The Emperor's Checkbook

Dallas City Hall finances could be our own little Enron

"Experience, knowledge, excellent analytical skills...consistently present and on time..."

They loved this guy. He was a star. His superiors rewarded him with ever larger and more significant audits to supervise, and that was when things began to go south for him, because Robert Reynolds began to find ever larger and more significant problems at Dallas City Hall.

In 1999 Reynolds informed his superiors that the city budget prepared for the council by the city manager was seriously misstating expected sales-tax revenues. You remember this issue, right? It's why we are in the ditch right now. The city manager told the city council earlier this year that the city was facing a $95 million shortfall all of a sudden because of a shocking, totally unanticipated plunge in sales-tax revenues after 9/11. It was all Osama bin Laden's fault.

City Manager Ted Benavides is the personification of the Dallas City Hall system--calm, cool, collected, always businesslike. But a major whistle-blower says that's all a façade, and City Hall is a junk pile.
Peter Calvin
City Manager Ted Benavides is the personification of the Dallas City Hall system--calm, cool, collected, always businesslike. But a major whistle-blower says that's all a façade, and City Hall is a junk pile.

Was it?

Reynolds also carried out a major study of cash transactions at City Hall, and this is where we get back to my stupid parking ticket. What he found was that the city, according to his study, has no real control at all over receivables. It doesn't know who owes it what. It doesn't know whom it owes money. It doesn't keep track of who pays what. There are pools of money all over City Hall that nobody ever checks on or counts.

"These discrepancies made it more probable than not," the lawsuit states, "that city employees had either misappropriated funds or that city employees responsible for these accounts were grossly incompetent."

So my imaginary picture of people sitting around in their swim trunks dipping randomly into stacks of crumpled citations or invoices or whatever to see which one might pay--or pay again--is not a joke.

In his den Reynolds calmly laid out for me what he says is the general picture of City Hall finance in Dallas. He said the city maintains more than 200 separate bank accounts, almost none of which is ever truly reconciled or balanced down to the level of transaction detail.

"Nothing is analyzed," he said. "Nothing is reconciled."

Reynolds doesn't blame the staff for being lazy or stupid. He says the staff has been cut and cut and cut again over time, so that "the staff is so very very thin, I don't know how long it can go on." The people who are responsible, in many cases, are woefully undertrained, Reynolds says.

"The bank deposits are not totaled up correctly; they come from different sources; there are credit card charges unresolved; it's all just sitting out there. The problem is that if you don't resolve these things, you can't trust your own books."

The consequences of all this are fairly scary. Reynolds says the city basically would have no way of knowing if a city employee were skimming deposits, or if a debtor, say someone who owed 15 bucks on a parking ticket, had ever paid. He said there are many instances where the city owes people money, and he has pointed out those instances to the departments involved.

"They tell me, 'If they ask for the money, we'll pay it.'"

How's that for a first-class operation?

In Reynolds' suit, he claims the city retaliated against him--denied him a promotion--for telling the truth about these issues. He also has complained to a state oversight agency within the auditing profession and to subcommittees of the Dallas City Council. He has some interesting things to say about council members who have known chapter and verse on all this for years and have remained silent. More on that later.

I called Reynolds' superior, current City Auditor Thomas (Mike) Taylor, who called me back and said he couldn't discuss Reynolds or the lawsuit on instructions from the city attorney. Two members of the city attorney's staff called me back to say they also could not comment.

In the weeks and months ahead, I plan to delve deeper into some of the specific claims Reynolds has made. Claims in a lawsuit are just that, claims, but many of these happen to be backed up by major audit studies. And Reynolds is a very credible person with specific expertise. All of that lends this lawsuit a considerable amount of gravitas.

It also explains a lot, from my stupid parking ticket to the general randomness of city enforcement of ordinances and claims. And then every once in a while they get somebody so dumb he actually lets them talk him out of getting any paper. They must really love that. "Bye, Sweetie, see you in a few more months." Steam from my ears.

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