The Mudflats

Those of you trying to sort out the current kerfuffle over union contracts and city finances will enjoy the following article by one of Anchorage’s most tenacious citizen watchdogs. This piece also appeared in the Anchorage Daily News and is reprinted with permission of the author.

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By Dianne Holmes

The recent finger-pointing of who knew what, and when, over the union contracts and the city’s financial solvency, goes much deeper than mere numbers. The flaws in the Municipal Attorney’s report and the incomplete financial report waved before the media should cause us to question the qualifications and motives of those who are managing our city.

When the Assembly asked for a legal opinion on the labor contracts that were passed in 2008, why didn’t they ask their staff attorney? Instead, they first hired a law firm, Walker and Levesque—who were not experienced ’employment’ attorneys—to render legal advice. Their opinion was included in the infamous 60-page Wheeler Report, issued by the Municipal attorney, Dennis Wheeler.

What a shame we wasted $5,000-12,000 (I am still seeking the final figure) for a legal opinion when the answer could have been obtained with a phone call to the former Chief Fiscal Officer (CFO). The legal opinion determined that the fire and police five-year contracts were invalid partly because the CFO had not ‘fund certified’ them (‘fund certification’ is a big deal among those who deal with numbers). It is well-known that five-year contracts can’t be ‘fund certified’ because our Municipal budget doesn’t extend beyond one year. In other words, there’s nothing to certify against.

We all should ask why this information wasn’t provided in-house, for free, by any number of the city’s professional staff. Moreover, why was this erroneous opinion used to compound yet another poorly researched document, the Wheeler Report? And what was behind the current CFO, Lucinda Mahoney’s attempt to influence the media by showing an old and incomplete document that was suppose to indicate the city would have a $12 million surplus at the end of 2008? Even in the best of times the city has never had such a surplus, so that alone should have been viewed with suspicion, especially because it appeared just days before the Wheeler Report was released. Can we blame the media for failing to see what appears to be an orchestrated set of events? They aren’t numbers people, but as journalists—even on a tight deadline—they should know enough to ask more questions in subjects that are foreign to them.

We can only speculate on the actions of the current CFO, but the data in the old fund balance spreadsheet are easy to explain. It turns out that the first document shown to the media was the wrong one. But the damage had been done by the time a vigilant Assembly member pointed out the mistake and requested the critical cover letter be included with the correct document.

That cover letter explained how unusual it was for the Assembly to ask for a mid-year fund balance projection, that it never been done before, that it was a draft (underlined), tenuous and very complex. It went on explain what the spreadsheet alone could never do and that was to alert the Assembly to the fact that the ending figure did not include the required deductions for the operating emergency designation (2-3% reserve funds required by the bonding agencies to keep our good bond rating and for emergency designations). Taken together, the cover letter and correct document: Fund Balances Projections of November, 2008, projected, at best, a “break even” fund balance—not a $12 million surplus.

Almost forgotten in all this finger pointing is the basis for the questioning and that involves the union contracts. While there are details of the fire contract that were not fleshed out well and which this blog may dwell on in the future, no one has yet asked what would have happened if the contracts hadn’t been signed. Would the unions work without a contract? Of course not; they would have gone to arbitration. Do you know the score card for past arbitrations? Someone in the city has been keeping tabs and the answer is—the city has not come out ahead. The recent contracts would be about the same after arbitration and we would have lost time and money in the interim. Instead, the unions have already given up certain provisions in their contracts.

Even before dissecting the Wheeler Report (stay tuned), a few things are clear and they are:

1. The Assembly knew about the state of the Municipal finances–because they asked for and received the data;
2. There is something fishy about why the current CFO would bring out an old, incorrect document and then, when pressed, did not include the key cover letter with the correct fund projection sheet;
3. Media, talk show entertainers and even some ADNews editorial staff should be taken to task for wrongfully inciting the public (and aiding certain political figures’ hidden agendas) on issues they do not understand, like numbers;
4. The public should question why the current administration is promoting this witch hunt to discredit former Municipal employees and (some of) the Assembly;
5. The public should also question why certain Assembly members are going along with the administration in this hunt;
6. Anchorage needs to return to the professional city manager-type of government where that job along with all department heads would not be politically appointees, rather, filled by professionals hired to implement good management standards and our approved ordinances/plans.
7. Hint—the answer to 4 and 5 is—April elections and Begich’s re-election run a few years hence.