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In a press release on May 19 Commissioner Madigan provided a revised plan to address the city’s financial needs resulting from the pandemic. The release includes a statement that by borrowing additional moneys and drawing down more from the city’s fund balance, the projected depletion of the city’s cash is now moved back from June to December.

Here is the full press release:

PR_Madigan_NewPlan_051920

Commissioner Madigan has also provided a thorough, well designed, and easily understandable spreadsheet to the City Council that documents the cash flow by month for this year. In order to borrow money under the Tax Anticipated Note (TAN) program the bank required this information. This is the information that John Franck had been requesting.

Financial shortfalls such as the city is facing can only be addressed in one of two ways: increase income or decrease expenditures. Commissioner Madigan has made a compelling case that the city at some point will have to reduce its staff  in order to close a budget short fall that she projects will be between $15,000,000 and $17,000,000.00 and her first line of attack was to decrease expenditures by furloughing a large number of city employees.

Commissioner Madigan has been critical of her colleagues for accepting voluntary furloughs rather than insisting on mandatory furloughs and thus not meeting her goal to save $3 million through this process.

My understanding was that the city could not require furloughs, however, but had to negotiate this with the unions so I was confused by her criticism. I wrote to Commissioner Madigan asking for clarification. Her response is included at the bottom of this post. She believed that the city should have somehow forced the unions to accept involuntarily furloughing many of their members.

 I know that some would argue that it was in the interest of the unions to go with the furloughs in order to minimize future layoffs but given that the threat of layoffs was not imminent and  that the number of employees who would have been affected by a mandatory furlough was very high, giving the city the authority to choose who and how many employees would be affected was highly unlikely to be achieved by even the most talented negotiators.

So now that we know that furloughs are not a solution and that the immediate need for cash flow has been addressed by borrowing and accessing more of the city’s fund balance, the question remains where do we go from here. Many of us are confused about what actions are required and what the timing of these actions should be given the projected $15 to $17 million deficit and the probability that 2021 will continue to be a financially difficult year. How much do we need to save during the coming year?  How can these savings be achieved? Is there an urgent need now to reduce expenditures by laying off employees? How should the potential for an influx of federal money be factored in?

I have asked Commissioner Madigan these questions and she has indicated she will be responding. I will be publishing her answers.

[JK: From the Finance Department]

John —

Under a “voluntary” furlough program, employees must proactively volunteer to be furloughed in order to be considered for the program.  Department heads have final approval.  No employee can be furloughed unless they volunteer.

Under a “mandatory”, or “deep” furlough program, the Department heads review their employees and recommend those that would be appropriate for furloughs considering tasks, staffing etc.  These employees are approached with a request/requirement to go out on furlough.  It is not clear whether an employee could refuse a furlough, or negotiate its terms, as the City did not complete the negotiation of this procedure as any type of “mandatory” furloughs were rejected at the outset. Employees could also volunteer to be furloughs.  Again, the Department heads had final approval.

The Union would only agree to an all volunteer furlough program.

My understanding, based on the information provided to me by the city’s labor attorney at the time this option was put forward, was that the City would present and support a deep furlough program:  the city management’s negotiating team would negotiate objective criteria for furloughs with the unions, and that, if the City were to implement such a program, all employees meeting a certain criteria would be furloughed and that the program would be temporary and last 90 days with a possible 30 day extension. This would not require the individuals to agree, or to volunteer.

My motivation was to reduce expenses immediately in hopes we could avoid layoffs.

Instead, what was brought back to the Council was a program where the only people furloughed are those who volunteered, and for only 60 days, until the extra $600 per week additional unemployment under the CARES act ends, for a total savings of $277,400.  In my estimation, this is hardly worth implementing as it is equivalent to 1/2 weeks of city payroll and may involve implementation challenges.  The Council choose to move forward with this option.  I would have preferred a better cost saving measure, one that saved taxpayers the interests cost of a substantial short term loan.  

Finance was looking to fill a $3M gap between anticipate revenue and expenses.  Having cut most much of what is otherwise available (Finance also requested 10% overall other expense reductions; while we did not receive 10%, departments did their best to accommodate), wage-related expenses are one of the last and largest options.  

“Wage-relate” includes wages, as well as ancillary times such as chiefs’ stand-by pay, IT on-call pay, education incentive pay, personal and sick-time increases and payouts, health insurance contributions, clothing and uniforms expenses, mandatory salary increases, vacation increases, retirement incentives, etc. 

The matter of furloughs is now moot.  Finance, which is not part of the city management negotiating team, has moved onto borrowing a $6.3M Tax Anticipation Note  (short-term, paid back in full with interest within 12 months) to ensure we can meet payroll and other expenses through November.  If revenue does not come in as anticipated, this note may prove insufficient.  As such, we continue to revise figures and prepare for each possible outcome.  Nothing can be off the table at this time.     

And now I plan to move on from this and responding to your blog — I need to turn my attention toward dealing with the impact of the pandemic on the 2021 city budget, including the impact of short term borrowing and depleting our fund balances instead of reducing our 2020 expenses as I had hoped.Thank you! 

An article by Wendy Liberatore was published in the May 20,2020, edition of the Times Union under the headline “Saratoga’s Cost for Homeless Lodging Won’t Get Federal Reimbursement.”

The unflattering story based mostly on an interview with Tara Gaston alleged that due to the ineptitude of the Saratoga Springs administration, the city ended up having to pay for housing the homeless in the Holiday Inn for a month during the pandemic. The story was inaccurate on multiple levels but the source of the misinformation appears to be primarily Supervisor Tara Gaston.

This is a classic story that documents the old adage that “no good deed goes unpunished.”

Before going into the details of Supervisor Gaston’s unfortunate role in this episode it is important to tell what should have been the story.

Karen Gregory, executive director of Shelters of Saratoga (SOS), was facing a crisis. Covid-19 threatened the homeless she was sheltering because the available facilities did not allow for social distancing.

In Boston one in every three homeless persons has contracted the virus.

The issue was not only the danger to the homeless persons but to the wider community that they might infect and to the first responders and hospital staff who would need to assist them.

The reality was that earnest attempts to get assistance from Saratoga County proved fruitless when the pandemic hit. It was the city through the intervention of Mayor Kelly using federal Community Block Grant money that funded the first month of housing. Through Ms. Gregory’s tireless fundraising along with the generosity of our community the money for an additional month was raised.

As a result of their efforts none of the homeless people they served came down with the virus. This was an extraordinary achievement. Pretty much every other city’s homeless populations were badly hit by this virus but our people were spared.

The headline should have been: “COVID19 Infection of Homeless Population Averted”.

I congratulate both Ms. Gregory and Mayor Kelly along with their respective staff for this wonderful achievement.

The Unfortunate Story of Supervisor Gaston and Our County Government

Around the third week in March Ms. Gregory contacted Tina Potter, the Commissioner of the Saratoga County Department of Social Services (AKA welfare department) for assistance. Now an uninformed person might have expected Commissioner Potter to recognize the urgency of this situation and suggest they team up to find the resources necessary to address this pressing issue. Instead Commissioner Potter dismissed the query. She informed Ms. Gregory that support would only be available for persons who were diagnosed with the disease.

Ms. Gregory pointed out the obvious, that by the time a person was diagnosed with the disease they would have infected many people around them including staff and any businesses like a Stewarts that they might have been in contact with. Commissioner Potter made clear that this was not the county’s problem and that Ms. Gregory would need to find another solution.

Ms. Gregory then approached Mayor Meg Kelly. The Mayor recognized the urgency of acting with all speed and contacted Cathi Duncan, Director of Public Health. The motto on Ms. Duncan’s website reads:

It is our mission to assess, improve, and monitor the health status of the community

Mayor Kelly and Ms. Gregory then met with Director Duncan. Director Duncan acknowledged the seriousness of the situation but told the Mayor that there was nothing she could do until someone tested positive for the disease.

In the meantime, counter to the headline of the Times Union that alleged the city was unable to secure federal money for the housing, Mayor Kelly drew on $61,950.00 from Federal Community Development Grant moneys to pay for the initial housing for the homeless at the Holiday Inn. She did not draw from the city’s fund balance.

I spoke to Mayor Kelly regarding her role in this matter. She told me that she did not seek reimbursement from the county to cover the initial month. She explained to me that she understood that SOS would be seeking money to cover the additional time for housing and she offered her support to Ms. Gregory for her efforts.

Ms. Liberatore actually acknowledges in the body of her story that the funds the Mayor used were federal. Whoever crafted the headline can be forgiven for their confusion because the Liberatore story begins with:

The nearly $62,000 the city spent to house the homeless at the Holiday Inn during the pandemic,  which the city hoped would be federally reimbursed, will not be refunded.

Liberatore May 20, 2020

Having been turned down by the Department of Social Services and the Department of health, and having allocated money from the Community Block Grant, no one was seeking reimbursement for the initial month as purported in the Times Union article.

Torturous Confusion

On April 20, 2020, Tara Gaston wrote to the members of the City Council and to Karen Gregory offering two options for getting money from the county to assist in paying for sheltering the homeless at the Holiday Inn. Option #1 was to secure FEMA funding which would cover 75% of the housing costs. Option #2 was to seek discretionary money from County Administrator Spencer Hellwig. This could provide as much as $15,000.00.

Her email to the Council included her assertion that there was a FEMA requirement that SOS would have to first use moneys from fundraising they did during the pandemic to pay for the temporary housing before FEMA money could be used. This was a red herring as the fundraising done by SOS was not subject to this regulation (this will be covered in a later post).

The next day at the April Board of Supervisors meeting Gaston introduced a resolution to authorize the county to apply to FEMA on behalf of Saratoga Springs. The resolution passed unanimously.

Neither Supervisor Gaston nor anyone else from the county government ever contacted the city or SOS seeking additional information as a follow up to that meeting.

So how does one explain this from the Times Union story:

…Gaston said neither she nor her fellow city Supervisor Matthew Veitch were given access to information they needed. They wanted to know who was paying the  Holiday Inn, Shelters or the city. They also asked about a contract between the city and Shelters. She also doesn’t know if Shelters has to pay back the city

“We can’t help if we don’t know that,” she said.

Without knowledge of what is going on, Gaston said, it jeopardized both the reimbursement and the money raised during a Shelters’ fundraiser, which FEMA could have subtracted from its reimbursement

Times Union May 20, 2020

Neither Supervisor Gaston nor Supervisor Veitch contacted the city or SOS following the April 21 meeting when the Board of Supervisors approved applying to FEMA. I contacted the Mayor and asked her to review email correspondence relevant to the FEMA money issue. Contrary to Supervisor Gaston’s allegations the Mayor never received any emails or requests of any kind from Supervisor Gaston or Supervisor Veitch for the information referenced in the TU story.

Even more bizarre is the fact that Supervisor Gaston attends every Saratoga Springs City Council meeting. She is on the agenda and she addresses the Council directly about matters relevant to the county and city. If she had actually wanted this information could she not have used any of a number of these occasions to request the needed information from the Council? If she had there would have at least been a video recording documenting her efforts. There is no such record.

Similarly, Karen Gregory was never contacted by Supervisor Gaston.

Why Should This Be The City’s Problem?

The county has a Department of Social Services, a Department of Health, and a Department of Mental Health. They also run a FEMA funded group that is charged with addressing problems related to COVID19.

No one has argued that the homeless are not particularly threatened by COVID19 or that they do not pose a risk to the wider community. For that matter no one is even arguing that all these people are just from Saratoga Springs. So why has the county not been a proactive force on this issue? Why isn’t someone from the county administration not working directly with SOS to find a solution for this problem? The role of Supervisor Gaston should have been to alert the appropriate authorities in the county to the problem and ask them to resolve it. That should have been the extent of her role . Putting aside the issues of credibility raised in this post, resolving this problem through her makes no sense. She adds an unnecessary layer that only serves to muddy the waters. Someone from the county should have formally written directly to either the city or SOS laying out what they needed in order to apply to FEMA.

Why Is The County Administrative Staff Not Making The FEMA Funding Happen?

Carl Zeilman is the Commissioner of Emergency Services for Saratoga County. He runs the county’s COVID19 response operation. There have been articles in the Saratogian and the Gazette in which Zeilman’s operation has been trumpeted for its efforts to combat the COVID19 epidemic. Where has Mr. Zeilman been in addressing this issue of the homeless?

In addition to his position at the county, Mr. Zeilman is also the chairman of the Saratoga County Republican Party. The following post which included a link to Wendy Liberatore’s article appeared on the County Republican Party’s Facebook page It reads reads as follows:

Mismanagement cost the taxpayers in the city of Saratoga Springs more than $60k. In a time when the city is furloughing it’s employees there is no excuse for this. Why no comment from Karen Gregory or the Mayors office? Because they are directly responsible!Saratoga County Republican Party Website

Saratoga County Republican Committee Facebook Page

As documented above, the allegation that this was paid for by taxes raised in Saratoga Springs is false. It would have been more productive if Mr. Zeilman had used the resources of his office to try to assist in finding a solution to this problem rather than making a partisan attack based on false information.

As for Supervisor Gaston, her decision to, in effect, praise her own efforts while ignoring the failures of the county and denigrating the city are disheartening. Mayor Kelly and Karen Gregory deserve better.

During her time in office Finance Commissioner Michele Madigan has crafted a fiscal program for Saratoga Springs that is the envy of most municipalities in New York State. The high marks awarded to the city by the bond rating agencies are a particular source of pride. They are an acknowledgement not only of the city’s sound fund balances but of the overall management of its finances.

Now the city faces a financial tsunami. For all her creativeness and perseverance, Commissioner Madigan is confronted by a set of problems that can only be addressed by painful actions. Success is an irrelevant concept.

Commissioner Madigan is a person who takes her responsibilities personally. She is concerned not only for the city employees who may lose their jobs but for our beautiful city which relies on sufficient staffing to maintain its infrastructure, its safety, and its quality of life.

In our form of government, in addition to managing the city’s finances, Commissioner Madigan is charged with crafting the city’s budget. It is hard to overstate the amount of pressure she is under as the city faces an unprecedented financial crisis brought on by the pandemic.

Regrettably, the strain has been reflected in a number of recent episodes.

On May 6 she held a press conference to present her plan to address the crisis. She highlighted a plan that involved furloughing city employees to reduce the city’s spending. By furloughing the employees rather than laying them off, they would continue to be eligible for city health insurance. In addition to the regular unemployment insurance they would all be eligible for federal payments of $600.00 per week until the end of July.

Unfortunately, the press conference involved no written materials. It projected that the city faced a short fall for the year of between $14,000,000.00 and $16,000,000.00 and Commissioner Madigan identified a number of areas where moneys might be found to fill the gap. This included achieving $3,000,000.00 in savings from the furloughs. What the press conference did not address was what drastic measures would have to be taken to try to save $3,000,000.00 in a compressed period of less than three months. In fact, Commissioner Madigan had informed her colleagues on the Council that both the Public Safety Department and the Department of Public Works would need to furlough 45% of their staff while the remaining departments would each need to furlough 20% of their staffs to achieve this savings . As she would subsequently concede, these draconian cuts were unattainable.

At the time, Commissioner John Franck questioned the feasibility of achieving such huge savings through furloughs. In particular he requested a breakdown of the monthly cash flow projections for the year. As he would explain to me later, to assess the city’s condition he needed to know how much time there was before the city would face insolvency. The city’s expenses and its income varies considerably month by month due to the fact that large expenses and major revenue events are not spread out evenly throughout the year. Commissioner Franck is a CPA. He told me that in his work he had been regularly called on to provide consulting to companies facing fiscal crises. He noted that one of his first concerns is to establish how much time there is to work out a solution. In addition strategies often entail managing cash flow.

Commissioner Madigan refused to provide him the numbers. The conflict between the two commissioners became the subject of a Wendy Liberatore article in the Times Union.

“I’m not holding back information when it comes to the fiscal bottom-line,” Madigan said. “Revenues are down and are projected to come in at a $14-to $16-million shortfall, therefore will not meet projected expenses. I have discussed this at length and will continue to do so at city council meetings and press conferences.”

“This is a pattern with him [John Franck],” Madigan said. “I have done my analysis and it’s not so easy to find all this stuff he is looking for.”

“The bottom line is we are not unique,” she said. “We will run out of money, we need to cut expenses and I’ve offered up every bit of cash and projected revenue I am able to meet projected expenses.”

“There are 464 CPAs in Saratoga County, should I send numbers to them too?,” she asked. “If he would like to be the commissioner of finance he can run for this office. … I have held nothing back from any council member or the public or the press.”

Times Union May 11, 2020

The reality is that Commissioner Madigan up to this point has not provided the Council or the public the cash flow projections which are critical to assessing any plan to address our short fall.

The Special Meeting Of The Council

In the meantime, the Mayor’s team was feverishly trying to implement the furlough program. As the federal $600.00 supplement would end on July 31, it was essential to make the program happen as soon as possible. The clock was ticking and every day the furloughs were delayed lessened the amount of money the city could save with this program.

The process was complex. The city could not require employees to sign on to the furlough program. It had to be voluntary so the unions representing city employees had to be convinced of the value of the program and a variety of related legal issues had to be resolved. City employees also had to be informed about the benefits of the program and then individuals had to volunteer. This involved many hours for both the Mayor’s staff and the Human Resources department to negotiate what is called a Memo of Understanding with the unions spelling out how the furloughs would be implemented.

The final result of the negotiations was that 43 employees representing 15% of the city’s employees agreed to be furloughed. Their combined salaries were about $450,000.00. Unfortunately this did not represent the actual savings. I am not clear about all of the issues in arriving at this number but I do know that the city was required to pay for 38% of the unemployment benefits provided. The final savings ended up to be $270,000.00.

The Council voted four to one in favor of the Memos of Understanding with the unions. Members of the City Council and City Attorney Vincent DeLeonardis made clear that they were aware that the savings achieved by the MOUs was modest and that it in no way resolved the city’s looming deficit. They emphasized that the MOUs were just the beginning of a very difficult process.

Commissioner Madigan was the dissenting vote. In explaining her “no” vote she told the Council that the amount of savings was utterly inadequate and that the city needed to go back to the unions to negotiate for far more ignoring attorney DeLeonardis statement that the furlough savings were only a first step. She acknowledged that her target of $3,000,000.00 from furloughs had been unobtainable. Apparently, while the mayor’s staff and the human resources were trying to hammer out the furlough program, she revised her plan to call for savings of $1,500,000.00 to $1,700,000.00 in “actual wage and related expenses” over ninety days rather than the end of July. I am not sure what the qualifier “related expenses” means. In addition she had now added $1,500,000 to $1,700,000.00 in savings from reductions in union contractual obligations. I am unclear what this means but added to the “actual wages and related expenses” the target was now $3,000,000.00 to $3,400,000.00.

The reality is that furloughs, unlike layoffs, require that unions agree to them. The City Council cannot dictate that staff involuntarily furlough. The Mayor’s staff did their best to implement the furlough program. Given the unions’ response and the limited time, the $270,000.00 savings was the best they could do with this particular element of the plan to address the city’s looming deficit.

If Commissioner Madigan had voted for the deal but strenuously asserted that it does not get us where we need to go I could understand her thinking although she would be pointing out a reality that everyone on the council was keenly aware of. What I cannot understand is why she would vote against any savings.

How Close Are We To Collapse?

What I found really disturbing was statements Commissioner Madigan made that suggested the city might run out of money to meet its expenses in the near future. She repeatedly referenced a crisis in cash flow (enough money to pay bills) and asserted she needed more money to meet the city’s obligations.

Here again she raises the specter of a potential default:

A Crying Need For Clear Information

Ignorance breeds fear and suspicion. What is most needed is a document that explains to the public not only the short fall for the year but documents when the city might not be able to meet its payroll obligations if drastic measures are not taken. People deserve to understand the truth about what the Council must deal with.

Commissioner Madigan has demonstrated over her terms not only her grasp of the details of the city’s finances but her skill in communicating both the challenges and achievements of her office. I have every confidence that she can provide this community the information it needs to understand both the daunting challenges we must overcome and the kinds of sacrifices that we will need to bear in protecting Saratoga Springs.

It is generally understood that there will need to be reductions in staff, at least temporarily, to address the city’s financial crisis in this time of pandemic. It is the severity of these cuts that most folks are not anticipating.

In the commission form of government the Finance Department is responsible for drafting the city’s budgets.

For years Commissioner Madigan has done an outstanding job of managing the city’s finances. We have had repeated years of budgets with no tax increases while maintaining city services. We have had a bond rating that is the envy of pretty much all the municipalities in New York State and we have had a healthy reserve fund.

All of this predated the COVID-19 pandemic. While Saratoga Springs went into this crisis in better shape than many other municipalities, our city’s economy is rooted in tourism. With the statewide shutdown of stores and restaurants and with the track and SPAC season in question, the income from sales tax is now like a reliable spigot suddenly gone dry. In addition the recently secured VLT money and other state funding is in jeopardy as the Governor looks for ways to deal with the state’s looming deficits. So much of our ongoing income is gone but the expenses for the year have hardly begun.

In presentations to the Council and the press Commissioner Madigan has laid out a multi-faceted approach to dealing with the financial crisis the city is facing. The Commissioner told the Council that one of the immediate steps the city needs to take is to cut three million dollars from the city’s payroll. She is proposing a 90 day furlough program rather than lay offs. Furloughs would allow the city to continue to pay employees’ health benefits. The federal government is paying an additional $600.00 a week for unemployment through July 31 so during the three months the loss of income to furloughed employees would not be as onerous. The Mayor would have to negotiate this plan with the unions.

In order to meet this $3milloin savings goal, the magnitude of the required staff reductions is staggering. The plan assumes that the Mayor’s department, the Finance Department, and the Accounts Department would have to reduce their staff by 20% each. Even more devastating would be the effect on Public Safety and Public Works. They are looking at a staff reduction of 45%. Even then the city is still looking at a $3 million short fall before the end of the year.

Putting aside the most important questions about the risk that such reductions in Public Safety would create, the existing union contracts require a minimum number of persons for each fire crew.

The word draconian seems inadequate to describe the situation.

While Commissioner Madigan has provided some general figures regarding how she arrived at the short fall, some of the information used to assess the situation and to come up with a strategy is not available.

I sent her an email asking a number of questions. She wrote me back indicating that she was not prepared at this time to answer them. They were:

1. In terms of the cash flow per month, when would the city run out of money?
2. Would the $3,000,000.00 savings from furloughing the employees include the cost to the city of unemployment insurance [See below]?
3. What are the projections for the number of furloughed employees in each department to reach the financial savings?
4. What is the overall budget number for the city that the $14-$16 million dollar savings is taken from?
5. What is the potential risk to the city associated with the layoffs projected in public safety?

[Note: For the private sector unemployment insurance is paid annually by a percentage of a company’s payroll based on a rating. The rating is determined by the history of claims made for unemployment by laid off workers of that company. In the case of municipalities, they are required to reimburse the state for the full and direct cost of claims. Unemployment payments are based on a percentage of a laid off worker’s income up to a certain limit. The limit is very low. ]

There is every reason to believe that the Federal Government will pass legislation providing some relief to state and local governments in spite of Senate majority leader Mitch McConnell’s intransigence on additional spending. As the impact of the economic crisis becomes more evident the pressure on the Senate to act will, in all likelihood become overwhelming. President Trump has asserted that the problem is with states run by spend thrift Democrats but the economic impact on states and local governments across the country will be bi-partisan.

The entire New York Congressional delegation has signed on to a letter calling for additional moneys for states and localities. This includes Democrat Congressman Paul Tonko and Republican Congresswoman Elise Stefanik. Everyone is on board.

Given the crisis there is also the possibility that New York State may modify some requirements that might ease some of the costs of government while the pandemic continues.

This crisis will expose the inequities associated with funding local government through property taxes. The taxable value of a home is a poor indicator of the income of the owner. Many of our older neighbors struggle to pay their taxes. As a short term solution it might be necessary to provide some sort of relief for these people for the inevitable tax increases that will come. This would require action at the state legislature.

The bottom line here is that our city is facing some devastating challenges. Whatever the Federal Government will do, it will not be sufficient to address the radical imbalance between Saratoga Springs’ income and its expenses.

This kind of crisis can bring out the worst in people. It is critical that we see this as not the Department of Finance’s problem but as a problem we must all share. There is no way around the reality that all of us will have to make sacrifices to protect our beautiful city.

In order to do this, the citizens of our city need all the information we can get to find a way forward that we, as a community can live with.

Below are excerpts from the May 5 Saratoga Springs City Council meeting. Matt Veitch discusses the failure of the county to follow proper procedure in their selection of the law firm that will be carrying out the independent review of the county salary debacle. He and Tara Gaston also discuss the failure of the county to convene a meeting this week (May 4-8) as promised at the last Board of Supervisors meeting.

The current collapse of city revenues with most of the year still to go can only be described as a crisis. I will be writing more on this but here is a story from WNYT television.

Will The County Adhere To The Open Meetings Law?

Due to the Covid-19 emergency Governor Cuomo issued an executive order that modified the New York State Open Meetings Law. Public meetings no longer have to allow the public to be present. The order did, however, offer some new requirements meant to maintain the spirit of the law. Among those requirements is that organizations subject to the law must provide a transcript of the meetings. Granted that the last meeting of the Saratoga County Board of Supervisors was on April 21 which is not that long ago but to date, no transcript of that meeting has been made available. Today (May 1) I emailed the clerk of the board to ask when the transcript will be available. The clerk, Pam Wright, has been responsive in the past. When I get a response I will post it.

The Usual Suspects

In the meantime, the Human Resources Committee of the Board of Supervisors met yesterday (April 30,2020). Attending the meeting were the seven members of the committee along with six other Supervisors. In addition attending the meeting were the County Administrator Spencer Hellwig, Human Resources Director Marcy McNamara, County Attorney Stephen Dorsey, and Adam Kinowski who apparently holds an administrative position that deals with insurance. Most county meetings are family affairs and this one was no exception. Mr. Knowski’s father, Ed, is a Supervisor and was also there.

In fact, the five people who were on the original committee that authorized the controversial raises were all present. Conspicuously absent were any Supervisors who signed the letter that challenged the decision. The usual suspects like to keep things simple.

Supervisor Tom Wood, who chairs the Human Resources Committee and was a member of the original committee that created the county’s mess, announced the formation of a subcommittee charged with investigating the controversy over the raises. He appointed Allan Grattidge, Jack Lawler, and Bill Peck.

Supervisor Peck asked County Attorney Stephen Dorsey whether the independent investigation of the controversy had been initiated. [His “innocent” question reminded me of this scene from the film Casablanca:

As it turns out, according to Dorsey, the law firm E. Stewart Jones, Hacker, and Murphy have not only been retained but have already started their investigation. According to a story in the Times Union by Wendy Liberatore, the firm is being paid $350.00 an hour.

Of course all of this was done with total opacity. How was the decision made to select that particular firm? No one at the meeting saw the need to inquire.

Ms. Liberatore reported Supervisor Tara Gaston’s response.

[Tara Gaston] was stunned to learn about the investigations proceeding without the scope or funding secured.

“It’s not the way to conduct an internal or external investigation,” Gaston said. “I’m literally shocked and I continue to be shocked. … We are not responding to this in way we need to.”

Times Union April 30, 2020

Supervisor Jack Lawler expressed surprise similar to Claude Raines when he told the Times Union,

“This group wanted an external investigation and wanted it quickly,” Lawler said. “This was done. We engage one of the most reputable law firm [sic], outside of Saratoga County, to avoid any appearance of bias and to leave no stone unturned. … Frankly, I’m surprised they are still complaining.”

Times Union April 30, 2020

These people have no sense of irony.

There is nothing like a crisis to bring out the best and the worst in people. In the case of our two County Supervisors, Tara Gaston and Matthew Veitch, it has brought out the best.

The Saratoga County Board of Supervisors has for years atrophied from a relatively responsive institution into a clumsy organization fraught with cronyism and nepotism. It was only a matter of time before the county government would finally do something so ugly and self serving that it could no longer be hidden. The COVID-19 crisis has finally produced that event.

I would have liked to have included in this post clips from the April 21, 2020, meeting with the thoughtful remarks made by Supervisor Gaston. Unfortunately the recordings of the county meetings, unlike the city of Saratoga Springs Council meetings, are not made available to the public. Even if they were, the poor quality of the audio would have rendered them useless.

Fortunately, the two Supervisors addressed the City Council the evening of the county meeting and I was able to edit the video to share it with this blog’s readers.

These brief clips are very much worth listening to. Not only do they illuminate what happened at the county meeting but they reflect the willingness of our Supervisors to take on the reforms needed at the Board of Supervisors.

[JK: This is a release from the Finance Department. Things look pretty tough for this year. “The City is now in the process of reviewing its 2020 budget for adjustments that will be required in the face of a potential $14 to $16 million, or 29% to 33%, loss of general fund revenue.” The departments are being asked to submit budgets with 10% cuts.

Particularly troubling is that NYRA has produced a new “formula” for their payments to the city which represents a reduction of approximately 40%. Commissioner Madigan writes that she is trying to find out how this was determined.]

MEMORANDUM

OFFICE OF THE COMMISSIONER OF FINANCE

CITY OF SARATOGA SPRINGS

MICHELE MADIGAN

COMMISSIONER OF FINANCE

PRESS RELEASE

For Immediate Release:  April 23, 2020

Contact:​Commissioner of Finance, Michele Madigan

Re:​City of Saratoga Springs 2019 Year End Report and April 2020 Covid-19 Fiscal Update 

Commissioner of Finance Michele Madigan reports that 2019City general fund (operating budget) closed out the year with a strong fund balance and nominal operating deficit.  

Unaudited year-end figures show a $16,758,000 fund balance; about half of this is restricted and half is freely available. This equates to 17.32% of the operating budget, well within the required 10% -25% range. The annual operating deficit for 2019 was $856,000, about 1.8% of the 2019 budget.  

Of note is NYRA Admissions Tax, which came in 40% below 2018 as a result of a change in NYRA’s calculation methodology. 2019 amounts received were $429,000; 2019 amounts budgeted were $723,000 (in line with amounts received in 2018). We continue to work with the County and NYRA to better understand NYRA’s revised methodology. “The amount received in 2019 is equivalent to amounts received in 2011. Admissions are up, but the tax is down considerably. The City provides fire, police, ambulance, water, sewer, traffic, and beautification services in order to properly host the yearly meet. I believe the City requires a more equitable distribution of this tax in order to maintain our high-level of visitor and citizen protection services,” states Commissioner Madigan.

“With excellent policies and practices in place, the City ended 2019 at a strong advantage to face the unprecedented 2020 pandemic.  My years of financial discipline, preparation, budget and reserve building have provided us with a much better foundation than many coming into the current situation,” states Madigan.  

Actual 2019 revenue collected totaled $46,261,134.  Actual 2019 expenditures totaled $47,117,479.  “The City did good job managing its current budget while considering future needs. These skills will prove beneficial in the months to come.” said the Commissioner.    

The City is now in the process of reviewing its 2020 budget for adjustments that will be required in the face of a potential $14 to $16 million, or 29% to 33%, loss of general fund revenue. Sales and occupancy tax collection have already shown substantial decreases compared to 2019.  State aid revenue sharing, parking ticket revenue, NYRA general admissions tax, casino rentals, building permits, and property tax collection are all at risk.  The City has researched the option of waiving late fees and penalties for property tax bills, but it has confirmed that only the NYS Governor may do so during a State of Emergency.  

Commissioner Madigan has asked each department to scour its budget for reductions, cuts, and re-purposed funds.  Looking for a 10% budget rollback “will require a new outlook, revised priorities, and discipline.”  Madigan has great faith that “this Council has what it takes to make it work.” This is coupled with the “Hiring and Spending Freeze” requested by Madigan to the City Council on April 10, 2020.  

“Every expense must be considered very carefully, against the long and short term City sustainability, the needs of our taxpayers, and most importantly, the health, safety, and welfare of our citizens. We are beginning from a position of strength, and will do what is best for the City of Saratoga Springs.”

[JK: Lew Benton has had a long and distinguished career in government. He has worked for both Saratoga County and for the state of New York. He served as the Saratoga Springs Commissioner of Public Safety.

In order to understand our current crisis at the county it is critical to step back and try to understand how this all came about. This piece by Lew helps all of us find some answers.]

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The state Legislature has granted fairly broad discretion in the preferred structure of government for each non-charter county.  The general limit of that authority is the principle that the legislative and executive authority remain with a single body of elected officials.” *

* Saratoga County 21st Century Study Commission Governmental Operations Task Force Report

The dustup brought about by Saratoga County’s award of 50% salary increases to certain employees and officials deemed “essential” to managing the current health emergency presents an opportunity to take a fresh look at this form of government, how it functions and why and how the office of county administrator has been allowed to morph from its defined, statutory role as manager to one of quasi-executive.

And an April 15 “Times Union” story (“County officials lament ‘vacuum’ ”) and last Friday’s ham-handed attempt to avoid a public airing of how all this came to pass serves to add urgency.

Maybe it will remain in the public conscience long enough to force a hard look at this County’s governance.

It also indicates that it may be time for the Board of Supervisors to exhume and re-examine the reasoning that led to the creation of the county administrator title in 1979 and subsequent recommendations found in such initiatives as the 1987 Governmental/Intergovernmental Operations Task Force Report.  

That Task Force, chaired by the late Charlton Supervisor Fred Hequembourg, was part of the County’s 21st Century Study Commission appointed by Roy McDonald, then chair of the Board of Superiors.

Those who knew Fred Hequembourg will recall a strong, demanding personality who was elected chair of the Board for three consecutive terms and who was a power to be reckoned with.  He was also smart and knew government. [JK: Fred Hequembourg was one of the finest persons to serve our county in my lifetime. A Republican, Fred represented, in the deepest sense, service to community.]

Perhaps the Task Force’s final report is still worth a look.  Through its staff, the Task Force examined the evolution of county government in New York.  The report noted that then 37 of the state’s 57 counties outside New York City were non-charter, looked critically at the Charter v. Non-Charter forms and what non-charter structures might better serve Saratoga County.

The Task Force made several recommendations including this: Enact a Local Law for the Creation of a County Board of Representatives by 1991.  Implicit in the recommendation was a board made, as then and now, of representatives of the each of the 19 towns and two cities and thus preserve the direct connection between the local governments and the County.

The Task Force went out of its way in making this recommendation to emphasize the following:

“The state Legislature has granted fairly broad discretion in the preferred structure of government for each non-charter county.  The general limit of that authority is the principle that the legislative and executive authority remain with a single body of elected officials.” *

* Saratoga County 21st Century Study Commission Governmental Operations Task Force Report

So in 1987, eight years after the office of county administrator was established, the Task Force   was quick to remind all that while it was suggesting transitioning from a Board of Supervisors to a Board of Representatives, both the legislative and executive authority remain with the legislative body.  

In the follow-up to the present circumstance, any review should begin with a reminder of what this county is not.  It is not a charter county.  There is no executive other than the Board of Supervisors acting in its legislative capacity and as it may, at open meeting,  authorize and direct the chairperson to act.  Such authorizations and directions are always linked to specific policies and legislation adopted by the full Board and most are ministerial in nature; i.e., directing the chair to sign and submit a specific grant application, advocate or oppose pending state legislation, etc.

Over time it appears that members of the Board have allowed the office of county administrator to morph into a de facto executive authority.  The tail seems to be wagging the dog, the inmates are running the asylum.

The Board cannot legitimately transfer or grant authority to a committee to expend monies that have not been appropriated.  It cannot increase compensation without, by formal legislation, amending the pay schedule and budget.  And it certainly cannot give that authority to an ad hoc committee or the county administrator.

Specifically, Sec. 154 of the County Law, precludes such delegation of authority:

“Nothing herein shall be deemed to authorize the delegation of any of the powers, duties or responsibilities of the board of supervisors or of any officer except as otherwise expressly authorized by law.”

But it appears that Resolution 84 – 2020 did not, in fact, authorize increasing the compensation of certain “essential employees” nor did it appropriate any monies to do so.  So what did it do?

The March 17 resolution, among other things, established a committee made of

“ … the Chair of the Board, the Chair of the Law and Finance Committee, the Chair of the Human Resources and Insurance Committee, the County Administrator and the Director of Human Resources …” and gave it “ … the authority to jointly determine appropriate County employee staffing levels and rates of compensation that are consistent and in compliance with the current directives of any Executive Order issued by the Governor of the State of New York relative to local government staffing levels … “

So the full Board of Supervisors never authorized pay increases and clearly limited the committee’s actions to those “ … consistent and in compliance with the current directives of any Executive Order issued by the Governor of the State of New York relative to local government staffing levels … “

Of course none of Cuomo’s pandemic related executive orders allow for increases in compensation outside of normal procedure.

It is only at the referenced Law and Finance Committee meeting, convened just one hour before the full Board met, that any reference to increased compensation for some employees is discussed and even then in an obtuse way.

One thing though is clear from the minutes of that meeting: staff misrepresented facts that might have influenced members.  For instance, when asked by a committee member, Todd Kusnierz, if  “ … the State and other localities were providing time and a half.  Mrs. McNamara said the state was as well as some municipalities.”  But neither the state nor other municipalities had done any such thing.

And the true intent of the full Board’s resolution is further affirmed by the budget amendments (shown below) authorized by Resolution 84 – 2020 follows:  

“ …and be it further RESOLVED, that the 2020 County Budget is amended as follows:

PUBLIC HEALTH Appropriations:

Increase Acct. # A.40.409-6000 Regular Wages $150,000

Increase Acct.#A.40.409-6930 Social Security $11,475

Increase Acct. #A.40.409-8200 Department Supplies $838,525 …”

Note that the resolution only amends these three line items in the County’s Public Health budget. The increase of $150,000 in the Public Health Regular wages line and the additional $838,525  in the Department Supplies line are to bolster the Public Health Services capacity to respond to the emergency by adding staff – as necessary – and materials. This intent seems crystal clear by the following language in Resolution 84:

“ … and WHEREAS, Saratoga County Public Health Services is in need of additional staffing, supplies and equipment in order to respond to the ever increasing number of individuals who have tested positive for COVID19, been exposed to someone who has tested positive for COVID-19, or who are exhibiting symptoms of COVID19; …

“ … and WHEREAS, it is necessary to amend the 2020 Saratoga County Budget to effect a transfer of $1,000,000 from Fund Balance to Saratoga County Public Health Services in order to allow Public Health Services to hire additional temporary staffing, procure needed supplies and equipment, and help to meet the needs of those individuals in the community subject to mandatory or precautionary quarantine; … “

Still, press coverage of this story continues to report that the March 17 Board action authorized the committee to award 50% increases to certain administrative and elected officials and time and a half to rank and file workers.  There is no language in the resolution which authorized such increases and there is no language that gave any such authority to the five member committee.  And the resolution made no appropriation necessary cover such additional compensation.

So how did it come to pass that the Board’s appropriation of $1,000,000

“ … to allow Public Health Services to hire additional temporary staffing, procure needed supplies and equipment, and help to meet the needs of those individuals in the community subject to mandatory or precautionary quarantine…”

Somehow justify temporary salary increases of the county administrator, the personnel director and other administrative staff by 50%?  And how could have such increases been awarded without budget authority?  The $1,000,000 was appropriated to bring on temporary nursing staff and needed supplies as needed.

Not one penny was appropriated for any other purpose.

John Kaufman has reported that Saratoga Springs Supervisors Tara Gaston and Matthew Veitch, both of whom attended the referenced Law and Finance Committee, and later voted to adopt Resolution 84, took to social media to deny having responsibility for granting 50% raises to “essential” County workers.

Here, in part,  is what Supervisor Veitch posted on his Facebook page:

    “Yes, the County is currently operating under a policy where most of the essential employees are getting 1.5 times pay for hours worked. I was informed of this decision on March 15th by our County administration, and was not involved at all in developing this policy.

    Nowhere in that resolution does it approve or dictate time and a half rates for essential employees.”

On her Facebook page Tara Gaston offered a similar defense.

    “On March 15, 2020, administrator Hellwig notified the board of supervisors that essential workers were to receive time and a half during the COVID-19 emergency. I immediately sought details, including who created the policy.

    “On March 17, 2020, the board debated resolution 84-2020 to amend the budget. The time and a half policy was not included in the resolution and was not voted on.  Nevertheless, the topic was discussed. I requested that the pay discussion be taken to executive session to allow frank conversation about the origins and details of this policy. Chairman Allen, on the advice of county attorney Dorsey, denied the request.”

These posts support what is already known: the Board’s resolution did not authorize increased compensation.  But both supervisors say they were notified by the county administrator on March 15 that “essential” employees would be compensated at 150% of their established pay rates.

How and in what form the March 15 directive referenced by Supervisors Veitch and Gaston was transmitted and if it specifically referenced increased compensation is not mentioned.  If our supervisors would share the  administrator’s March 15 directive It would, presumably, answer lingering questions and perhaps put this entire episode in a more favorable light.

Back in 1989 Fred Hequembourg and the other members of the County’s Governmental Task Force were so prescient to warn against allowing the Board of Supervisors to forget that it is the executive authority and it cannot surrender that authority, voluntarily or otherwise.