Email Reveals Bogus Revenues

Many people may remember back in April and May when I wrote several posts that were highly critical of then Mayor O’Brien’s proposed budget. In one of my posts I outlined a number of revenue projects that I felt were beyond belief, no matter how optimistic you wished to be about our city and our economy. This week I am alarmed, but not surprised, that Acting Finance Director, Becky Salerni, had the exact same concerns and raised them to O’Brien in April of this year. Those concerns were completely ignored.

In an email dated April 5, 2013, Salerni called out Mayor O’Brien on a number of bogus revenue projections that she felt were unrealistic. This was not a short list, you can download the scan of the original email here (or an easier to read version of the document here). There were over 20 items that were questioned in this email, many of them the same exact issues I pointed out back in May. These projections, such as single handedly increasing the Rock Cat’s rent, doubling parking revenues, conveyance tax projections, and many others, total over $30 million in over-inflated revenues. That means that Mayor O’Brien’s budget, which he repeatedly called “balanced” is anything but.

The Email Coverup

This email definately brings to light a troubling truth, that O’Brien’s budget from the start was heavily flawed and he knew it. His own finance director told him early in April that his revenue projections were “unjustifiable”.  Furthermore, his office deliberately attempted to cover-up this email and hide it from the public. In early May I submitted an FOI request to the city asking for any emails or other documents related to revenue projections for the Mayor’s budget. After a great deal of stalling the Mayor’s office released a great number of mundane documents, many of them not even pertaining to Mayor’s revenue projections.

What was notably absent from the materials released by the Mayor’s office was this very email. It clearly relates to the Mayor’s revenue projections and there is no justifiable reason it should have been excluded from the scope of the original request. Clearly the Mayor was afraid that if the public knew just how unrealistic his budget was it would harm his re-election effort and so he attempted to hide the document from existence.

The CPOA does not know who anonymously leaked the email to us, but we only wish that it had come to light earlier, that perhaps the Common Council would have done a great deal more work in revising the Mayor’s bogus budget if they knew just how full of lies it was.

Our Current Fiscal Health

The revelations brought about by this email have a profound impact on the current fiscal health of the city. We now know that Mayor O’Brien willfully ignored the recommendations of his finance director and padded his revenue projections by at least $20 million dollars. Furthermore, he bought himself additional “padding” by underfunding several expense lines in the city’s budget.

Mayor Erin Stewart has already announced a hiring freeze and has directed that all purchase orders and funding requests comes through her office. This is certainly a good first step as the city tries to come to terms with our current financial situation. This past April at the annual CPOA meeting I cautioned that the Mayor’s budget had left such a substantial hole our revenues with his inflated projections that it might require a mid-year supplemental tax to actually balance our budget. I certainly hope that my prediction does not come true, but if that is what needs to be done we certainly have no one to blame but Mayor O’Brien and the Common Council who passed this damaged budget to begin with.

Unanswered Questions

There are still many unanswered questions about the financial dealings of the past two years. We have yet to have a final accounting regarding the Octoberfest or the Halloween event that took place this Fall. Many contracts awarded to politically connected companies and individuals such as David Pudlin and Global Strategies Group (run in part by Roy Occhiogrosso) have produced little visual results and it will be interesting to see what information may come out about the work done by these individuals.

The city’s long term fiscal health, as well as our continued ability to borrow and issue bonds as well as maintain financial stability over the next few years is unknown and troubling. And there are issues of union contracts, many which O’Brien seemed to negotiate in the final days leading up to his election as a last ditch effort to buy votes. We don’t know all the details of O’Brien’s consolidation and whether or not it was simply a great big paper shuffle on a organizational chart or whether or not there were any tangible benefits that materialized. In short, there is much that may come out in the next few months that cause us to question what happened over the past two years.

Fraud?

If an company had done what O’Brien did, overstate their earnings projections by more than 10% of their entire budget, and then used those lies to encourage investors to buy stock in their company they could be brought up on fraud charges. What was done with our municipal budget should be considered criminal, if it isn’t already. I sincerely hope that the new administration and the Common Council takes a serious look at what happened in the Mayor’s office over the last few years to determine if his financial mismanagement rose to a level of criminal negligence. I also hope that the Common Council displays an appropriate sense of outrage at how blatantly they were lied to by the Mayor’s office with regard to his revenue projections.

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