In case you haven’t heard, Montpelier has a bit of a financial scandal going on at City Hall.
(Mayor Mary) Hooper and City Manager William Fraser disclosed last Friday that the city had mistakenly cut a check from the water fund for $548,111 to Scott Construction on Dec. 22, 2004, for a water line improvement project. The amount should have been $85,775.
The $462,336 overpayment, which was cashed by Scott Construction, wasn’t detected by an audit in 2005 and was discovered by the city in 2006. The city has been able to collect $114,688 of that overpayment from Scott Construction over the years, but last week Chittenden Bank called in its $4.8 million loan to the company and foreclosed on Scott, making it almost certain no further funds will be recouped by the city.
The City Council has met several times since 2006 behind closed doors in executive session to discuss and approve action to recoup the funds. Hooper and most council members believed keeping Scott’s financial situation quiet was imperative to preventing a run on his assets and recovering the lost money for Montpelier ratepayers.
The City Council and City Manager recently had their face the music meeting with townsfolk. By all accounts, it was generally civil, but no one that I can find feels good about any of this – in particular how it was kept quiet for so long. There is a keen sense of betrayal on that point in active circulation in the Capital City.
The rationale for the “cover up” is not crazy; if word got out about the company’s tenuous financial condition, there could have been a run from creditors, forcing them into immediate bankruptcy and shutting down any chance to recover the funds by being dropped to the back of the line behind secured creditors. And all that is true. It’s a sound explanation.
But its not justification.
When we screw something up, there’s a temptation to keep it quiet until you can fix it. It’s a lot easier to fess up to a parent, a spouse, a friend – whoever – if we can say “I broke it, but I took responsibility and made it better, so its all cool.”
It can be an appropriate approach, but it includes a gamble; if you fess up to a screw-up immediately, you can expect a certain amount of grief. If you keep it quiet in order to fix it before reporting, you have to be sure you do fix it, as there is major interest compounding on that grief. If you can’t make good on that reparation or payoff, the injured party is going to be that much angrier for the lack of disclosure, which may be seen as intentional deception.
This is why, while it may be a gamble we as individuals can choose or choose not to take in our private lives, it is never, ever a gamble that public officials should be taking through our democratic institutions. This situation should make that clear. Intentions may have been good – they certainly weren’t bad – but accountability and transparency have to be axiomatic in public institutions to guard against incompetence and dishonesty, the former certainly being in play in this case. Decisions to hide such things, as rational as they may seem at the time, also get tainted by feelings of fear or trepidation (even panic), self-interest, frustration, anger, etc. – and that’s no way to run a public institution.
The City Council and the City Manager made the wrong call – a call in which they placed themselves further apart from (above?) the community than they’re supposed to be. Very simply, the information was not theirs to withhold, no matter the intent. Do I think they should resign? No. We elect humans, not robots, and as long as I personally see no intent to do wrong, then I personally see no reason for them not to fill out their terms. That’s me.
But there’s no question that re-election could prove challenging for these folks (including for Mayor Hooper in her other role as State Representative), as Montpelier residents will all be making that calculus individually. And right now, emotions are quite understandably high.
(Yes, the post says “part 1”, but part 2 will focus on the Burlington Telecom snafu)
I believe that is justification enough. Yes, public officials generally should disclose such things, but in this case the disclosure would have adversely impacted the city’s position. I do hope the AG seriously investigates the company for wrongdoing and perhaps one lesson to learn here is to be more careful and not hire such highly-leveraged contractors.
The capitalist welfare system is so entrenched that there’s no discussion about how we reform markets to make business as honest as people are expected to be.
If I cashed a paycheck for $4,600 when I had earned $850, my employer would hold me accountable. I’d probably be threatened with a felony charge. But, when it’s a business taking taxpayer money, it’s just business as usual, and 99% of the blame goes to people who have no profit motive, even though 100% of the money went to the profit side.
That’s just scratching the surface. Business relies on society being fiscally irresponsible, and actively pushes for it. Look at Vermont Yankee: 1000 years of waste storage costs kept off their books, and off society’s books, but it’s a real future cost, which 50 future generations will have no chance to duck. It’s like taking a 10 year loan out to pay three months’ rent, or like taking a 100 year loan out on a car.
Business has hidden deficits in pollution, and destruction of human capital for 150 years in America, keeping it off the books, and trying to stick taxpayers with the bill.
Until we expect an accounting on all these big issues, we’ll be stuck with the bill on all the little issues, too. We were barely to the point where we could expect responsibility for current actions, when the Bush administration pushed back hard.
Today, 99% of pollution past is written off as bad debt, and business (nuclear power)is negotiating for loans where they keep the profits (20 years worth), and we make the payments (1,000 years worth). Business has stuck us with 2 trillion plus of war debt, and is still negotiating to eliminate corporate income tax, and for a flat income tax, so we will pay their debt both in lives and future taxes. They have also manipulated markets to cause economic chaos, and stuck us with the losses, and the deficit that may or may not get things going again.
Where’s the accountability? Nowhere it sight, because Republicans make sure we don’t use business accounting methods to show where business is sticking us with the debt. We just use it in a post mortem to understand that we really are stuck with it, because those who stuck us have skipped town.
That’s what we have to change. We have to point out relentlessly that business repeatedly does to the state and the nation exactly what Scott Construction did to Montpelier.
We need to list the social costs of business, and name recipients of those welfare benefits, and list the social benefits. That way, when it’s time to make spending cuts, we can choose between business welfare, and welfare for women and children. And, when it’s time to raise taxes to pay the deficits, we can justifiy taxing those who cost us the most.
You can’t rely on paperwork or computers when dealing with numbers.
At some point you need to see if the stuff makes sense.
It’s easy to make mistakes, especially with calculators and computers.
After using your tools you need to use the most important tool – – the one between your ears – – to make sure that the numbers are what you would reasonably expect.
Skip this step at your peril.
PJ
“We need to list the social costs of business, and name recipients of those welfare benefits, and list the social benefits.”
Right on, gov4all. the social costs of our capitalist state are too immense not to just investigating it and how businesses ruin us, especially big businesses.
I was at the meeting at city hall. It felt pretty tense there. One wrong phrase and it could have boiled over. The city officials certainly took a bruising, as they should, and there were citizens in the back shouting for blood. one lady was afraid of the “mob mentality,” and one of the bloodhounds in back hissed, “then move.” I wondered if they were republicans gleeful at the golden opportunity to kick a few liberals when they were down.
I think odum is right about the right idea with the wrong method. It is almost unimaginable that someone could botch a check for 400 or so grand than it was billed for and absolutely no one caught it until two years later, after an audit and an attorney missed it. They should be investigated as well and, possibly, fined. And a few people at the hearing wanted answers, and not evasions, why they hired some fly-by-night construction company from Newport when there are more than enough contractors around here, low bids aside.
I just hope that the city taxpayers will not have to pick up the tab for this.