By Jon Seidel, Post-Tribune staff writer
GARY - A member of the city's new fiscal monitoring firm expects his team will recommend "wrenching changes" for Gary that will be far-reaching without being punitive when it issues its report later this year.
"Our goal always is to be constructive and useful," Dean Kaplan, managing director of Public Financial Management, said.
Kaplan and his colleagues, based in Philadelphia, have been hired by the city and the Indiana Distressed Unit Appeals Board to report on the state of Gary's finances later this year.
PFM's $320,000 contract, which Gary's taxing units are on the hook to pay, was a condition of the $23.5 million in relief granted to those units in a first-of-its-kind decision by the DUAB earlier this year.
A fiscal monitoring 'team'
The idea of a singular "fiscal monitor" was first posed by DUAB members during a visit to the city in January. Kaplan, however, said his firm will have a team of 12 to 15 people working on the project.
"We try to match up some of our folks who have had a little more experience in certain areas," Kaplan said.
Those areas of concentration, Kaplan said, could include planning, labor and workforce issues and public safety budgeting.
Kaplan said the work has already begun. Members of the team have met with Mayor Rudy Clay and some City Council members and department heads.
Meetings between individual members of the team and Gary staff will begin soon, Kaplan said. PFM will also send a "very broad informational request to the city" seeking records such as performance data, organizational charts and staffing.
"Everything from recent budgets and financial reports," Kaplan said.
Clay said he's encouraged by the idea of City Controller Celita Green teaming up with PFM and the state distressed board.
"I think we have probably the best, probably the best financial team in the country," Clay said.
Gary has been hit by several years of multimillion-dollar shortfalls exacerbated recently by new property caps imposed by the state.
Without relief from the DUAB, a privately produced report predicted, Gary's general fund would have lost $26.3 million in 2009, reducing spending there by about 37 percent from the 2008 budget.
Even with the relief, Gary fell $7 million short this year. The city's proposed 2010 budget sets spending at $57.4 million, even though that same report predicts it will see just $26.5 million in revenue.
Process just starting
Kaplan said he doesn't expect his team to be closely involved in the 2010 budgeting process. Instead, after PFM's report is finished, that budget could be revised.
It's premature, he said, to know what kind of recommendations will be made for Gary. While bidding on the job, PFM said it helped bring another distressed steel town, Pittsburgh, from a $32.4 million projected deficit in 2004 to an $87 million surplus in 2008.
The most significant aspects of that turnaround, according to a Pennsylvania state official, were a unique set of business taxes put in place for that city by the state's General Assembly and a new set of collective bargaining agreements that eyed "cost containment" for the city.
Pittsburgh was the host city this week for a Group of 20 summit, reportedly chosen to showcase its rebounding economy.
Among the documents to be reviewed by PFM in Gary, Kaplan said, will be a recent state audit that found Gary is overdrawn by $4.5 million. It questions the city's ability to continue as a going concern.
Auditors noted in that report the use of credit cards by elected officials. A Post-Tribune review found $98,334 was charged to those cards by officials who were mostly traveling and making personal purchases that have reportedly been reimbursed.
Kaplan said there has been a movement toward "purchasing cards" as a best practice in local governments, because they are easier to track than petty cash.
"Of course, in most cases, there are strict limits on how much you could purchase," Kaplan said. "A limit on the kinds of things you could charge."