Despite a $9 million budget shortfall, no sign spending is slowing on 62 cards

Erica Felci and Xochitl Peña • The Desert Sun • January 3, 2010

Facing a multimillion-dollar deficit and the threat of staff cuts, Indio city employees since January 2008 have charged more than $805,000 for pricey meals, travel that took staff members across the country, professional sporting events and a trip for the city manager’s wife — all on taxpayer-funded credit cards.

Use of credit cards has continued despite the city’s worsening economic conditions, which include a $9 million budget deficit, an early retirement offer to city employees, layoff warnings — and a pledge by City Manager Glenn Southard to “continue to operate in a fiscally prudent manner.”

A Desert Sun review of nearly 1,000 pages of credit card statements, however, shows that through October, the city’s 62 cardholders spent at least $43,000 more than they had during the same period last year.

• Tens of thousands of dollars in credit card bills were racked up monthly with charges to local restaurants, NFL and major league baseball teams — even a a women’s clothing store. City administrators have repeatedly refused to explain the purpose of these charges.

• About one in five employees has a card. Records show the cards were issued to employees at all levels, including a front desk receptionist and the five members of the city’s executive team.

• Statements are not seen regularly by City Council members. After reviewing The Desert Sun’s findings, the mayor said he feels “blindsided” and believes some spending liberties were “abused.”

While Southard declined to answer 11 written questions from The Desert Sun regarding the city’s spending habits and specific charges, one of his top administrators defended his department’s spending.

“Credit cards are the way most people do business. Obviously you have to make sure what you do is appropriate,” said Dave Ison, Human Services manager who oversees the senior and teen centers, as well as other programs. “I can assure you no one is buying anything for themselves on the city dime.”

While Southard wouldn’t talk, his bosses did.

“We got blindsided on this,” Mayor Gene Gilbert told The Desert Sun, saying he conducted an independent examination of records the newspaper requested.

“If I knew this before, (I) would have obviously said ‘What the heck is going on?’ I had no idea we had that many credit cards going (around),” he said. “As far as eating out, I think that was abused. I hate to use that word, but it was. That was the first thing that came to my attention was the amount of food.

“We have a problem and we can’t go on like this. Our credit card policy is inadequate. It seems to me like overall, some people are living on the credit cards.”

The council is expected to call a special meeting Wednesday to discuss the city’s proposed early retirements, and the session is likely to include a discussion of the city’s spending policy. No specific agenda has been released, because special meetings only require 24-hours notice.

Gilbert and Councilman Glenn Miller have each suggested that most of the cards should be revoked.

Miller also is calling for the creation of a “blue ribbon panel on finances,” comprised of residents, to independently audit the city’s spending habits.

This is not the first time council has heard concerns about the city’s credit card policy.

Auditors warned Indio officials as early as 2006 that the city’s credit card policy needed to be improved as employees did not consistently provide receipts for every charge, which made it difficult to prove that the charges were valid official business.

Having multiple cards creates the “potential for abuse,” financial experts have warned.

Unlike other spending that is presented line by line in Indio’s annual budgets and reviewed by elected leaders, these charges are buried on statements approved by department heads. Council members told The Desert Sun they don’t regularly review the charges before approving the payments to the bank.

Travel, meals, clothing

An evaluation of statements from Jan. 1, 2008, through Oct. 26, 2009, found:

• Travel: Credit card records from February 2009 include travel charges for 13 employees.

Just into this fiscal year, amid dire budget projections, taxpayers also paid more than $3,200 in August so four employees could fly from Ontario to Phoenix, rent a vehicle and stay at a AAA Four Diamond hotel that promotes itself as “luxurious, oversized (and) newly renovated” while checking out its water park as research for Indio’s proposed aquatic center.

• Southard’s wife: City taxpayers in April paid for a $533.10 plane ticket so Southard’s wife, Gale, could join him on a September trip to Quebec in conjunction with the International City/County Management Association’s annual meeting. The event — where Southard was honored according to one city official — focused heavily on “redefining services in challenging times,” according to the group’s event summary.

The flight was charged on a city credit card issued to Glenn Southard.

Later that September, taxpayers covered a $15 baggage fee for his wife for a trip to Sacramento.

The city’s travel policy specifically states “expenses for spouse or family members who accompany an employee on a trip are the employee’s responsibility.”

Council members have previously warned that the practice must stop.

Southard declined to answer The Desert Sun’s question on whether he reimbursed the city for the expenses.

• Meals: City employees regularly used the cards to pay for meals at local restaurants, including Burgers & Beer, Naked Noodle, In-N-Out Burger and China Bistro.

In February 2009 — after initial budget projections indicated a $14million deficit loomed — employees charged more than $2,300 in meals.

On July 11, 2008, Ison charged two bills at the La Quinta Cliffhouse, totaling $2,019.86. In May, Southard’s card covered a $3,947.63 bill at Jackalope Ranch.

Sports tickets: During the 22-month period reviewed, almost $9,200 was charged on assistant to the city manager Mark Wasserman’s card for two trips to see the Los Angeles Angels of Anaheim play baseball and one trip to see the Minnesota Vikings play football.

Councilman Miller said he thought the trips were pre-approved youth group trips, but city administration did not provide specifics.

• Clothing and home goods: An employee charged almost $135 in October at Forever 21, a popular women’s clothing store; another employee spent $1,072.36 at Bed Bath & Beyond in May; and yet another employee charged $2,371.80 at Best Buy in July 2008.
No details released

Southard refused to explain why the credit card purchases were made.

“The $805,000 is less than 1 percent of our expenditures on an annual basis and they are a record of every expenditure that we make,” Wasserman said on Southard’s behalf, without answering other questions.

“I’ve been instructed by the city manager not to answer questions on any of the charges in question at this time, until we have ample opportunity to research all of the charges.”

Others are already expressing concerns about the city’s credit card spending.

“All these lavish expenses at a time with a multimillion (dollar) deficit is totally, totally irresponsible,” said Tom Ramirez, Indio’s former city manager, who has more than 30 years experience in public service.

Ramirez reviewed the credit card statements obtained by The Desert Sun.

“It’s totally out of control. I’ve never seen anything like it in my career,” he said. “What this tells me is nobody is managing the money. Nobody.”

Budget cuts loom

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