Eeek, the Facts!

Guy gives Mary Poss really bad news about City Hall bookkeeping. Poss says, "Well, it's so nice to see you," and splits.
Peter Calvin

I was unable to get Councilwoman Mary Poss to call me back to confirm or deny this story, so let's take it as one man's version and assume there are two sides:

Over a period of a year or more, Robert Reynolds, a senior city auditor, had appeared before Poss and the city council's finance and audit committee to talk about serious problems with the city's financial housekeeping. So one day he runs into Poss, our would-be mayor, on the elevator. He reintroduces himself. She figures out who he is and says something to the effect of, "I'm glad you were able to settle all those problems."

Stunned, he says, "What do you mean, 'settle?' Nothing is settled. Ms. Poss, if we were in the private sector doing what goes on here, we'd go to jail. I don't know if people here even know what good business practices are."

According to Reynolds, Poss blinks at him several times and then says, "Well, it's so nice to see you again." Then she bolts from the elevator like she's late for a date at the charity ball.

Poss isn't the Lone Ranger. Most council members are afraid of the bottomless pit. Each separate scenario of waste or fraud is a window on a vast overarching management problem at Dallas City Hall, and they all know it's there, and they don't want to touch it.

A good example is the council's reaction to the recently released city auditor's report on Dallas Water Utilities. The bottom line was that the city's water utility can't keep track of the water, and it can't keep track of the money.

What else are they supposed to do? They deliver water, and they collect money. It's like a heart surgeon whose two big weaknesses are surgery and hearts.

The audit said Dallas Water Utilities--a semi-autonomous arm of the city that produces, stores and treats water for Dallas and many surrounding suburbs--carried one account that was out of whack by $9 million for two years. The audit said DWU loses about 26.3 million gallons of water a year, or 17 percent of its production.

On several occasions DWU officials disputed the audit, claiming at one point that they lose no more than 12 percent of their water. As soon as she heard that, council member Elba Garcia gave the situation a gloss: "We're not that far away from 10 percent!" she said. Far from a joke, this is the kind of thinking that goes on all the time at City Hall, where numbers become meaningless.

One thing I noticed in the audit: DWU had originally told city auditors its total water losses were no more than one day's production or one-third of one percent. The auditor's department disagreed. It found a waste rate of 17 percent. In its working papers showing that the water loss was actually 17 percent, the auditor's department cited industry standards calling for lost water levels of less than 10 percent. In response, DWU told the auditors it had rechecked, and amazingly, according to its own study, water losses were now at 9.98 percent. Just under the wire.

The auditor pointed out that DWU was not providing any documentation to support the new numbers. (Documentation! I got your documentation.)

But based on the new 9.98 percent number, City Manager Ted Benavides' office said confidently, "Responses provided by staff do not indicate a need for any corrective action."

The auditor insisted the real number was worse than 9.98. Finally DWU compromised and said its water losses were about 12 percent, giving rise to Garcia's argument that 12 is almost like 10.

I could also argue that 10 percent is only one zero away from 100 percent. Oh, my goodness! We lost all the water!

An even better example of number numbness at City Hall is in the debate between the auditor and DWU over leak detection. To save money, DWU had reduced its leak detection staff to one-quarter of one person. Let's not even bother with the obvious wisecracks: It's too irritating.

The auditor pointed out that DWU could employ one supervisor and five employees at an annual cost of $1.1 million, labor and capital, and with current technology would be able to plug or prevent 75 percent to 90 percent of the utility's leaks, at an annual savings of $8.2 million to $10.3 million.

Hold on to your hat. This is where we see the core mentality. And rather than interpret, let me give you DWU's response first in its own language: Writing to the auditor, DWU said, "Your comment that states, 'the retail value of the water that could be saved by the program is estimated to be between $8.2 million and $10.3 million,' is not correct. All customer demand was met and billed."  

It's so stupid I'm afraid even to translate it because of the possibility of mental contamination. They are saying, "The water we lose doesn't count because it's not the water we sell."

The auditor pointed out that processed water has an economic value. (They have to tell the water department this?) The amount of water that Dallas sells to surrounding communities is two-thirds of what Dallas provides to commercial and residential customers within the city. There are two other major water districts in the region that sell water to the suburbs. The auditor suggested DWU try to prevent its excess capacity from leaking away and work instead on competing to sell it, rather than produce it and allow it to go down the drain.

"Processed potable water has a retail value," the auditor said. "The DWU management should concentrate on ways to market water that is produced in excess of demand in lieu of downplaying its value."

You're trying to understand this, right? Let a City Hall veteran give you a hint: If it sounds like Alice in Wonderland and it walks like Alice in Wonderland, it's Alice in Wonderland. Don't try to make it more complicated than it is.

There is a dimension in all of this where one can begin to see a certain rhyme, however, illustrated by the remarkable decision to put one-quarter of one person in charge of leak detection (later, we'll guess which quarter they were using). City Hall veterans and people who have left city employment say that years of ruthless payroll slashing to keep tax rates down in Dallas have left many departments absurdly understaffed.

Kelly McCullar, who was in charge of DWU's accounting and finance division until leaving the city two years ago, told me that management at DWU, like management in most city departments, knows what it would have to do to run departments responsibly. He said management also knows that current budgets will not allow that to happen.

"The people in management positions, the directors of operations, realize that they have a lot of outstanding needs that are continually building up that they just can't get to because they don't have the budget."

But McCullar said talking honestly about it is a career-killer. "It's highly political. The people in charge definitely know, but it's hard for them to talk about because they don't want to get in trouble."

Reynolds, the auditor, told me there is no way DWU has cleared up the problems cited in the audit, because DWU still does not come close to having an internal financial staff capable of making necessary fixes and running things properly. I asked him what that winds up meaning in practical terms: What is it that DWU cannot do because it lacks the budget and staff to do it?

"The idea," he said, "is that if you don't have the total of the detail agreeing with the master account, you don't have any control to see if things are being done correctly. In other words you can't say, 'Give me a list of everybody who was billed today and what that totaled up to. Give me a list of everybody who paid today and how much that totals up to.'

"When that's not done, you're out there with nothing. You cannot defend any number. It's like just putting all the numbers in a pot and then throwing them out and saying there it is, whatever it is."

Reynolds echoed what McCullar had said: Years of budget cuts have denuded City Hall of the staff it needs to do things properly. But the heads-up ambitious executive is the one who helps his boss, the city manager, promote the Big Lie--that everything is copacetic.

So they're not stupid. They're just cynical.

They tell the council what the council wants to hear. The council wants to hear it, because they believe you and I want to hear it. That's what we vote for in Dallas--cheap taxes.

I know we have our reasons. Dallas thinks cheap taxes are good for the economy. It's a religious faith. Dick Lavine, senior fiscal analyst at the Center for Public Policy Priorities in Austin, points out that the really hot growth in the nation in recent times has been in very high-tax climates like Silicon Valley and Boston, driven by the great infrastructure and excellent public education for which high taxes pay.

"It's very clear that when businesses are choosing new sites for location or expansion," Lavine said, "tax is only a minor factor. The important things are access to markets, educated workforce, good transportation system and quality of life, which may be why we didn't get Boeing.  

"They [Boeing] were in Washington, which has no state income tax. They could have come here, where we have no state income tax. Instead they went to Illinois, which has a pretty high state income tax, because it had various cultural amenities they were looking for."

The political reality in Dallas is that we vote for the people who promise us either cheap taxes or cheaper taxes. And we get what we pay for--a crumbling infrastructure operated like a junkyard by a bunch of smiling con artists.

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