UPDATED: City Report Says Cicilline ‘Severely Worsened’ Effects of Recession

UPDATED: City Report Says Cicilline ‘Severely Worsened’ Effects of Recession

A new report that will be released today says that Congressman and former Mayor David Cicilline’s mismanagement of the budget “severely worsened” the effect the recession and revenue cuts had on city finances.

Earlier this year, a separate panel, convened by Mayor Angel Taveras, revealed that the city was facing a $180 million deficit and outlined widespread problems with city finances. The new report—which was commissioned by the City Council—is the latest effort to identify what led to the city budget crisis.

The report concludes that the Cicilline administration did not “did not honestly assess or address" the “fiscal challenges” it faced in the recession and in revenue cuts.

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Cicilline: factors beyond my control

In an interview last night, Cicilline told GoLocalProv that three external factors caused the financial challenges the city is facing—the recession, the loss of $50 million in state aid, and a cut in federal funds.

But the report recognizes all those things. It says that Cicilline made them worse. “In fact, a dysfunctional financial management system severely worsened the effects of the national recession and cuts to revenue,” the report states. It recommends ways of improving the budget process.

Cicilline questioned whether those reforms would have made a difference. “The best practices in the world would not change these three facts,” Cicilline told GoLocalProv. He also pointed out that the council was part of the process. “The council was fully engaged in … the enactment of the city budget,” he said.

Report finds improprieties

This latest report goes into detail about the apparent mismanagement of city finances, according to a summary obtained by GoLocalProv. These include:

■ Improper transfer of funds: The cash balance of the three largest reserve accounts dropped from $70 million at the end of fiscal year 2008 to $8 million by the end of last month. Funds were transferred without the approval of the City Council, which the report says is a violation of the City Charter.

■ Missed audit deadline: According to the report, the city missed a six-month deadline for completing its annual audit, as required by state law. “Braver Associates, the City’s independent audit firm, believed the Administration did not place a high priority on completing the audit within the deadline required by law,” the report states.

■ Missing budget documents: The prior administration’s proposed budget for fiscal year 2011 was missing four of the nine documents required by the City Charter.

■ Failed oversight: The report also points to a lack of oversight. “There are several deficiencies in the Council’s oversight and monitoring of the budget and financial operations,” Sasse and Clarkin state.

The report was authored by authored by fiscal advisor Gary Sasse and Internal Auditor Matt Clarkin. In addition to pinpointing where the budget was mismanaged, it will make a number of recommendations on how to prevent a similar fiscal crisis in the future.

Fixing the system

The report makes a number of recommendations for improving the budget approval and review process. These include, according to the summary:

■ Rainy Day fund: Creating a minimum reserve goal of 5.0 percent to 10.0 percent for the City’s “Rainy-Day Fund” and a multi-year plan to replenish and fund the Rainy-Day Fund.

■ Budget transparency: Requiring more information be submitted with the annual proposed budget to make it more transparent.

■ Monthly reports: Requiring monthly and quarterly budget reports and cash-flow analyses.

■ Fines for city officials: Passing a ordinance to impose a fine on the Director of Finance and the Director of Administration if the monthly and quarterly reports are not submitted.

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