City Hall — Swords drawn over budget deficits

City Hall

June 5, 2001

 Swords drawn over budget deficits

Council President William Bell moves for denial of a budget deficit reduction ordinance proposed by Mayor Bernard Kincaid. The Mayor says accusations by Bell that current budget deficits are contrived “betrays an utter lack of regard for the current and future financial condition of the city.” Kincaid warns that a downgrade in the city’s bond rating will almost certainly result. According to Kincaid, Bell should be aware of the bond rating threat since the council president recently traveled to New York for meetings with ratings agencies. Budget revenue shortfalls include a decrease of approximately $2.5 million in sales taxes to date due to the national economic downturn, a decrease of $1.9 million in business license taxes, and the loss of more than $6 million budgeted last year from anticipated Water Works revenue. Kincaid warns that the city’s ability to provide basic services to citizens and to pursue new programs to move the city forward will be in peril. “This deficit is real; it is not contrived,” notes the Mayor.

If the Mayor’s budget reduction ordinance is passed, items already passed by the council would have their contractual obligations threatened, according to Bell. He denies that his trip to New York included discussions about the city’s budget, and disagrees that recent downgrading of the city’s bond rating had anything to do with any action or lack thereof on his part. Bell also claims to have never heard of Fitch IBCA, one of three bond rating agencies involved with the city, until Kincaid read a letter three weeks ago regarding that agency’s downgrading of the city’s bond rating. Councilor Sandra Little joins Bell in refusing to support the Mayor’s ordinance, still fuming that her district’s Roosevelt City fire station has been held up by the Mayor’s office for two years.

Blake and the bottom line

Councilor Jimmy Blake notes that law requires that the budget be balanced. “We’ve got an interim finance director [Michael Johnson] that’s been in office for a short period of time, and is getting thrown into a political ‘hot potato,’ unfortunately.” According to Blake’s understanding of the law, the finance director has the “ultimate authority” to decide what revenues must be budgeted for the coming year. Blake urged the council several months ago to play a role in determining where to make up for the imminent shortfalls, which first came to light several months ago when Kincaid warned that deficits loomed ahead. Demanding that political games cease, Blake says that if the council refuses to pass the deficit ordinance, it needs to legislate what changes must be made. “If we refuse to act on his recommendation, then it’s our responsibility to create our own recommendation. And we have not done that,” scolds Blake.

Council President Bell says that he has previously asked the finance director to look for other areas to cut, and vows that he is willing to sit down with Kincaid, the finance director, and the council to solve the deficit dilemma. Councilor Aldrich Gunn protests any slicing of projects in his district. Gunn quietly asks the Mayor if the city’s bond rating is higher or lower than two years ago. Kincaid responds that the bond rating is higher than 18 months ago. The two larger companies, Standard & Poor’s and Moody’s, rate the city at AA, whereas two years ago the rating was AA negative. Kincaid notes that “cataclysmic circumstances within city government” affect bond agencies’ ratings. [Fitch cites the city's unstable political climate as one reason for the rating downgrade.] Bell, however, says that the improved bond ratings from the larger bond agencies were due to the transfer of the assets back to the Water Works because the agencies viewed the transfer as “a stabilizing factor” since the city would not carry the Water Works debt. Bell objects that Kincaid’s lawsuit seeking to halt the asset transfer did nothing but perplex the bond rating agencies. The council president urges councilors to personally go to New York to visit the agencies to verify his position.

The city attorney’s side of the story

City attorney Tamara Johnson gives her account of what occurred during her two trips to New York to meet with bond rating agencies. The first trip included Kincaid’s chief of staff Al Herbert and former finance director Mac Underwood, who left that position several weeks ago to take the job of assistant general finance director with the Birmingham Water Works. Johnson says that she never misrepresented the status of the Water Works lawsuit; instead the entourage explained the lawsuit. She insists that she gave no guarantee as to what the outcome of the lawsuit would be. Her second trip included Herbert and interim city finance director Michael Johnson. On this particular New York trek they were told that a few days prior to their arrival, Bell and an attorney for the Water Works Board had visited the bond rating agencies. She notes that Moody’s and Standard & Poor’s, the two major bond agencies, seemed to understand the city’s position in the lawsuit. The two agencies inquired not only as to why an asset as valuable as the Water Works would be transferred away, but also asked how the city planned to pursue further funding of the school system, as this was the underlying purpose in documents transferring the assets back to the city originally, according to Johnson.

Bell immediately objects to Tamara Johnson’s account, denying that he had stated that Johnson had misrepresented anything. Bell explains that Johnson and her group did tell the agencies that the Water Works assets were being transferred. Johnson disagrees, and reiterates that she only reported the status of the lawsuit.

Councilor Leroy Bandy welcomes Bell’s suggestion that councilors travel to New York to confer with rating agencies. Bandy says he first suggested that idea two years ago. “This is educational for me. We’re newcomers!” pronounces Bandy, perhaps not choosing the best words for a councilor seeking re-election in four months after having served for four years.

Blake’s philosophical conclusion

In a day of reiterations, Councilor Blake again stresses that if the council had addressed the deficits five months ago when they were first recognized, there would be no crisis with only three weeks left in the fiscal year. Addressing interim city finance director Michael Johnson regarding the finance department’s cooperation on debt resolution, Blake says, “I’m quite sure I’ll have absolutely no say in what we determine on that. There will be five or six people who will get together and make their determination about that. And it won’t be done in the light of day, just as it ain’t never done in the light of day in this city. And then let’s turn it over to the president of the council and his cohorts, and let them tell us what we’re gonna end up doing ’cause they’ve got the votes. And then let’s go from there.”

June 12, 2001

Jail inmates eating too well

The city council votes to adopt an amended version of Mayor Kincaid’s Fiscal Year 2001-2002 operating and capital budgets, with Councilors Blake and Lee Wendell Loder voting not to approve. Included is a 6 percent pay increase [Kincaid's employee raise had been 3 percent] for all city employees so that police and fire fighters could receive a substantial increase as previously demanded. [Public safety workers have been lured away from Birmingham to surrounding municipalities offering large pay increases.] A $100 monthly uniform allowance for police and firefighters is also included.

Councilor Loder proposes a different plan from the one presented by Council President Bell. Loder says that he fully intends to honor his commitment to provide a substantial pay increase for public safety personnel. The councilor is not happy about elimination of appropriations for the Pike Road redevelopment project, which could force Limbaugh Toyota to move out of the city limits. Among Loder’s proposals are a $200 monthly uniform allowance. [Police and firefighters had requested a $242 monthly allowance. The county has already voted to provide a $160 allowance each month.] Loder also suggests reduction in travel expenses by sending one representative to conventions instead of several councilors or city employees. Elimination of UAB football funding and reduction in “food for prisoners” by $100,000 are also included in Loder’s cuts.

Call out the National Guard

Mayor Kincaid opens his attack on the council’s proposed budget cuts by noting his commitment to properly compensate police and firefighters “responsibly.” Kincaid reminds the council that former Mayor Richard Arrington refused to support the 20-year retirement plan (as opposed to the previous 25-year plan) that Kincaid has strongly supported, a plan that was subsequently passed this past year. The Mayor says the new retirement plan is “tantamount to a pay increase from city government, so it’s not as if they [public safety personnel] have been shunted to the side.” A reduction in city services and personnel will result, says Kincaid, warning, “Some of the people who will enjoy the 6 percent raise in this budget will be laid off.” He stresses that the same goals desired in pay raises can be attained by increasing the benefit package. According to Kincaid, the uniform allowance is being viewed as a salary increase, and thereby would be subject to taxation.

Bell argues that the uniform allowance is not a salary, “regardless what you call it in the press.” The council president denies that his proposed budget cuts are a power play on his part, and says that he is not trying to be mayor. Councilor Don MacDermott defends the pay increase, noting that former Birmingham police officers who are currently on the Vestavia police force have told him, “You better do something or else you’re going to have to call out the National Guard to police your streets.” Birmingham officers present at the council meeting burst into a thunderous round of applause.

Blake’s final hurrah

Councilor Blake notes that this is his eighth and final budget adoption. Offering a comparison of the fiscal battles he’s encountered, Blake says that the first six budgets were passed by a mayor [Richard Arrington] and six councilors who were “overtly members of the Citizens Coalition, so there wasn’t any pretending about what we were doing.” Blake reminds the council that he advocated pay raises for police and firefighters each of those years, and put together detailed budgets that were “responsible.” The councilor then confronts the large group of police officers and firefighters present: “Public safety employees are not the entire city. And I will not, because this is an election year, vote for a budget that is unbelievably irresponsible and designed specifically to re-elect those five members of the Citizens Coalition and those one or two members of this council who have somehow cut some deal on this thing.” Blake continues, “There are so many holes in this budget, you could drive 10 trucks through it. Let me say to my friends in the police and fire department that were clapping loudly for an irresponsible budget this morning, you are cutting your future off for today by supporting this budget.” Blake concludes by adding that he will not vote for a budget that “puts hundreds of thousands of dollars into the council budget so that they can hire their buddies, [so] that they can get re-elected, and puts peanuts into the districts of those few people who cut a deal with Coalition members again this year, and sell out the future of this city as a responsible entity.” He surmises that it is a “nut budget.”

Gunn defends trees, denounces hydrogen bombs

Birmingham airport officials have decided to forego plans to build a new runway parallel to the existing one. Councilor Gunn notes the destruction of the East Lake community that would have resulted from the expansion. Gunn speaks up for trees in East Lake, praising them for their ability to stop wind and sound. “It’s amazing what trees [can] do. We talk about how many homes we move, how many families we move [as a result of airport expansion]. But we don’t talk about how many trees we’re moving. That’s something money can’t buy. That’s where you get your fresh oxygen from.” The councilor says that runway expansion plans would have decimated the eastern area to the point that it “would have been worse than the hydrogen bomb.” Bell leaves the council chambers during the discussion, resulting in a tie vote on council approval of the airport budget. It will be brought back up next week.

Let them eat nothing

The meeting ends on a light note when appropriations for $14,000 in emergency dental care for inmates at the city jail are brought up for a vote. “Now if we don’t approve this, then the inmates will have bad teeth and they won’t be able to eat as much food,” Bell points out, barely able to control his laughter.
“Loder was saying we need to cut down on the amount of food [for inmates]!” &

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