By Jack Mayne
The Des Moines City Council – in its second “virtual” meeting due to the deadly COVID-19 coronavirus outbreak – heard a report of the city’s excellent financial condition and an outline of how the city under lockdown will proceed.
Then there were allegations from the mayor about disruptive statements made by Councilmember J.C. Harris and Harris’ response.
City Manager Michael Matthias said the city has received for the second year, a certificate of excellence in financial reporting from the Government Finance Officers Association for the preparation of the 2018 annual financial report.
Bond rating up
Matthias said the city “was so successful in resolving the potential of bankruptcy in 2017” to now receiving “a three step bond upgrade from Standards and Poors,” a financial services company that publishes financial research. The rating went up three points to AA+, he said, “saving the city hundreds of thousands of dollars…” including savings on refurbishing the Marina.
“The City Council and the city administration pulled together and righted the ship,” Matthias said. “We not only learned but we instituted fiscal discipline. We were very disciplined on how we approached our recovery from potential financial disaster.”
Matthias said it is important to remember that “our contingency and reserves are not a surplus” and not money “to be spent indiscreetly, that is money that is underlying support for the budget.”
He said public finance is “very different” from private sector finance. The private sector is “based on receipts” while public sector finance is “defined by value, especially non-monetary value to the community.”
‘Challenges of accounting’
The city manager then shifted to the “challenges of accounting” for costs related to the current COVID-19 coronavirus outbreak.
“Everything we are doing trying to protect our community is generalized value to all and not specific; what are the steps we can take to protect this community. It is too early to predict a trend …” and only begun to see the disasterous potential.
He said the “dynamic” of the federal move to provide money to people is to help the retail sector and help to generate sales tax, which helps government survive, and creates jobs.
“At this point, the lag on job creation is simply that businesses are closed for public health reasons,” Matthias told Council. The actual impacts of the infusion of money won’t be felt until later.
“We can anticipate high amounts of receivables, which are money owed to the government that have not yet been paid,”
Matthias said Des Moines’ financial goal now are to keep the city solvent, maintain sustainable budgeting and therefore a make the city strong, and to retain the city’s “talented and effective work force.”
He also says the time now is an opportunity to review government essential functions and to make “any organizational changed to support the “new normal” when what that “normal” becomes clear. “We don’t know that yet,” he told the City Council.
Revenue down 10 percent
But not knowing the specifics, Matthias said the city staff is estimating a 10 percent or 20 percent reductions in revenue next year because of reduced revenues in 2020, then to “identify critical city functions that must be maintained.”
The city administration is also “closely monitoring expenses.”
Because business and personal impacts of the coronavirus outbreak the city is looking at allowed delays for citizens to pay property taxes and a city delay in collecting Business and Occupations taxes. That means the city is expecting impacts on revenue to the city.
Change budget rules
The city manager said the city is proposing a reallocation of money for “short term solutions” and proposed a “one time” allowance for the sales tax to be taken from its dedicated position and placed in the general fund through 2020. That would free its use for matters that the money could not be used for while in a dedicated fund.
“That could help pick up the gap especially for cash flow,” Matthias said, adding that the city spent “about a half a million dollars less in 2019 than intended and the money reverted to the general fund.”
He said he is considering freezing staff vacancies, encourage early retirement, reducing extra hires “primarily in the Parks Department” where programs that require extra people will no longer be activated for the summer. Matthias said some could be taken from the general fund and transferred to be paid from other funds where money is available.
The city will look at taking money from lesser important used and deferred to primary matters. City staffers will record what work they are doing that may be able to be paid from federal or other funds that are reimbursable by the state or federal governments.
Matthias was asked by Councilmember Luisa Bangs how often finances are reviewed for appropriateness and he said one answer was that the state audition yearly spends “months at a time … yearly” and city spending is “under constant review.”
“That is a good thing for the public to understand,” Bangs said.
Bangs she asked the city manager what he considers ‘essential services’.
“It is unknown at this time,” Matthias said. “At the moment, having an emergency operations center is an absolutely essential service, but eventually that will not be an ongoing service.” He said the staff will bring the Council future needs “when we figure out what the new normal is going to look like.”
Councilmember J.C. Harris asked if Matthias received any comment on the city’s capital projects and for companies with development projects in Des Moines.
Matthias said there were a couple of projects paid for from outside sources on the agenda at the meeting but other projects “are on hold at this point.”
He was asked if the projects stopped will start again and Matthias said he didn’t know at this time.
“It is a question that nobody knows the answer to,” Matthias said.
Under comments from individual members Harris said the Port of Seattle was continuing its program to update its homeowner noise control and “encouraged” the public concerned about noise and other problems to get them to him or to others.
Pina challenges Harris
Most of the members offered comments supporting the actions of the city during the COVID-19 coronavirus outbreak, some concerned that comments have been inappropriate but not directly indicating to whom the criticisms were directed to.
Buy Mayor Matt Pina did, noting that there have been individual councilmembers acting on their own who have criticized the city or misrepresented members of the Council and he said the comments were concerning and offensive. He said he felt he should respond of Councilmember J.C. Harris.
“Mr. Harris, by your own social media posting, you have criticized the operations of the emergency operations center before you even saw or understood what it does. What it does is save lives by coordinating the actions of our first responders, fire, police and medical and by helping to protect them and the public.
“When you finally did tour the facility, your approach to professionals in the EOC was that of arrogance. It was indicated to me you successfully made it clear to them you did not understand emergency management, it procedures or the need it serves. It’s surprising to me, than an elected official would try to erode public trust by questioning the value of an EOC.
“It’s okay to ask the questions, it really is, and trying to garner some level of understanding. But, speaking out negatively before getting the answers, doesn’t seem responsible to me.”
After that, Pina said Harris chose to participate in a conference call with our legislative delegation from the 30th district. “This, again, is a call where you represented yourself as a Council representative, without the authorization of this Council, and you made statements confirmed by several who were on the call, to the following effect.”
Third rate businesses?
The mayor said Harris said that some Des Moines downtown “businesses are mediocre and third rate.” The coronavirus provides a great opportunity to redevelop the downtown with hundreds of millions of public dollars as these mediocre businesses will not survive the coronavirus. This a once in a lifetime opportunity to redo the downtown.
Later in the meeting, Pina asked Harris which businesses were “mediocre and third rate.”
“How dare you,” said Harris. “I will not reply to that. That was a conference call…I have no shame at anything I said” and had no intention of providing a list and had “no shame at anything I say in any of these contexts but no, I have no intention providing a list …”.
Pina said “These are outrageous comments. They definitely do not reflect what I know of this Council.”
The confusing part is that (Harris) copied the city’s restaurant postings and put it on his site, encouraging people to support our local businesses via takeout, you claimed you were the source of the information. Please help me to understand … how you can support businesses you called third rate and mediocre and believed would not survive.
“All of this Council has been willing to work with you and collaborate collectively for the benefit of the city,” Pina said. “You constant dismissal of facts and the values of others’ input, including our administration, our law enforcement, our professional staff are making working with you very difficult.”
The mayor said he was hopeful some deliberation by Harris will convince him he is “not a one person show, that you are part of a body of seven. I welcome your consideration.”
Harris was given time to respond and started with “many of the things you just ,said are outrageous, if they were true.
“You have distorted my comments in any number of contacts,” he said, “if they were true.”
“I never represent myself as the voice of the government, never. I tell people my title” Harris said after Pina said all of the statements he made about Harris were true facts gathered from sources he relied upon.
Pina said it was fine for Harris to attend functions and to tell whomever he was a Councilmember, but never than he represents the Council unless he has been given that role by the Council.
The mayor said being at a meeting is fine, but it is not acceptable to speak as representing the Council unless the Council has approved that role.
Harris said that the business he said were questionable has he right to succeed “but the fact is that some are stronger than others.”
He also said he wanted to know who “told you this” and that the mayor was distorting his words.