Ann Arbor city staffer (and likely the next City Administrator) Sue McCormick (pictured left) has earned the nickname of SHOPerations Manager for the City of Ann Arbor. Why? Because Ms. McCormick likes to spend your money on shiny new trucks, software, and other municipal toys, while City Council members twist in the wind trying to come up with last minute resolutions to “save” staff proposed cuts to parks, human services and, once again, police and fire.

Third Ward Council member Christopher Taylor has worked mightily to convince his constituents and the public that money simply can’t be moved from bucket-to-bucket. Taylor’s fabrications, shoddy understanding of the city’s finances, and willingness to serve as the Council’s official huckster-in-chief, earned him a Weekly Whopper recently. In an email to constituents concerning city debt levels, Talyor understated the city’s total debt by almost $215,000,000 either out of sheer ignorance, or in an effort to mislead people into believing that the city’s General Fund has not been over-stretched by bond/debt payments to cover costs for the new Police-Court building and the Fifth Avenue underground parking garage, among other projects that, combined, have increased city debt payments made from the General Fund and resulted in continued service cuts.

The current budget cycle is no different than previous budget cycles. Council proposes cuts to citizen services, parks and, of course, to impose the requisite fee hikes that, collectively, amount to back-door taxation. In a recent constituent email, First Ward Council member Sabra Briere, ever more apologetic about her inability to represent the First Ward residents effectively, writes how sorry she is to hear fees for certain facilities are going to rise. She writes, “Most of the proposed fee increases won’t affect you or me unless we swim, ice skate, rent a park shelter, or otherwise use the recreation system.  I’m not happy about all of the fee increases in Parks and Recreation….The Parks Advisory Commission is satisfied with the increases, however, so I decided to relax.”

Briere’s decision to “relax,” sounds much like John Hieftje’s now infamous quote about being “comfortable” with the cuts he’s made to police and fire services over the past decade. These cuts, according to recent data released by the fire fighters’ union, revealed in a May 2, 2011 A2Politico story, have resulted in significantly slower response times, and an increase in the frequency and number of fire-related deaths.

At a recent City Council meeting, the President of University Bank, Stephen Lange Ranzini spoke. His comments went to the heart of the budgeting fictions perpetuated both by the city’s CFO Tom Crawford, as well as John Hieftje and his supporters on City Council. According to AnnArbor.com Ranzini argued that:

“He’s combed over the city’s audits and can’t figure out why the city doesn’t tap into some of the more than $100 million in cash reserves it has on hand. We aren’t just having a rainy day, but a financial hurricane. What is the $103 million rainy day fund for but times like now?

“Ranzini argued the city is savvy enough to find a way to use the money it has to avoid cuts to public safety that could have drastic consequences. He pointed out the city regularly taps the DDA’s buckets by siphoning off parking system revenue to help augment the general fund. Let’s drain the buckets, he said. Persisting with the fiction of the various buckets enables claims of poverty, which are easily seen through by those with financial budgeting experience.”

A significant part of the problem is that Ann Arbor city mangers have been allowed by elected officials to focus on their own priorities—priorities that are often not citizen services. City managers have been allowed to accumulate tens of millions in departmental surpluses and to establish fiefdoms. To understand exactly just how skewed the priorities are, A2Politico asked CPA *Karen Sidney to analyze the 2012 proposed budget and make specific recommendations concerning how Council can reign in over-spending by city staffers, such as Sue McCormick, and redirect spending on services. As A2Politico readers will see, there is ample money to fund police, fire, parks and other citizen services valued by those who pay taxes.

Karen Sidney’s Budget Letter: THE FY 2012 BUDGET

The FY2012 budget is on the May 16, 2011 Council agenda. Under our city charter, the City Administrator proposes a budget which goes into effect unless 7 council members vote to change it. The current proposed budget continues the trend of cutting basic services, especially police and fire, which could see as many as 10 layoffs plus elimination of vacant positions. Mayor Hieftje and his supporters on Council insist that Ann Arbor is better off than other cities and the cuts are an unavoidable result of the recession.

The truth is that Ann Arbor is better off than other cities because we pay higher per capita taxes than other cities. There are other solutions to the current fiscal mess the Mayor and his supporters have created besides continuing to slash basic services. Below are  changes I suggest Council make to the budget.

Council should eliminate pork projects

1. A $639,422 contingency is included in the general fund budget. This contingency is in the same line item that was used in the 2011 budget to cover the Justice Center overruns. If the City Administrator can’t explain what the money is for, it shouldn’t be in the budget. The budget should be amended to eliminate this contingency and restore police and fire positions.

2. $2.2 million for more new garbage trucks is included in the fleet fund budget. The fleet fund is an internal service fund. According to the last audit the city has an all time high of 28 garbage trucks, up from 18 the year before. Most of the $2.2 million is for new residential collection trucks even though Sue McCormick says she plans to outsource residential collection. Apparently the garbage company that gets the residential collection monopoly also gets a big taxpayer subsidy in the form of new trucks. Residents get higher fees and fewer services. Cancel the new trucks and restore services to residents.

3. $1 million for new parks vehicles is also included in the fleet fund budget. Parks needs a lot of things but $1 million in new vehicles is not high on the list. Cancel the new vehicles and transfer the $1 million to the parks millage fund, overseen by the Parks Advisory Commission.

Council should refund internal services over-charges

Internal service funds are supposed to be break even but the latest audit shows the city’s internal service funds have built up a cash hoard of about $20 million. That means these funds have overcharged other city departments $20 million. Internal service funds are used to divert money that should be used for basic services to more ego projects. $3.3 million in overcharges by the insurance fund were used to help pay for the new Justice Center.

When the IT internal service fund was established in 2006, the charges for IT services doubled. In 2006, the charges for fleet services also doubled while City Hall touted efficiencies from the $35 million new maintenance facility. The Increased charges have allowed the city’s top management to pursue more ego projects at the expense of basic services. Your street may not get plowed, but when the plow finally comes, it’s state of the art.

A2Politico revealed recently through independent analysis of the city’s own audited financial statements that city staff and elected officials have quietly bled $3.5 million dollars from the Park Maintenance and Repair Millage since 2008 by jacking up internal services charges levied against the millage fund. When asked about the skimming by Council member Briere on behalf of a constituent, McCormick wrote the following:

Hello Sabra,

While we could not match much of the data, I can offer in similar fashion to our discussion Monday, that the funding guidelines for the Parks millage and General Fund support of Parks contemplated that as the General Fund saw increasing pressure for reduction, many activities could be maintained by funding them with millage funds.  There were a few exceptions: Mowing, snow and ice control and utilities costs were the largest of these types of expenses which may not be funded with millage funds.  The internal charges, such as insurance, fleet charges etc.  will move wherever the personnel and equipment are being utilized and charged, so that follows the shifting of activities.  In the case of the vehicle charges increasing disproportionately, the increase in millage VS general fund Parks fleet charges is reflecting an increase in the level of Forestry work in Parks which is a very equipment/fleet intensive activity.

Please let me know if I can assist further.

Sue

I am mystified by Ms. McCormick’s email. She justifies the increase in parks fleet charges by claiming they are related to an increase in parks forestry expenses. However, if you look at the Budget Expense worksheet, you see that forestry expenses in the parks millage fund decreased by $146,023 between FY09 and FY10, but fleet charges increased $133,661 during the same period. Did it cost more in fleet charges to do less forestry? It’s a typical response from Ann Arbor city staff, and why Ann Arbor citizen services continue to be cut by Council Hiefje and his supporters on Council, such as Briere.

What more could be done?

Council should restore safety services positions and eliminate management positions

In 2002, the city had 958 employees. The city administrator’s 2013 budget proposes 688 employees, a 28% drop. But the pain from staff cuts has not been shared equally. By 2013 police and fire will have lost 35% of their staff compared to 2002 levels while the city attorney and district court have lost about 12% of their staff and the city administrator service area has lost 16%.

Winners include the DDA, whose staff has doubled, and public services area management. Sue McCormick oversees the Public Services area. Compared to 2002, the proposed 2013 budget has about 25% more people planning and overseeing capital projects, 33% more people in public services administration but 33% fewer people assigned to field operations, which is responsible for performing services like plowing, tree maintenance and road repair. One example of the shift from doers to managers is forestry. Before the Roger Fraser reorganization, the city had a city forester who was responsible for taking care of our trees.

When our last city forester, Paul Bairley, left, the city forester position was eliminated and replaced by an Urban Forester & Natural Resources manager (Kerry Gray) and a Field operations Supervisor III (Kay Sicheneder). The result has been big spending on a tree inventory and an urban forestry management plan while our trees continue to deteriorate.

Council should say no to Consultant contracts

The city has become addicted to consultants. The city has even posted a RFP for a consultant to help the police chief decide who to promote. Recently, Sue McCormick told Council that there was no one on city staff capable of conducting a public meeting. City staff needs to stop hiding behind consultants. We don’t need to pay consultants to justify decisions that have already been made. We also don’t need to pay consultants to conduct public meetings in order to manipulate us to make the “right” decision. City employees should be the ones talking to the public. The city staff member conducting the meeting should be the individual with decision making authority, not some junior staff member sent to absorb public anger about an unpopular decision.

Maybe if Roger Fraser, Mayor Hieftje and the council members who pushed the new justice center had had to face the public in a give and take public meeting, we might not have a new $50 million building next to city hall, which has been nominated for the dubious distinction of being the ugliest building in America.

* Karen Sidney is an Ann Arbor attorney and CPA. She has expertise in forensic accounting, which is the art of finding out where the money is going when people can’t or won’t tell you.