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Goldwater Institute releases months-long investigative report

Phoenix public union leaders are paid at least $3.7 million of taxpayers’ money to do union work instead of their regular jobs – while the city is cutting services to libraries, seniors, children and parks because of budget restraints.

A story by Mark Flatten, an investigative journalist now working for the Goldwater Institute, shows that the city pays for union leaders to take more than 73,000 hours off their city jobs to do union work.

This is with public dollars, your money, not from union dues. This dramatically demonstrates how much public unions own city hall. Taxpayers’ money is going to pay them to not do city work. You’re paying union bosses to fight for bigger and bigger pieces of the public purse.

According to the Goldwater Institute report Money for Nothing: Phoenix taxpayers foot the bill for union work 

• All seven public unions have multiple workers who are paid their regular salary and benefits when they get “release time” to do union work instead of their assigned job.
• The top two to six union officials in the seven units take the entire year doing union work – not one hour of city work – and get not only their full city salaries and benefits but also hundreds of hours of automatically paid overtime.
• Two unions get lobbyists paid with taxpayer dollars.
• Some union bosses also get salaries and stipends from their unions.
• None of this is audited to see if they’re actually showing up and doing any work.
• The practice may violate Arizona’s “gift clause,” according to constitutional lawyer Clint Bolick of the Goldwater Institute.

While this is shocking, it’s not really surprising. Phoenix staff compensation grew 23 percent over the past five years, during the worst recession in most people’s lifetime, while services were curtailed and taxes and fees shot up.

I’ve highlighted the struggles you and your family have been going through, how businesses have to fight through the expense and red tape of city bureaucracy to create a job.

This report is one more glaring example of how Phoenix city government  is dominated by insulated insiders who just don’t get it. This shows how much union control exists at city hall.

You’ve heard me say that your voice must be heard in order to make a difference. Real reform will not occur until you get your family and neighbors to demand real change.  You must vote.

To fix this problem, I recommend that: 

• All labor contracts will be available for public inspection at least 30 days before Council can vote on them so you have an opportunity to tell us what you think.
• All key items should be defined in layman’s language, in a glossary, to prevent confusion. For example, if “pay” means only salary or if it means salaries and anything else, that should be clearly spelled out.
• All previous benefits enjoyed by each labor group should be listed in advance of negotiations, including pay, time off, overtime and seniority benefits.
• All negotiation sessions should be taped and transcribed. This will give you the opportunity to see if your city officials are negotiating in your best interest. 
• The proposed budget will show labor costs, benefits cost, bonuses and raises, and these will be presented on all public hearings on the budget.
• All contracts must be audited.

“They’re not talking about eliminating a tax – they’re talking about raising more taxes.”

Sal DiCiccio, Arizona Republic, September 14, 2011

Just when you thought the pay raise for food tax scandal couldn’t get worse, Phoenix leaders are now looking to tax services.  During yesterday’s debate to eliminate the food tax, staff was asked to consider raising new taxes on the service industry.

First, they went after the poor with the food tax, now they are going after the small businessman and woman.  At a time when small business owners are one sale away from shuttering their doors, Phoenix leaders now are considering targeting these entrepreneurs that are so important to our community.

This is how it always starts, first impose a “sin tax” on services.  If the City of Phoenix opens the door for a service tax, where will it end?  The next step will naturally be real estate, barber shops, pet groomers, auto shops, gym membership… the list will never end.

Phoenix has never imposed a tax on services and this new proposal should have you scared. It should have you very scared.

A BETTER IDEA

As was pointed out, City Manager David Cavazos purposely kept the total amount of the pay raise for government staff from the public until two months after the food tax was passed, creating the scandal.  Phoenix could have used yesterday’s debate as an opportunity to restore credibility with the taxpayer.

Instead of looking to create a new tax on services, Phoenix should first look internally to solve the fiscal problems.  Phoenix leaders created the problem, they should be required to fix it – but not on the backs of the taxpayers.

I have proposed Phoenix continue with a 3.2% cut in compensation, no pay raises for at least two years, and stop the taxpayer payment for union activity.   We are waiting for the actual savings, but the estimate is this will save $70 million/year.

With additional money we could restore library hours, children and senior services, and have more programs in parks.  Those were the same services cut to pay for the pay raises.

I need your help: Please pass this on to your friends, family and neighbors.  The public was snookered once by staff on the food tax, please help me stop this new proposal.

My best to you and your family,
Sal DiCiccio
Councilman, District 6
Phoenix City Councilman Sal DiCiccio represents District 6, which includes Ahwatukee, Arcadia, Biltmore, East Camelback and North Central. He can be reached at council.district.6@phoenix.gov or 602-262-7491.

You may have seen, in the newspaper and blogs, attacks on the reforms that we believe necessary at city hall.  Expect more smears in the days to come. Many more.

Union bosses, insiders and beneficiaries of the current system will smear all those looking for reform. They will not let go of their firm grip of city hall and your wallet without a fight. They will smear all the change agents, including me, and do all they can to divert your attention from the real issues.

The people who want reform want you and your family to come first.  You have my commitment that I will continue to expose the problems at city hall that must be addressed for Phoenix to prosper and issues that must be resolved to improve our quality of life.

What has raised the ire of the Union bosses and beneficiaries?  In the past few months I have exposed:

Water rates: You were told that the water rate increase was needed to protect water quality when in fact it was to protect government jobs. Phoenix moved hundreds of jobs into the Water Department for employees cut from other departments — and then jacked up rates.

Food tax = pay raises: You were told that the money was needed to protect police and fire positions.  Fact: Phoenix handed out $28 million in pay raises this year, which equaled the revenue from the food tax.

Bidding process: My office, along with a group of community leaders, looked into the problems and provided solution last year to our procurement system.  The city manager failed to act on those recommendations.  The Arizona Republic investigated with the expose: “Phoenix’s bid rules for contracts called ripe for abuse.” With no standardization and little transparency, the procurement process is ripe for abuse and insider dealings.

Budget transparency: The city manager, David Cavazos, refused to release the amount of union pay raises until after the food tax was approved (pay raises = equaled the food tax), the budget was approved, public hearings were conducted citywide and the union contracts were approved. The city manager’s office still refuses to release documents related to that.

False kidnapping reports:  Late last year I asked the city manager to look into the allegations that the kidnapping reports were fabricated.  On four occasions, me and the public were told by management that all the information was audited and accurate.  We later discovered that neither was true, and the federal government is still continuing with its investigation. We are awaiting the feds’ final report.

Debt fund shift: Last year, the city manager’s office said the fund that repays the city’s debt obligations was seriously under-funded and the tax rate needed to go up. When the Council said no, staff shifted the tax funds around so the debt repayment fund got less, and paying today’s bills got more. That will mean higher property taxes down the road.

Outrageous benefits: I uncovered that taxpayers fund benefits for unionized public employees much greater than what you, the taxpayer, gets.

Union bosses, who feed off their union dues, have become out of control because they are out to serve their best interest — not the taxpayer’s of Phoenix!…
It is my belief that City Hall must be reminded that it serves the taxpayers — not the other way around.  Emergency tax hikes (food tax) without public input is simply wrong . . . The Phoenix I want represents the interests of the residents of Phoenix, not the union interests.
  — Former Phoenix Mayor Skip Rimsza, Arizona Republic, July 9, 2011

Phoenix has no uniform set of procedures and policies for outside contracting and the guidelines it has relied on have been kept from both public view and City Council oversight, a situation that critics say could lead to unfairly awarded contracts and the waste of taxpayer dollars.
   — “Phoenix’s bid rules for contracts called ripe for abuse”, Arizona Republic, July 6, 2011

During the next few weeks, this newsletter will examine the role of government unions at Phoenix City Hall and the impact on your family, your pocketbook, your services and the city’s ability to fund its commitments.  We will provide comments from former Phoenix Mayor Rimsza and respected journalists who have written about this problem and the solutions needed to correct it. (**The first is the July 9 Arizona Republic editorial below.)

What former Mayor Rimsza and I have in common is that we care about our city. We care about the citizens who make Phoenix a great place to call home and your quality of life.  And, we care enough to expose the Union Boss influence over City Hall and the damage it inflicts on your quality of life.

Phoenix has (from Phoenix Budget and Research Department figures):

•  Paid more than $28 million in pay raises — this year.
•  Awarded more than $270 million in compensation increases in the past 5 years
•  A FIRST-YEAR clerk gets over 40 days off the first year of employment (it goes up from there).  Managers get over 46 days off to start (including vacation, holiday and sick time).
•  The average compensation cost for more than 14,000 employees is $100,000/year

•  Raised water rates over 60%
•  Created a new food tax
•  Raised fees and taxes more than $130 million
•  Cut services to children and seniors
•  Cut libraries
•  Shuttered pools

In the past few weeks you have seen City Manager David Cavazos refuse to provide documentation that would tie the food tax to the pay raises. Only you can stop this nonsense.  Only you can put an end to outrageous government pay raises that are unfair to taxpayers, while you and your family and neighbors have had to suffer through this bad recession.
**Here is the Arizona Republic editorial :

Battle over power,  taxpayer cash
The Arizona Republic
July 9, 2011

Sal DiCiccio, council member in Phoenix, may be a lot of things, but “partisan” gadfly?

Not this time.

For those who have bought into the stigmatizing rhetoric that DiCiccio is working some kind of ultraconservative partisan agenda in his effort to reform city finances, we present the following:

Andrew Cuomo, governor of New York; John DeStefano, mayor of New Haven, Conn.; Dave Bing, mayor of Detroit; Cory Booker, mayor of Newark, N.J.; Rahm Emanuel, mayor of Chicago; Jeff Adachi, San Francisco public defender.

“That’s the way it’s always been.” – Phoenix assistant finance director Susan Perkins on city’s purchasing process, Arizona Republic, July 6, 2011. 

That was the only explanation for lack of transparency in the city’s purchasing system. The Arizona Republic story below examines inadequate city procurement practices that cost taxpayer money and benefit insiders.

Phoenix’s bid rules for contracts called “ripe for abuse”

Phoenix has no uniform set of procedures and policies for outside contracting and the guidelines it has relied on have been kept from both public view and City Council oversight, a situation that critics say could lead to unfairly awarded contracts and the waste of taxpayer dollars. (Full story)

Good news: This article already had an impact: On Wednesday, the Council continued two bids, one for a lack of transparency; the other dealt with staff picking vendors.

National Unions Threaten Way of Life for Public

We have a fantastic city, one we all call home. We raise our families, go to church, work and play in Phoenix. We have seen many awards honoring Phoenix. Unfortunately, city management – as I pointed out at Wednesday’s Council meeting – union bosses are threatening our way of life.

The current system is designed to protect insiders. It lacks transparency and leaves out potential bidders who might lower costs and provide better service.

If we do not reform our city, you will see more major cuts in after-school programs and services for seniors, higher taxes like the food tax and higher water bills (already up more than 60 percent in past few years). And yes, more pay raises for government staff while you struggle. 

When you have a city manager who refuses even to answer a simple questions regarding pay raises for government employees – you have a significant transparency problem.

Solutions

Last year, I helped present city management a list of recommendations for improving Phoenix’s purchasing policies (below):

• Consistent bidding process.  The city should have a clear and consistent system across departments for the bidding and approval process.
• Consensus scoring:  Reviewing panel should agree on a score rather than simply summing the scores of individuals on the panel.
• Require scoring reasons: Reasons for the scores should be required and should be public record immediately.
• Bids should be public record at the exact moment the award is announced.  All this would make appealing a decision a more informed and contemplative process.
• An ombudsman would monitor this process and report results to the City Council.

These recommendations would make Phoenix more transparent, provide better services to the public, provide an open and competitive bidding that would lower cost of services and give us surety that we have the best process that allows more competition in the system.

Why hasn’t the city explored these?  Have you changed your purchasing habits in the past five years? Do you still shop they way you did when your house was worth twice what it is today and job/income security was much higher? Of course not. You look for deals. You have to in this economy.

My job is to act on your behalf so that your interests and tax dollars are protected from the insiders (who care only for themselves) and from governmental inertia and bureaucracy that drives up costs.