As Budget Woes Mount, City Managers/Staff Spend On Extravagant Meals & Luxury Resorts At Taxpayer Expense

A2P Notes: This is filed under “Scoops & Scores” because you read it here first.

Over the past 36 months Council has struggled with budget “deficits,” threatened to close Mack Pool and the Burns Park Senior Center to make ends meet, powered down streetlights, cut spending on parks, cut fire coverage to inadequate levels, left vacancies in the police department and reduced police staffing, raised fees for sewer, water, solid waste, and parking to plug holes in a budget stretched thin by over-spending and debt payments. At the same time, Mayor and Council have continued to allow city employees to lodge at some of the most exclusive and expensive resorts in Michigan and elsewhere—at taxpayer expense, as well as enjoy extravagant meals at restaurants all over town, spending as much as $1,900 for meals at times.

A2Politico examined city staff credit card records, and they show that Ann Arbor taxpayers have paid for city employees (primarily senior managers) to stay at resorts such as the Grand Hotel on Mackinaw Island, the Grand Traverse Resort, Crystal Mountain Lodgings, Hilton Hotels Disney, Hilton Hotels Waldorf, Radisson, Hyatt, and Loews hotels, Disney Resorts, Mission Creek Resort & Spa, Shanty Creek Resort & Spa, the Soaring Eagle Hotel, and Great Wolf Lodge.

Ann Arbor’s CFO and current interim Administrator Tom Crawford and his Finance Department have, once again, been cited by auditors for allowing credit card purchases without proper documentation. Ann Arbor’s CFO Tom Crawford, former City Administrator Roger Fraser, John Hieftje and City Council members together, have a history of poor oversight of City credit card use. At the end of April 2011, Fraser went to work in the administration of Republican governor Rick Snyder as the deputy state treasurer for local government services. As a part of his new job, Fraser will recommend whether Michigan cities in financial trouble need to be taken over by Emergency Financial Managers.

In 2006, the city’s auditor, Abraham & Gaffney, flagged Ann Arbor for allowing use of city credit cards without proper documentation. Then City Administrator Roger Fraser was one of the most flagrant abusers. FOIAs 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, Hieftje and Council changed City policy so that city employees were allowed to use city credit cards for travel and entertainment. Prior to the change, it had been forbidden to use city credit cards for travel and entertainment expenses. In addition to changing the rules, the City of Ann Arbor responded to the 2006 audit by promising to put stricter controls into place to make sure that employees provided documentation of all credit card purchases.

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

On March 13, 2011 Second Ward Council member  Stephen Rapundalo complained loudly to a receptive media about the overly-generous benefits and pay offered to the city’s unionized employees:

He’s staring at a new report on city employee compensation, pausing at a chart showing what individual workers in each of the city’s nine different labor groups contribute toward the cost of their health care benefits. He can’t get past the zeros on the page.

“Where do I sign up?” says Rapundalo, D-2nd Ward and chairman of the council’s labor committee. “It’s unbelievable. In this day and age, this is kind of unrealistic.”

Rapundalo is one of two Democratic members of City Council who gave donations to the Republican gubernatorial candidate in 2010. Rapundalo’s current run for re-election against a Democratic challenger may explain the sudden inability to “get past the zeros on the page.” The truth is that as a member of the Council’s Labor Committee (along with John Hieftje, Fourth Ward Council members Margie Teall, Marcia Higgins [facing a Republican opponent for her seat on Council] and Second Ward Council member Tony Derrezinski) Rapundalo recommended Council approval of the very same benefit packages at which he is now feigning utter shock.

Stephen Rapundalo has also been exceedingly generous with taxpayer funds with the city’s managers and other non-unionized employees, including those whom the Charter requires Council members to directly supervise. Ann Arbor City Council and its Mayor, John Hieftje, have given free reign to Ann Arbor’s non-unionized employees to spend tens of thousands of dollars on $1,000 meals, travel, four star resorts, and entertainment in the midst of the worst economic downturn since the Great Depression.

Over the past 36 months, city employees have charged taxpayers to eat at restaurants all over the city at functions which had no documented public purpose and, many times, for meals that had no documentation at all. Council has debated closing Mack Pool and the Burns Park Senior Center to save money, whether to park cars at Allmendinger Park to raise revenue, and whether to layoff firefighters. City staffers enjoyed a $1,909.17 meal at the French Quarter restaurant, in Ypsilanti. In December 2009 Roger Fraser stood before Council to warn of projected revenue reductions. The December 5, 2009 headline in AnnArbor.com was “Ann Arbor’s Budget Problems Grow More Imminent.” On December 11, 2009 city employees enjoyed a $600 meal at Moe’s Southwest Grill. One month later, in January 2011, taxpayers paid a $423.36 room charge for a city staffer at the Crystal Mountain Resort & Spa and over $2,000 in airfare for city staff travel.

In March of 2009, Roger Fraser recommended laying off firefighters. That same month, taxpayers treated staffers to an $871.50 meal at Afternoon Delight. In March 2009 Ann Arbor taxpayers also footed the bill for a $382.60 room charge at the Grand Traverse Resort & Spa, a $427.14 charge for a room at the Hilton, in Miami, Florida and a $578.91 room charge at the Omni Hotels Royal Hotel & Resort in New Orleans, Louisiana, a hotel described thusly on its web site: “The Omni Royal Orleans is a four-diamond luxury hotel located in the historic French Quarter.”

May 12, 2009 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.

There are, literally, dozens of credit card charges for food from Zingerman’s Bakehouse and Zingerman’s Coffee, and many of those meals, not surprisingly, cost taxpayers hundreds of dollars. If you’re cutting back on takeout pizza to save a little money, Ann Arbor city staffers are more than making up for your frugality. There are, again, dozens of City credit card charges for pizza from shops all over town.

Credit card spending records for 2010 look much like that of those for 2009. While Council discussed the idea of a city income tax, voted to cut city services such as leaf collection, voted to layoff firefighters, increase water rates, increase fees for the use of recreational facilities and programs, power down streetlights and once again raise parking rates, city staffers and their managers were allowed to continue to book rooms in luxury hotels & spas and eat meals costing hundreds of dollars—all on the taxpayer dime.

It seems that under the leadership of Mayor John Hieftje not only has he been “comfortable” cutting services such as police and fire, cuts which have resulted in slower response times and, quite possibly, the deaths of more residents in house fires, he has been equally comfortable looking the other way while city managers and staff bilked city coffers for stays at luxury resorts and hotels in Michigan, as well as in Colorado, Florida and New York. Ann Arbor City Council members have allowed city managers and staff to continue to charge taxpayers for tens of thousands of dollars worth of meals out, while at the same time voting to cut services to residents.

In a city where elected officials, such as Third Ward Council member Christopher Taylor, repeatedly claim in public there is no money to fund services at their present levels, and seek to explain (using inaccurate numbers) why we should be comfortable that our city debt has doubled, it seems particularly thoughtless and even negligent to continue to allow city managers and their staff to spend on extravagant meals out, travel, entertainment, and lodging at luxury resorts in the French Quarter in New Orleans, Miami Florida and Disney World.

Elected officials all over the country are instituting policies that strictly limit, and in some cases have eliminated, city staff travel and meals thanks to budget woes. To pay the credit card charges of staff who do not provide documentation for the charges is simply an example of poor oversight of the taxpayers’ money.

You can download City staff credit card receipts for meals, travel, and hotel/resort & spa accommodations here. Council has yet to finalize the city budget. You can contact John Hieftje and City Council members with your feedback and suggestions by clicking this link.