The Mudflats

~Mayor Dan Sullivan

So, back in 1982 there lived a recently former mayor in a city in Alaska.  His name was George Sullivan and the city was Anchorage.  And as the mayor of a city, he had a life insurance policy.

And those at the time liked George Sullivan so much that they thought they’d insure him forever… that this life insurance policy would go on until the end of his life.

Fast forward 20 years.

(swooooosh)

Now fix your hair.

…in 2002, Deputy Employee Relations director Karen Moore was baffled when Dan Sullivan, who was on the Assembly at the time, came to the city to make that year’s premium payment, according to e-mails from the time. She asked the city’s insurance carrier about a policy for Sullivan. The company didn’t know about it either. The premiums paid by Sullivan and his family had been deposited into a city account, not given to Aetna.

Top officials in the administration of George Wuerch, who was mayor in 2002, spent months trying to figure out the history of the deal and what to do about it, according to the e-mails, released to the Daily News this week.

The city’s life insurance carrier, Aetna, told the city in 2002 that it had no policy on Sullivan and wouldn’t cover him anyway because its agreement was only for active city employees, according to the e-mails. Aetna made clear it wasn’t liable for Sullivan, who was 78 years old by that time. The insurance company’s legal department recommended the city just return the premiums to the Sullivan family.

Dan Sullivan must have been bummed, seeing as how it looked like the big payday might not happen.  The mayor at the time, conservative one-term wonder George Wuerch listened to the recommendations from the insurance company’s legal department who said to simply pay back the premium to the family and call it a day.  Then he listened to the city’s finance director who also said to simply pay back the premium to the family and call it a day.  Then Wuerch decided that the city just simply had no option but to provide the coverage anyway. And the city attorney at the time decided that Anchorage would become an insurance company, and then Assemblyman Dan Sullivan must have smiled and he continued making the payments knowing that some day the city would have to cough up the money.

So Assemblyman Dan Sullivan continued to pay $556 every year to the city.  An actual policy with an insurance company would have run  more than $11,000 per year in premiums back in 1982, according to the city’s benefits manager at the time.

Fast forward to last week’s Assembly meeting.

George Sullivan is no longer with us, and it’s time for the Municipality of Anchorage to pay up in the amount of $193,000 to the trustee.  Who is the trustee?   And who gets to sign the check that distributes that big wad of cash to members of the Sullivan family?  Why, look!  It’s Dan Sullivan again.  You remember him… the Assemblyman who was in the middle of the whole situation in 2002.  Well now, he’s the Mayor.

Asked last week about the trust, Sullivan said “it was kind of news to me until a year or so ago when I realized that I was named as trustee for the life insurance trust and that there were payments that needed to be made on an annual basis.”

Well, that’s strange.  Mayor Dan Sullivan is, in fact, the same person as former Assemblyman Dan Sullivan who brought the annual payment to the city that set off the alarm bells that resulted in the city becoming an insurance company.  He didn’t realize he’d been making payments all those years?  How very very convenient odd.

When this little contradiction was pointed out to the Mayor, the furious backpedaling began.

Sullivan said what he meant was that he hadn’t realized that “somewhere along the line it changed from being an insurance product to a contract.”

OK, let’s review this for a moment.

What he said before he realized the ADN knew he made the payment:

“it was kind of news to me until a year or so ago when I realized that I was named as trustee for the life insurance trust and that there were payments that needed to be made on an annual basis.“

What he “meant” after he found out the ADN knew he made the payment:

he hadn’t realized that “somewhere along the line it changed from being an insurance product to a contract.”

Ahh…  Now we get it.  I bet Mayor Dan has a bridge to nowhere he’d like to sell us too.

“But,” you ask, (because you’ve been paying attention)  “isn’t this the same Mayor Dan Sullivan who just cut $150,000 from the Fire Department, and has reduced bus service and police, and library hours, and the arts? And isn’t that the same Dan Sullivan who is spending tens of thousands to help sue the government over beluga whales, and $50,000 more to do a “forensic audit” of city finances to make sure the previous Mayor wasn’t playing fast and loose with our money?”  Yes, it is.  And no, the irony of that last point isn’t lost on me.

Oh, and yes.  It’s the same Mayor who took $12,000 to pay himself for being the “Mayor elect” before he took office, even though we had someone else who was already the Mayor.

And now, it looks like Mayor/Trustee Dan Sullivan will get to sign a check from the city to himself and his family for $193,000 that will come from the city’s general fund.

Hooray for fiscal conservatism and Dan Sullivan, the Mayor/Trustee Hybrid of the City/Insurance Company Hybrid Anchorage, Alaska.

The lone voice of reason from the Assembly on this one was Harriet Drummond.

“If there were enough (Assembly members) who realized this was stupidity and voted no, then Anchorage’s taxpayers would still have $200,000 in the bank,” Drummond said later. “And the Sullivan estate could have gotten the $20,000 in premiums back. Maybe that was the appropriate thing to do. But it was certainly not appropriate for the city to be acting as an insurance company, which it is not.”

Kudos to Drummond for some common sense skepticism, and to Sean Cockerham from the ADN for some great digging on this issue.

Mayor Dan Sullivan promised to end the unpopular ‘rolling closures’ that shuttered fire stations in Anchorage on alternating days last year. Now that cost-saving measure has been replaced with another one that will trim $150,000 from the Fire Department’s budget. These are tough times, you know. Or so the Mayor says.

Even though the city fund balances are all peachy keen now after their disastrous levels in 2008, the Mayor’s red pen feels the need to keep cutting. This time it is the special rescue teams. Why? Some say it is because overtime has amounted to far more than they’d calculated. Why? Because there aren’t enough personnel to cover the required positions, especially when people call in sick, die, retire or go on leave. Why? Because the Mayor hasn’t authorized the Fire Academy to begin training new recruits. That would cost money and remember, he was elected to not spend our money.

The timing on this should be just about right. Conservative takes over administration. Conservative breaks stuff and under-funds services. Conservative is voted out. Progressive inherits a big fat mess to clean up. Conservative says “See? Government sucks, and it doesn’t work, and it’s a big mess. And no I’m not going to help you clean up my mess because you’re doing it wrong!” Conservative sits in corner pouting and whining and stomping its feet. We’ve seen it play out on the local, statewide and national level over and over.

How many other US cities have to worry about rescuing people from icy waters, snatching tourists and reckless kids from sticky mudflats, find injured hikers, or deal with avalanche victims? Fresno? Not so much. But in Anchorage, where our city slogan is “Big Wild Life” we actually use these services and rely on them to save our lives, and the lives of those who come to visit our state. We rely on them when we’re out in the back country, or when we just happen to be in the wrong place at the wrong time – like on the Seward Highway during an avalanche. The Fire Department special teams who provide these services are trained and equipped – ready to go 24/7. Yes, team personnel receive extra pay. Yet the Mayor had the chance to cut even more than his targeted $150,000, by accepting the union’s offer to reduce some of that extra pay. Why didn’t he accept?

More important, why isn’t the city asking for reimbursement from the Troopers for each wilderness rescue? After all, they are the ones who have to give the OK before the AFD can respond, every time a call comes in. Without reimbursement, we will end up with duplication of effort and slower service. If the Troopers agree to do wilderness rescues in Chugach State Park, the AFD will still need a rescue team to handle calls like bear maulings in Far North Bicentennial Park.

Here are a couple interesting internal memos that sum it up pretty well.

AFD memo Special Operations & Rescue Responses 17 Feb 2010

AFD memo Special Operations Reductions(b) 17 Feb 2010

AFD special team reductions guidelines Feb 2010

I’ll translate for those who don’t want to dive in. This is what we’re telling the people who are trained, ready and able to do the hard work of saving people’s lives summed up in a 10-point plan.

1) We’re not going to pay you extra to be trained to do all this really important stuff, or to participate in the team that does all this really important stuff, BUT…

2) You will be expected to do it anyway if to the Troopers tell you to. So make sure you’re prepared. We’re not training any more people, and only trained people can use all the equipment. Should we reinstate the teams you will be able to re- apply, if you keep up your certification, which we won’t be paying for.

3) The Swift Water team will be off line until breakup.

4) The Dive Team will be a skeleton crew only, but there is no actual watercraft available for use in Cook Inlet.

5) The Wilderness Rescue Team is off line indefinitely.

6) We’re also cutting people from the HazMat, High Angle, and Urban Search and Rescue teams, like the structural engineers that nobody really needs anyway, right?

7) The Duty Officer will make the decision about whether to answer someone’s rescue call. And remember, there is no seaworthy craft available for Cook Inlet rescues so they will have all be done from the shore by using ‘rope throw bags.” So, you may want to make sure you’re working those deltoids and biceps, which will allow further distances when heaving rope.

8.  We will continue to provide ‘non-technical’ operations with the rope throw bags that you can use to rescue people. It’ll be really useful to save those on the ice as long as our implements can reach that far from the shore. We’ll even have some motorized equipment if you have an emergency that is conveniently located on a city trail or park, but NOT in the wilderness. We’ve got that motorized equipment stored right near by, close to the backcountry areas where we most often use it. But we’ve decided to move it all somewhere else farther away.

9) When 9-1-1 calls are received from inconvenient wilderness locations outside the Anchorage Fire Service Area, the dispatcher will first call the Alaska State Troopers to ask if they want us to respond, like we’ve been doing all along. Since they don’t really have the ability to respond, and they’re usually pretty busy, they always say, ‘Yes.’ Then, the request will be forwarded to the Duty Officer to decide whether to respond or not.

10) Thanks for your understanding about all this. We’re just really sure that nothing bad will happen, and we’ll continue to do just fine as long as something bad doesn’t happen, which it probably won’t. And think of all the money we’ve saved, and how people will begin to pull themselves up by their own bootstraps to make our city a better place.

I’m imagining a letter coming from Mayor Sullivan. You can imagine it with me. It goes something like this:

Dear Anchorage Resident or Tourist,

Do not take a boat out into Cook Inlet farther than you think someone can throw a rope with a bag on the end of it.

If you insist on having a heart attack while enjoying our beautiful state, please do so only on designated and maintained trails within the Anchorage Fire Service Area.

If you do enjoy the back country, make sure to avoid all bears, moose, bodies of water, inclement weather, avalanches, giardia, dehydration, disorientation, general illness, firearms, poison berries, tripping, sharp implements like wood saws and Swiss Army knives, hypothermia, conking yourself on the head, and other activities of a similar nature. If you do encounter an emergency situation, just let someone know and they will contact the troopers and they will tell someone to contact the fire department’s DO and they will decide whether to respond to you.

If this takes too long, we hope your last thoughts as you lie there looking at the sky, or the snow, are gratitude for living in a free society where we all take personal responsibility for our actions, and don’t rely on the government to bail us out if we do something dumb like getting mauled by a bear or buried by an avalanche. And think how much money we’ve saved! And if you do manage to survive somehow, Mayor Sullivan would appreciate your vote next time.

Don’t forget to enjoy Anchorage’s Big Wild Life!

Warmest Wishes for your continued health and happiness,
The City of Anchorage, brought to you by Mayor Dan Sullivan

Maybe it’s time for safety minded Alaskans to start enjoying the Big Wild Life from the couch.

So, let’s say that you’ve got a roofer, and he says that your building leaks. And you say that it doesn’t. And he says it does. And you say that every year you have a certified roof inspector with all kinds of credentials get up on the roof and check it out, and you pay him a ton of money to do it just to be sure.  He crawls up in the attic, and examines every little possible crack and crevice, and you get a nice certificate saying all is well.  And he says that he’s still really worried because something just doesn’t seem right.  He has unanswered questions. There are mysteries. “Did you ask the roof inspector what he did” you query?  Well, no.  But still… there are these concerns… these unanswered vagueries… I’m so confused.  “So let’s compromise,” he says.  You pay me $50,000 and I’ll have someone else come check it out.

Now, mind you – you’ve already spent hundreds of thousands to the certified fancy dancy roof inspector, but this guy wants to cut you a deal for a mere $50,000.

Boy, oh boy. Don’t you feel like you got a deal? If you’re answering yes, then have I got a nice little cabal of politicians for you. May I present Mayor Dan Sullivan, and Assemblypersons, Dan Coffey, Bill Starr, Debbie Ossiander, and Jennifer Johnston.

Of course, this story doesn’t have to do with roofing.  It does have to do with auditing the city’s finances. The ridiculous witch hunt directed against Mark Begich continues.

The city of Anchorage just underwent its annual audit like it always does. And the very reputable firm of Mikunda Cottrell did the audit. And the very reputable Standard & Poor’s just gave us a double A bond rating.  But, the Sullivan/Starr folks are not satisfied.  They’re still whining years later, accusing the previous city administration and then mayor (now U.S. Senator) Mark Begich of financial funny business. “We ended up with less money than we thought! We have no money! The previous administration didn’t predict how bad it was going to be! Their forecast was wrong!!” they screech over, and over, and over.  And over.

News flash for the Sullivan administration and Assemblymembers – NObody predicted how bad it was going to be.  Not the Begich administration, not his financial people and not even the chairman of the Federal Reserve. Those darn crystal balls were on the fritz.  But Assemblyman Bill Starr believes that if your crystal ball IS on the fritz, and you can’t accurately predict economic disaster, it means you’ve committed bank fraud.  Actually, he probably doesn’t really believe that at all.  But that’s not the point.

If the Begich folks had been able to predict that the economy was going to crash, and that we’d have the second worst economic collapse since the Great Depression at the end of 2008, I imagine that they all would have taken their 401k money and moved it into cash.  Happily for the city, things have gone better since then, but they did not get better between November 17 and December 31 of 2008. They got better in 2009.

So looking at the city’s investments at the time, as long as we didn’t sell anything, we didn’t realize a loss. Time was on our side, because we knew the recovery would come.  It was only a matter of time and patience.  People understand this.  They watched that phenomenon happen with their own 401k’s and those that could afford to wait it out have seen a measure of recovery from its worst point.

But let’s look back to October of 2008.  The Begich people met with the Assembly and put the cards on the table.  The economy had crashed and things couldn’t have been worse.  They showed the Assembly the city’s portfolio and explained that we had a combination of problems . We had some money invested in Lehman Brothers and Washington Mutual (WaMu).   Unfortunately, as we all know, those companies had gone belly up and taken our investments with them.  That was money we were not  going to get back.  But, the administration explained, we also had investments that were backed up by perfectly good companies that would pay 100 pennies on the dollar.  But right then the market was so dysfunctional that nobody wanted to pay the right price for these, so we had at that time what is known as a ‘paper loss’.  But with that particular loss,  we were absolutely certain we’re going to get our money back.   As long as long we didn’t have to sell, we were OK.

So where are we now?  Fortunately, the city has fully recovered.  But nobody seems to be talking about that.  For accounting wonks, you’ll be happy to know that we had budgeted $0 in 2009 for realized gains and unrealized gains, and we’ve actually made millions.  So we’re not only back on track, we’re more than back on track.  And yet, Mayor Dan Sullivan keeps cutting and cutting, and laying people off.  AND while he’s doing all this, our mayor is voluntarily taxing $10 million below the tax cap.  This is a choice he’s decided to make.  But, instead of taking responsibility for it, he’s just blaming the guy before him for financial woes that no longer exist.

Nowhere in the first 60-page report from the city attorney Dennis Wheeler, nor in the follow-up report does it mention those unbudgeted gains, which may be as high as $25 million.  He’s been charged to paint a gloomy picture despite reality which is actually pretty good right now, so we can understand that little omission.

These guys know exactly what they’re doing.  They’re hoping by breaking out their tiny sad violins, and presenting a bleak picture of a previously corrupt administration, and telling everyone we have no money, they’ll be able to get concessions from the unions, cut services to the poorest members of the community, and pave the way to topple our first Democratic Senator in decades and replace him with the current mayor.  They hope that the masses will be so busy looking at this “conspiracy” that they won’t actually notice that the city has its money back and more, that the previous administration did what they were supposed to do, that Dan Sullivan is taxing below the cap, and cutting essential services, and that they (to quote another infamous Alaskan) keep “makin’ things up.”

There’s a whole laundry list of accusations with little or no merit, which will get swatted down one by one.  A list, after all,  looks really incriminating, even if each individual item has no merit.  And why is there a list of these issues that will now be investigated with a $50,000 audit?  Because Dennis Wheeler, never actually picked up the phone to ask anyone from the previous administration any questions.  He just decided to make a list and leave it at that.  That’s way gloomier and doomier than getting your questions answered and finding out that everything is fine.

After all, what’s a witch hunt without some good fear-mongering propaganda?

As regards the latest development, [Begich] said: “It’s frustrating to see the Assembly and Sullivan administration continue to play political games and spend $50,000 or more of taxpayer money that could be used to fund critical projects and services. Standard & Poor’s recent affirmation of the Municipality’s AA bond rating has already substantiated the professionalism and integrity of the budget and finance information provided by my administration.”

But, he said, if the city goes along with an audit, he will supply information and answer questions.

Hooray! Our fair city has maintained the highest possible bond rating! Woo-hoo! Yeah, baby!  Hip hip….. Hey, what’s the matter over there? (We look quizzically at the sad, sad star). Turn that frown upside down Mr. Star!  This is great!  It means we all have to pay less money for things than we would if the city had a lower bond rating.

Well, despite his best efforts to sabotage the city’s bond rating, Assemblyman Bill Starr will just have to be happy with a good grade.  He did his best.  With an impressive show of melodrama and a breathless trip to the FBI to turn our city in, he tried his best to tank that AA rating.  He tried to convey to the powers that be that our super-great bond rating was based on fraud.  Mikunda Cottreell, the fine, upstanding company who did that audit (and is one of only two firms in the city who are even capable of doing this type of audit) must not be very pleased with Mr. Starr. .

“Standard & Poors’ affirming the Municipality’s AA bond rating is just further proof of the professionalism and integrity of the information provided by the Begich Administration,” Hasquet said in a statement. “You can rest assured if Standard & Poor’s was concerned about the bond rating, they would make it known in short order.”

Assemblyman Bill Starr recently contacted the FBI asking them to investigate the claims of Begich administration wrongdoing. He did not return request for comment.

But Hasquet hopes this will quiet him and other critics.

“Hopefully, Mr. Starr and his cohorts will stop trying to make headlines and start focusing on the real issues facing the city,” she said.

Mayor Sullivan says this is not about what has happened in the past but about where we are now.

The entire editorial staff at Mudflats (me) says, “Whatever.”  The Sullivan administration, Mr. Sad Starr and their cohorts have been doing nothing but whining and grousing about the previous administration since they took office.  Mr. Sullivan thinks the Senator’s chair looks a lot more comfy than the Mayor’s chair and apparently believes the “piss and moan” strategy is the best way to get there.

So what was the last bond rating when Mayor Begich was still in office?  Care to hazard a guess?   Yes.  That would be the same excellent AA bond rating we just got.

In other words, (according to the current administration) we got a good ratingduring the second term of the Begich administration, and we got the same good rating in the first year of the Sullivan administration, and the sky is falling and it’s all Mark Begich’s fault even though we don’t look to the past but only live in the present, both of which look good.

Grab the hand rail if you feel dizzy.

And as soon as you recover your balance, grab your wallet.  Because next thing on the administration’s “to do” list is to have a “forensic audit” done.  “But, didn’t we just have an audit done,” you ask?  Why, yes we did.  “And didn’t the results of that audit lead to our super-fantastic AA bond rating?”  Why, yes they did.  “And aren’t audits expensive?”  Why yes, as a matte of fact they are.

So what gives?   What you’re witnessing is a waste of time and money which will pay for negative advertising against Mark Begich and for Dan Suliivan.  It’s the price of a witch hunt, and we get to pay for it.