Blames prior councils, managers for city’s fiscal fix
September
4, 2014
Chico
News & Review
By
Robert Speer
Once again, former leaders of
the city of Chico—in particular City Manager Dave Burkland and Finance Director
Jennifer Hennessy, along with the city councils in place from 2007 to 2012—have
been blamed, to a significant extent, for the financial crisis the city now
faces.
This time it was the current
council members pointing fingers.
At its meeting Tuesday (Sept.
2), in its legally mandated response to the 2013-14 Butte County Grand Jury
report, the council voted, 6-1, with Councilwoman Ann Schwab dissenting, to
acknowledge that it agreed with nearly all of the jury’s findings critical of
the city’s handling of the crisis.
On the positive side, the
council agreed with the jury that nobody broke the law or enjoyed personal gain
as a result of actions taken. And it acknowledged that the Great Recession and
the decrease in tax revenues that resulted, as well as the state’s
commandeering of redevelopment and other funds, were the primary causes of the
crisis.
The council also went to great
lengths to point out that, in 2012, when it became aware of the severity of the
problem, it took steps to bring in a new administrative team (headed by Brian
Nakamura) and told it to right the ship.
But the council also agreed
with the sometimes harsh indictments of prior administrators and
councils—including councils on which three of them, Schwab, Mary Goloff and
Mayor Scott Gruendl, served—for compounding the problem.
Specifically, the current council
agreed that the “[previous] City Council failed in its fiduciary duty and
oversight duties.” City administrators hid the scope of the problem, and the
council failed to “dig into the data,” as Vice Mayor Mark Sorensen put it, to
see what was going on.
As a result, the city was
allowed “to deficit spend for many years, accumulate [internal] debt and erode
its cash position to dangerous levels. All while being told that the General
Fund was generally balanced each year.”
Interestingly, city staff had recommended
a softer response to the grand jury finding, one that disagreed with it,
pointing out that since 2012 the city had been working to solve the fiscal
problems.
The current council also agreed
that upper management “failed to share complete and accurate information with
council members.” It noted, however, that the new city administration has
implemented timelier budget reports.
The council also agreed that,
“[w]ith respect to finances, it appears that the prior City Manager [Burkland]
abdicated his responsibility and allowed the Finance Director [Hennessy] to
take charge.” Piling on, the council noted something not mentioned in the
finding: that the city manager also had failed to follow a City Charter mandate
requiring him to “keep the council advised of the financial condition and
future needs of the city ….”
The grand jury questioned the
generous pay packages enjoyed by upper
management. In response, the council noted that in 2013 it increased its
authority over budget appropriations.
The only finding with which the
council disagreed was the jury’s contention that a “council-manager model of
governing [such as Chico’s] leads itself to potential problems.”
Every form of government has
potential weaknesses, the council noted, adding that it “does not believe the
council-manager form of government, the most popular in the country, is more
prone to these weaknesses than others.”
The grand jury made a number of
recommendations that the council either agreed to implement or already had
implemented. Among them were calls for greater transparency in city government,
better training for new council members, contract adjustments to bring down the
city’s high salaries, and better controls over enterprise funds.
The council disagreed with one
recommendation, that the city “rehire lost staff when funds become available,
instead of contracting out for services.” The city needs to maintain
flexibility and keep its options open, the council stated.
This is an election year, and
Sorensen and Gruendl are both up for re-election. That wasn’t mentioned during
discussion of the grand jury report, but it surely was on people’s minds.
Conservative gadfly Loretta Torres, for example, once again lashed out at
Gruendl for his alleged “mismanagement” while calling Sorensen “a hero” for
having uncovered it.
For his part, Gruendl has
insisted that he was as hornswoggled by Burkland and Hennessy as everybody
else. Since his awakening, he insists, he has brought all his considerable
experience and expertise to bear on rectifying the situation.
Local attorney Mike Bush urged
the council to reject the grand jury report in its entirety. It’s compromised
by the fact that the jury’s foreman (Chuck Nelson) was a former mayor of Chico
at a time when the deficit was already developing and therefore incapable of
being objective.
Regular council attendee Sharon
Chambers may have put it best, however: “I think it should just go away and
we’ll have peace.”
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