Tag Archives: city treasurer

The Real Bottom Line: City Council betrayed the voters

Commentary
By John Earl

It’s as predictable as death and taxes: politicians say that everyone should obey the law, especially their interpretation of it, but when the law inconveniently conflicts with their own interests they just ignore it in violation of the public trust and their oath of office.

That’s what happened on Dec. 20 when, as reported exclusively in the Voice, the Huntington Beach City Council voted 6-0 to approve changes to the city’s municipal code that would strip the elected city treasurer of the powers and duties vested in that office by the City Charter (the city’s constitution) and hand them over to the Director of Finance, an appointed position under the direct control of the city manager and council, not the voters.

Simply put, the council majority conducted a coup d’état of the City Treasurer’s office, the charter be damned, even though voters said five times at the ballot box that they want an elected treasurer to provide checks and balances in order to better watch over their money.

That’s a good idea, judging from Councilmember Don Hansen’s opinion that it’s just fine to trust investment bankers to properly look after public funds in light of the drastic budget and staffing cuts that accompanied the coup, leaving a treasurer’s office that will be even less able to conduct its oversight duties.

The coup was depicted as an effort to save money—over $100,000 a year by making the treasurer a part-time position and consolidating staff.

Limiting the treasurer to conducting “core” charter duties would create more efficient management, City Manager Fred Wilson told the council, while preserving the independence of the treasurer’s office as required by the City Charter.

Wilson’s conclusions were based on a report by an outside consulting firm, but the changes he recommended and the council approved went beyond what the report called for and clearly conflict with the charter.

That report was not attached to the council agenda for council members and the public to read. Even worse than that act of negligence, when asked if they had even read the report or cross-checked the wording of the code changes with the City Charter, not a single voting council member responded.

Obviously, the City Council didn’t bother to do its homework or think of the possible long range consequences of its actions. When outgoing City Treasurer Shari Freidenrich gave her last address to the council that same night (she was elected Orange County Treasurer), she warned that its illegal actions would endanger the ability of the city to protect the taxpayers’ assets, but her concerns were casually brushed aside by Wilson and City Attorney Jennifer McGrath, as well as the council.

McGrath later conceded that her office is following up on the concerns raised by the Voice and that, “if an amendment is necessary to clarify any ambiguity, then it can be made at the second reading on January 17, 2011.”

Last year, after McGrath issued a legal opinion that said Section 617 of the City Charter—which had been approved by voters—allowed a mandated 15 percent budget set aside for infrastructure to include debt service payments for infrastructure designated bonds, she put her political career on the line.

Councilmember Devin Dwyer, who had hoped to create a city financial crisis that would force renegotiation of city labor contracts, lashed out at McGrath by calling her “another lawyer” using “legalese” to “twist things” in order to thwart the will of the people.

McGrath was attacked by local Republican Party bloggers and threats were made to remove her from office. If you believed the angry rhetoric, it was a war between Good and Evil and McGrath was Satan.

On Dec. 20 it was Dwyer who ignored the will of the voters, but he had plenty of help, even from an unlikely source sitting on the opposite side of his place on the right wing of the political spectrum.

Councilmember Joe Shaw was just as adept at practicing his own form of selective democracy. Despite campaign speeches denouncing the past city council for approving an arguably unlawful senior center in Central Park, Shaw, who was elected to the council for the first time last November, also had no qualms about voting for another arguably unlawful action just as soon as he took office.

Some on the council, no doubt, see our ailing economy as a long awaited opportunity to diminish the functionality of local government and transfer control of the public’s money to the private sector. And some council members are simply happy to claim that they have saved money for the people.

But the real bottom line is that the voters have been betrayed and may end up actually losing money along with their right to vote for a city treasurer who has real power and is accountable to them.

The City Council will have another opportunity at its Jan. 18 meeting (no meeting on Monday because of Martin Luther King Day) to undo its mistakes when the changes to the municipal code come before it for a required second reading and final vote.

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Vote by Unvigilant Council Usurps Treasurer’s Office and City Charter

By John Earl
Surf City Voice

If you have read the Huntington Beach City Charter and think that you have the right to elect your city treasurer, don’t be so sure.

Section 311 of the City Charter—the city’s equivalent to the U.S. Constitution—calls for the treasurer to be elected by the voters at large. But budget cuts and other changes approved Dec. 20 by a 6-0 majority of the Huntington Beach City Council (Connie Boardman was absent) leave little more than a figurehead for a treasurer instead of the vigilant watchdog intended by the charter.

The Director of Finance, who is appointed by the council and answers directly to the City Manager rather than the electorate, will assume the treasurer’s core duties if the legal wording behind the new policy is taken at face value.

The apparent coup d’état was performed by eliminating Section 2.16 of the Municipal Code, which explained the duties and powers of the City Treasurer in detail based on the City Charter, and then attaching several of its provisions to the end of Section 2.15 of the Municipal Code that explains the duties and powers of the Director of Finance.

Outgoing City Treasurer Shari Freidenrich warned that transferring the treasurer’s duties as proposed would be in “direct conflict with the charter and state law.” Eliminating staff would cause the treasurer’s investment decisions to suffer, she said, and went against the will of the voters, who had voted to keep their elected officials elected many times.

Freidenrich was elected to the office of Orange County Treasurer in November. She received kudos earlier at the council meeting (her last) from City Manager Fred Wilson for15 years of service in which she “restored the honor and integrity to the City Treasurer’s position” after the notorious 1994 Orange County bankruptcy.

But Wilson had presented an entirely different analysis than Freidenrich’s in his presentation to the council, saying that the city would save over $100,000 a year by making the treasurer a part-time position and consolidating the City Treasurer’s duties with the Finance Department while preserving the authority and independence of the office. “[Only] the duties and responsibilities not required by the City Charter to be performed by the City Treasurer shall be migrated to the finance director,” Wilson said.

Councilmember Keith Bohr asked City Attorney Jennifer McGrath if the city was in compliance with the law. “Yes, we are,” McGrath answered, “The charter does not speak to whether this position is part time or full time. And by deleting the ordinance you are actually taking it back to the core responsibilities as dictated in the charter.”

City Manager, Fred Wilson. Photo: Arturo Tolenttino SCV

Councilmember Joe Shaw asked if the City Treasurer’s office would retain its ability to act as an independent oversight in order to provide the checks and balances that it is intended to provide as an elected office. In the future, will the City Treasurer be able to do that? 

“Absolutely,” Wilson answered.

Based on McGrath’s two sentences of legal analysis and Wilson’s word, and without cross checking Freidenrich’s assertions with the City Charter, all six council members present were satisfied with the plan. But if they had bothered to read the outside analysis which Wilson cited in his written report as the basis for the final recommendations or to double-checked the charter for themselves before voting, they might have had second thoughts.

The report, “Final Report: Organizational and Staffing Evaluation of Limiting the City Treasurer to Core Charter Responsibilities,” written by Ralph Anderson & Associates, a government consulting firm, does recommend changing the treasurer to a part time position, limiting its range to powers and duties outlined in the charter, and transferring non-core duties over to the Finance Department.

But the Anderson report notes only one non-core function spelled out in chapter 2.16 of the Municipal Code: the collection of money. The report correctly notes that although the charter requires that the treasurer ultimately “receive” all city funds it does not prohibit the initial collection of the money by other agencies. The report recommends that function—and only that function—be transferred to the finance department.

The Anderson report goes further. In order to create a part-time treasurer and still provide the support necessary for that position to fulfill its charter mandate, it recommends that the City Treasurer have “primary support from the Finance Department to accomplish the Offices’ (sic) responsibilities.”

The report, which the six present council members apparently did not read because—although cited—it inexplicably was not attached to Wilson’s written report and probably also because they didn’t ask to read it, did not recommend cutting sections of chapter 2.16 that enumerate the charter mandated duties and powers of the City Treasurer and pasting them into chapter 2.15, which explains the duties and powers of the Department of Finance, but that’s exactly what Wilson did.

The result is a conflict between the city’s municipal code and the city’s charter, and a virtual coup d’état, either by design or by sloppy staff work, and by sloppy council oversight. Nobody on the city council bothered to check, but comparing the wording in the charter to the wording of the amended city law proves the point.

“The City Treasurer shall have the power and shall be required to,” according to the charter, “Receive on behalf of the City all taxes, assessments, license fees and other revenues of the City…”

But now, under the amended city code 2.15(k), the Director of Finance “Receives all City monies including taxes, fees, water, sewer and trash fees…”

Again, the City Charter states that the City Treasurer shall “Have and keep custody of all public funds belonging to or under the control of the City or any such office, department of agency of the City government and deposit or cause to be deposited all funds coming into his hands in such depository as may be designated by resolution of the City Council…”

But now, according to the amended city code 2.15(h), the Director of Finance “Establishes and controls all bank accounts, negotiates services and contracts with bank, makes daily deposits,…” and, regarding investments, in 2.15(l) also “maintains all trusts, bonds, security agreements, and funds for the City including depositing…”

Nowhere in the amended city code does it state that the City Treasurer has any authority over her transferred duties or powers, another indication that the supposed “consolidation” is at best an accidental transfer of power with the potential for future legal headaches or, at worst, a deliberate takeover.

September 15, 2009

At a town hall meeting held by the city’s Charter Review Commission, residents of Huntington Beach were asked to comment on possible changes to the City Charter, including the idea of changing the elected offices of city attorney, city clerk and city treasurer to appointed positions.

It was one of several meetings where the topic would be discussed along with many other charter reform ideas. At the end of the commission’s term various charter reforms were proposed to the council for placement on the ballot, but converting elected positions to appointed positions was not one of them.

Although strong arguments were made on both sides of the debate of elected versus appointed city officials, the question had already been put to the voters many times and their response was always crystal clear: ballot measures to have an appointed city attorney failed seven times; an appointed city clerk failed four times; and, an appointed city treasurer failed five times, most recently in 1996.

Due to the likelihood of yet another rejection by voters, the commission went with a proposal for stricter eligibility requirements for city treasurer instead of creating an appointed position, and that was passed by the voters.

In the past, the voters seemed to have said that they wanted accountability directly to the public in order to provide better checks and balances in local government. Freidenrich, speaking at the town hall meeting, noted the pressures that could be placed on an appointed treasurer to produce interest income, pressures that might lead to risky investments for the taxpayers. “An elected treasurer can be independent and unbiased an select the most important investments for the city,” she said.

Outgoing City Treasurer, Shari Freidenrich. Photo: Arturo Tolenttino SCV

In contrast, speaking at the Dec. 20 council meeting, member Don Hansen suggested a way for assisting the new part-time city treasurer to provide the “safety, security and liquidity” for the city that had been Freidenrich’s trademark by all accounts: investment bankers. They will be at the new city treasurer’s disposal, he said, and “we can’t dismiss their responsibility and commitment to the city in providing their services and experience…”

Whether the residents of Huntington Beach retain their right to elect their city treasurer in reality or in name only, and the extent to which they will have to rely on the recently proven commitment of investment bankers to to protect the public’s best interests, may depend on what happens at the second reading of the amended ordinance at the next city council meeting.

In response to a Voice inquiry, McGrath defended the quick legal opinion she gave to the council, and said the council’s actions were “wholly consistent with the City Charter, the Municipal Code and state law.” As for not answering Freidenrich’s assertions, it was not her responsibility to respond “unless asked by my client.” Only Bohr asked her a question. To that extent, she says, “I responded accordingly and there were no further questions.”

McGrath assured that she would be working closely with the city manager, finance director and treasurer to make sure that law is properly followed. But she also acknowledged that—in response to the concerns raised by the Voice—her office will “follow-up” by taking another look at the language of the ordinance, and “if an amendment is necessary to clarify any ambiguity, then it can be made at second reading on January 17 (sic), 2011.”

Note: The city council meeting will actually take place on the 18th due to Martin Luther King Day on Monday.

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