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  December 4, 2015

Councilman: Lack of Audits in Baltimore, Poverty Inextricably Linked

Carl Stokes says the absence of fiscal accountability in a cash strapped city only heightens the growing divide between rich and poor
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TITLE CARD: In 2012, voters amended the city charter to require all government agencies undergo fiscal audits every four years. Before the ballot measure some agencies had not been scrutinized in decades.

But despite spending nearly one million dollars on outside accountants the city has missed several deadlines and failed to complete several critical audits. We spoke to Councilman Carl Stokes, one of the biggest advocates for audits, about this delay.

STEPHEN JANIS, TRNN: Hello. This is Stephen Janis from the Real News Network in Baltimore. I'm here with City Councilman Carl Stokes, and mayoral candidate, who has been trying to get answers about audits of city agencies for years now.


JANIS: The audits were due several days ago. We're here with Councilman Stokes to get an update. So what's going on with the audit process right now? There are three audits that were due, right?

STOKES: That were due yesterday, and five originally. And they said that two of those five would not be available until after--until December 30, and that the first three of them would come out by November 30. As of November 30, I am told that one of the three is completed. The other two are still not completed. But we haven't seen any of the audits yet because there is this procedural steps that they've set in place, meaning the finance department, that they have to review everything before they're finally released. And then they're released to the Board of Estimates at a regularly scheduled meeting. And then they would release them to the council and to the public.

JANIS: So councilman, which audits were actually due on the 30th?

STOKES: Department of Transportation, Recreation and Parks, and the Department of Finance were due on November 30.

JANIS: Now, so Rec and Park is something you've been trying to do for literally--not to laugh, but it's been what, like, five years?

STOKES: Five years. Five years. Well, I first came into, came back to City Council five years ago, the mayor said that she wanted to close five--15 rec centers, 6 swimming pools, and cut the hours of everything else. I said, why would you want to do that? She says, because we don't have any money. Is said, well, how do you know? And she said, well, go find it. And I went over the record in Parks and I tried to find the money by looking through their books, except they didn't have any books. They didn't have any financials. I asked to see the last three years' audits, and they said, we don't do audits. I said, what do you mean, you don't do audits? Don't you do a budget every year, and is it based on what you've spent and what you're--.

Anyway. I found out that for the last 30 years Rec and Parks had not done audits at all. Then I began to look around at the other agencies and I found that most agencies in the city had not done audits in at least 30 years. I sad at least 30 years because I couldn't find anyone who was older than that period of time to tell us whether we had done audits or not.

JANIS: So just so people know, these are fiscal audits, number one. And number two, the city does a comprehensive financial report. But these are specific audits that look at the [inaud.]. Tell people what the difference is.

STOKES: Right. Well, the overall comprehensive reports they call audits, but they're simply taking the balance sheets, so to speak, of the individual agencies and combining them into one report and saying that it's an audit of all of city government. It is not, technically, that at all. Because the agencies are not giving them audited financials. And so there's no way of knowing that what the individual agencies are getting actually are clean. Meaning that they're not sure where the money was actually spent or how it was spent, or even what date it was spent, frankly. And so what we're getting is a guess of the finances. It's about in and out, not really about auditing it.

JANIS: Okay. So we've come to this point where the audits aren't prepared, but the city has spent millions of dollars, right? I mean, they've already given, I think, either $1 million in an additional contract. So how do you feel about this not being done at this point? Where's all this money gone?

STOKES: Well, I'm--I'm not frustrated. But I am greatly concerned. But--here's the but. The but is that they haven't been done in 30 years. Any reputable auditor is going to come in with no books, no history, no tracking, I guessed would have a heck of a time figuring it all out. In other words, they have to create records for these agencies that did not keep records. They have to create financials for these agencies that didn't have financials heretofore. I couldn't imagine that any reputable company would come in and show up and said, you know, give us two weeks or give us two months. Let us look at the books, we'll churn this out.

Next year it should be greatly better. They should be able to do it in two weeks or two months.

But I frankly didn't see how it was going to happen. Here's my concern. My concern is that the administration kept saying, here's when it's going to be done. Here's when it's going to be done, the third time now. And they had no way of knowing when it can be done, because frankly they don't know how to do audits, and are failing, and haven't kept books, and haven't kept records.

So I'm not frustrated. I am concerned that they are not good at the process.

JANIS: Okay, Councilman, so you have a city that's been giving out huge tax breaks, a city that has, you know, a police department that's spending more and more money. Overall, what is the city's--what is the picture the city's--and we also have the highest property taxes in the region.

STOKES: In the region. In the state, not just the--.

JANIS: Is this just a problem of accountability? Or something deeper, more fundamentally flawed with the city?

STOKES: Oh, there's a lot fundamentally flawed with the city. And I'm a business guy, and grown successfully a couple of businesses. Maybe four or so. Having said that, the city on its surface, it's evident that they don't run a good and well-managed business model here. It boggles everything I have from a business sense that we would be so careless with the taxpayer dollars. Very careless.

JANIS: And we are the poorest city, one of the--we also have the most poverty. Why do we have this sort of mingling of poverty and huge excess, excuse me, with tax breaks, with spending on police, which seems to be no limit, with no controls. Why do those two things seem to mingle in this city?

STOKES: Well, they go hand-in-glove, actually. We are the poorest city because we do such a horrible job of managing our money. We just do a horrible job of managing our money, and we don't prioritize where the money should go. We give away hundreds of millions of dollars to two or three billionaires in this town to build their own sort of kingdoms, their own playgrounds, their own backyards. And while most of the city goes without well-maintained parks. You know, we just gave a developer $60 million to build his own parks in his own playground. $60 million for parks that are not really going to be public parks. He intends to use the $60 million to build these parks and then give them back to Baltimore City to maintain. It's ridiculous, of course.

JANIS: Well, Councilman Stokes, we really appreciate you talking to us about this problem. This is Stephen Janis reporting for the Real News Network from Baltimore City Hall.


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