While Citizens Bemoan Roads & Taxes, Spending On Meals Out And Four Star Lodging For City Staff Rises 30 Percent

Please note: This piece was corrected to reflect the fact that Ward 2 Council member Sally Hart Petersen was not seated on Ann Arbor City Council until November 2012.

THE ANN ARBOR INDEPENDENT recently reported that 76 percent of city residents’ written responses to the 2013 National Citizens Survey included comments about the poor conditions of the city’s roads and Ann Arbor’s property taxes. Fewer residents than ever before rated as “excellent” or “good” basic city services such as garbage collection, snow removal, police and fire.

Over the past 24 months, a group of Council members allied with Mayor Hieftje and Council members concerned with the impact of service cuts on neighborhoods and funding cuts on safety, have struggled to control the budget. Council members have threatened to power down streetlights, close pools and the Burns Park Senior Center. They have voted to reduce  maintenance of parks, cut fire staffing to levels judged inadequate by former Fire Chiefs Hopkins and Lanza, left vacancies in the police department and reduced police staffing. Council members have voted to raise fees for sewer, water, solid waste, and used parking revenue to plug holes in a budget stretched thin by over-spending and debt payments, or so say several City Council members, including Ward 4 Council member Jack Eaton and Ward 5 Council member Mike Anglin.

Meanwhile, over the past 24 months city managers and staffers have spent hundreds of thousands of dollars on travel, eating out and staying at luxury hotels and casinos—all at the expense of the city’s taxpayers. Just as was the case under former City Administrator Roger Fraser, under current City Administrator Steve Powers, hired in 2011,  city employees lodge at some of the most exclusive and expensive resorts in Michigan and elsewhere and spend big on take-out food and dine-in meals. For instance, over the past 24 months staff used their city purchasing cards (P-cards) to buy $4,275 worth of food at Pizza House Ann Arbor. There were also combined purchases of over $1,000 from Cottage Inn and Little Caesar’s Pizza over the same period. The pizza purchases were categorized under “employee recognition,” “materials and supplies,” “governmental services” and “training.”

The Ann Arbor Independent examined city staff P-card records, and they reveal that Ann Arbor taxpayers have paid for city employees (primarily senior managers) to stay at resorts such as the Canyons Resort in Park City, Utah, Crystal Mountain Resort, Grand Traverse Resort, Homewood Suites in Charleston, South Carolina, Mission Creek Resort & Spa, the Palms Casino in Las Vegas, Shanty Creek Resort & Spa and the four star Sheraton in New Orleans, “just steps from the French Quarter,” according to that hotel’s website.

In the city’s 2012 audit, Ann Arbor’s CFO Tom Crawford’s department was cited for “deficiencies” in internal controls which, according to the audit, could lead to fraud. Mr. Crawford’s department has a long history of “deficiencies” identified by the city’s auditors.

In 2006, then city auditor Abraham & Gaffney flagged Ann Arbor for allowing use of city P-cards without proper documentation. Then City Administrator Roger Fraser was one of the most flagrant abusers. Freedom of Information Act requests revealed that auditors caught Fraser charging airfare, hotel and other costs for his wife to his city credit card. The auditor writes in the 2006 report, “Instances were noted where purchases were made using the City credit cards (meals, recognition functions) that violate Michigan State law or Attorney General Opnions as compiled in Michigan Department of Treasury’s Document ‘Detemining Lawful Expenditures.’”

Under the heading UNLAWFUL EXPENDITURES the auditors wrote: “Specifically disallowed are expenditures for meals (with some exceptions) and employee recognition. Numerous instances of meals being purchased were noted.”

The auditor suggested corrective action: “We recommend that all expenditures that do not have a documented public purpose be discontinued.”

Instead, John Hieftje and Council changed city policy so that city employees were allowed to use P-cards for travel and entertainment. Prior to the change, it had been forbidden. In addition to changing the rules, officials responded to the 2006 audit by promising to put stricter controls into place to make sure that employees provided documentation of all purchase card use.

However, in 2010, the auditor once again found that 25 percent of the purchases using the city P-cards contained no documentation.

Council members have been exceedingly generous with the city’s managers and other non-unionized employees, including those whom the Charter requires Council members to directly supervise. This includes the City Administrator Steve Powers and the City Attorney, Stephen Postema.

Over the past 24 months taxpayers have footed the bills for city employees to eat at restaurants all over Ann Arbor.

The June 5, 2011 headline in The Michigan Daily was “City of Ann finalizes budget for 2012 fiscal year.” In that piece, it was reported, “The approved budget will eliminate 30 fire and police department positions — most of which are currently empty — including five police officers and five fire marshals.”

Three months later, a city staffer spent $808.92 on a stay at the Park Place Hotel in Traverse City, Michigan. On October 12, 2011 city employees purchased a $500 meal at Holiday’s Restaurant in Ann Arbor.  On October 26, 2011, taxpayers paid a $1,573.25 room charge to the Hyatt Regency McCormick in Chicago.

In May of 2012, City Council approved the budget without proposed increases to police staffing. Ward 2 Council member Jane Lumm  reminded her Council colleagues that, “The (police) chief has identified the path forward — proactive rather than reactive policing.”

Despite this, six Council members rejected Lumm’s proposals to amend the City Administrator’s proposed budget to increase the number of police, to restore Fall leaf collection, as well as holiday tree pick-up.

The collection of holiday trees cost approximately $34,000 the last year it was done, in 2009.

A few days after the May 2012 approval of the budget, taxpayers paid a $412.48 room charge at the Canyons Resort in Park City, Utah. In August 2012 Ann Arbor taxpayers paid for a $1,485.45 room charge at the Crystal Mountain Resort & Spa, then a $1,369 charge for a room at the Grand Traverse Resort, and finally a $1,870.30 room charge at the Hilton in Columbus, Ohio.

Steve Powers is by no means the only City Administrator to offer up budgets that cut services while allocating hundreds of thousands of dollars for staff perks including travel, stays at four star resorts and meals out.

On May 12, 2009 previous City Administrator Roger Fraser told the Ann Arbor News, “Our approach in the coming year is to be extremely frugal.” To makes ends meet, Council approved a budget which eliminated downtown beat cops.

One week later, on May 19, 2009 city staff enjoyed a $449.94 meal at Cottage Inn restaurant on William Street in Ann Arbor. On May 21, 2009 taxpayers paid a $610.35 charge for a city manager to stay at the Grand Hotel on Mackinaw Island. On May 30, 2009 taxpayers paid $625.32 for a city staffer to enjoy a stay at the Hilton Hotels Disney Resort, as well as $630.75 for charges at the Shanty Creek Resorts.

According to P-card records, over the past 24 months, taxpayers paid $231,730.66 in charges for conferences, training and travel for city staff. Since 2009, taxpayers have paid well over half a million dollars in P-card charges alone for city staff to eat out, lodge at luxury hotels and attend conferences, records show.

It would be necessary to file dozens of Freedom of Information Act requests for individual receipts for reimbursements made to city staff in order to tally the exact amount spent on meals, travel and conference expenses.

Between 2011 and 2012, P-card charges related to conferences, training and travel increased 30 percent, an increase of slightly more than $34,000—almost exactly what it would cost to restore holiday tree collection for the city’s residents.