from the lawsuit over reed and the rda refusing to turn over taxes collected by the RDA that were due the county.

    Just trying to put a little perspective on things… 

     

     

    ye

    • Mr. B

      Why would we all need a little perspective on these numbers? With Mayor Greeds “Sunshine and Transparency in Gov’t” The light is blinding. Just look at how the gang of six tried to spot light the half mil. spent on out sourcing attorneys this year.

      Does that mean that the surplus could have been 10.5 million? How many Library hours is that for a half mil.? Funny, I dont remember seeing that in Fig-One’s budget. Anyone care to bet that the 10 Million surplus is from the Sick leave payouts they plan to steal from the employees this year? Or are those numbers the same just by coincidence?

      Anyone care to bet that next we will hear from Mr. Greed that he wanted to open the Library’s, that we couldnt afford, because they were purchased on credit card (Bonds), but the evil employees and their evil unions fought back against the City stealing it?