FY 17/18 Huntersville Budget review: Legal Department

The FY 17/18 budget will be voted on Monday night by the town board. I’ve been working on an article detailing a line-by-line budget review for each department, but who has time for that? Definitely not your town board members since it appears they’ll be voting to approve the proposed FY 17/18 budget as presented by the interim town manager with very few, if any, substantive changes. Voters who thought they were electing a “fiscally conservative” town board in 2015 that was going to shrink the size of local government should be rightfully disappointed if the proposed budget gets approved. There’s still a chance the mayor surprises everyone and presents an alternative budget that lowers taxes pursuant to his pledge during last year’s budget vote that it would be his goal this year to cut the tax rate – but I wouldn’t hold your breath. [See pg. 12 of the minutes here to read the mayor’s words yourself.]

Even though it’s very unlikely to change the mind of any elected official prior to Monday’s vote on the budget, I decided to at least share some thoughts on the Legal Department budget after reading the top news story in the print edition of this week’s Lake Norman Tax the Citizen (along with some select quotes in the Horse’s Mouth section) about the future of the Huntersville legal dept. You can review the proposed Legal Dept. budget beginning on pg. 33/140 here. I know, I know, you’re probably saying give it a rest with the Citizen already, but they make it so hard when their reporting is just so bad.

First, the town attorney, Bob Blythe, did not become a “full-fledged” town employee in 2010; he became a part-time member of staff on a salaried basis as is clearly stated in the contract below. I would argue use of the term “full-fledged” is misleading given that 99% of readers would reasonably assume that means Mr. Blythe is a full-time town employee. But, who am I to question the word choice of a reporter at “the only experienced, professional, legitimate news outlet in the Lake Norman region.”

Blythe 2010 K

The Citizen accurately reported $241,536 as the total amount recommended by the interim town manager for Legal in the FY 17/18 proposed budget, but the reporter neglected to report how much of that was for Mr. Blythe’s salary. The town agreed to pay Mr. Blythe $98,967 for part-time work when his contract was signed in 2010. The town is currently paying Mr. Blythe $110,577.36 for part-time work as of February 2017.

Next, most readers would likely conclude it was Mayor Pro Tem Danny Phillips’ idea to push out Mr. Blythe after reading the Citizen article describing the events of the May 22 budget review session. Funny thing, I sent an email to the town all the way back on May 6 with a question about the proposed Legal Dept. budget when I read the following language on the summary page, “In FY 17/18, the town plans to transition legal services to a contractual agreement.” Interim Town Manager Gerry Vincent replied to me on May 8 and advised that language meant the town would contract out for legal services and that Mr. Blythe would retire. Is it possible a consensus decision had already been reached long before the discussion on May 22 that Mr. Blythe should retire??

Finally, the Citizen just gets it flat wrong when it reports the Legal budget includes, “more than $33,000 for the department’s share of building and office expenditures at Town Center…” The reporter is referring in part to the $30,325 line item listed for Repair/Maint – Bldg – Main Str. This line item also drew my attention due to it not being included in recent past legal budgets, but instead of just making an assumption I asked the town for more information on this line item when I emailed on May 6 since I couldn’t find a corresponding project description sheet in the budget for this amount. The town finance director responded that, “The $30,325 Repair/Maint – Bldg – Main St is to fund expenses related to the residential rental property; in the prior year, this item was budgeted in the Public Works budget.”

Still not understanding, I sent a follow-up inquiry since I thought Mr. Blythe’s office was located in town center with other staff and not in a residential building. I was further informed by the finance director that Mr. Blythe’s office is in town center and that, “For the upgrades to Main Street (and a couple other locations in Town), we have purchased property that was being used by the prior owners as residential rental property. While design and engineering has continued on our project, the tenants have been allowed to stay, but ultimately, the tenants will leave and the structures will be demolished. This $30,325 is to maintain the property while rented and fund demolition that we expect to occur by FY 2018.”

[I just received a response on June 1 to my records request related to the town’s residential property and rental rates being charged and will provide more on that issue in a future post. Am I the only one who didn’t know the town was such a prolific landlord?]

A little more information regarding the $33,070 allocated in the Legal budget for Contract Services – Legal. This is related to legal services provided to the town by outside legal sources. Yes, that’s right, the town already contracts out a portion of its legal work despite paying a part-time attorney over $100,000 a year. According to last year’s budget, this amount was broken down as follows: $18,070 for the annual retainer for Smith Rodgers, the outside law firm retained by HPD for “real-time tactical legal needs” (you know, tactical needs like figuring out how to deny public records to citizens in real-time…) that I have written about in the past here; $5,000 estimated for the legal services of Jackson Lewis, a law firm in Raleigh the town uses for work comp and employment matters (Jackson Lewis only has an NC office in Raleigh – whatever happened to buying local? Surely the town can find a local LKN law firm or one in Charlotte to handle work comp and employment matters?); and $9,000 for undetermined counsel fees and potential title search expenses. Interestingly, the town amended the budget last year to allow for contract legal services up to $47,235. Why the $15,000 increase in outside legal fees? I wonder how much of this additional $15,000 is related to the town’s attempt to wrongfully deny public records to citizens based on incorrect advice from the town attorney or outside counsel?

Has any board member ever even questioned how many times HPD actually needed “real-time tactical legal needs” last year to justify spending $18,000 of taxpayer monies? But I digress…

Now onto a question neither the Citizen nor any town board member has yet raised. Why does the proposed FY 17/18 Legal Dept. budget contain line items for $1,700 for travel/training and $1,200 for dues/subscriptions when Mr. Blythe’s contract only allows for up to $1,200/year for travel/training and up to $450/year for dues/subscriptions. [See paragraphs D. & E. in the contract posted above.]

The language in Mr. Blythe’s contract regarding a cap on costs related to travel/training & dues/subscriptions seems pretty clear and unambiguous to me and there has been no subsequent revision to his contractual agreement approved by the town board to the best of my knowledge. Apparently, the interim town manager disagrees. He responded to my question about this issue by stating in part, “Each year these expenses have increased and I have found them to be reasonable in the scope of the Agreement.” Either there has been a revision to Mr. Blythe’s contract since Feb. 8, 2017, the last time I requested his current governing contract, or the interim town manager (and past town manager according to a quick review of prior budgets) has on his own decided to fund the Legal Dept. above and beyond the contractually obligated amounts agreed to by Mr. Blythe and the town board in 2010.

Assuming Mr. Blythe pays active attorney rates for both the NC State Bar ($325) and Mecklenburg County Bar ($225), which are both mandatory bars, that’s approx. $550/year – which is $100 more than the town is contractually obligated to pay. (I say approx. $550 because Mr. Blythe responded to my email inquiry today and stated the town only pays 3/5 of his state and local bar dues. He said he pays the remainder out of pocket, but didn’t specify the amount.) The YTD payments through March 31, 2017 total $1,025. What other dues did the town pay using taxpayer dollars last year that would account for the remaining $475? According to the interim town manager, taxpayers also pay for Mr. Blythe to be a member of the following voluntary bars/associations: the International Municipal Lawyers Assoc.; the NC Municipal Attorneys Assoc.; and the Government & Public Sector section of the NC Bar Assoc., the voluntary statewide bar, NOT the mandatory state bar.

But hey, who cares, right? The taxpayers will surely never notice a concentrated benefit of $1,000 or so dispersed throughout a $35.5 million dollar budget goes the thinking of government bureaucrats everywhere. And they’re proven right on a daily basis. Spending other people’s money is so easy.

Final question for the town board on the Legal Dept. budget. Since Mr. Blythe’s contract states that health insurance will not be provided, is the $4,045 allocated for group insurance for the town paralegal only?

Here’s some additional information for any interested town board member still trying to figure out how it wouldn’t be possible to save taxpayers money by contracting legal services to an outside firm. I went back and calculated the average town board meeting time (not counting pre-meeting times since not every board meeting has a pre-meeting) over the period of Feb. 1, 2016 through the end of January 2017 based on times from the Ustream board meeting videos. [Starting in Feb. 2016 allowed for the new board and mayor to become comfortable with procedure meaning meetings were running smoother and that period would also include one mid-year and one annual retreat.] Over that period, there were 22 regular meetings, 1 special meeting in Dec. 2016, the mid-year retreat in Aug. 2016, and the annual retreat in Jan. 2017.

Regular meetings only totaled approx. 2,000 minutes, divided by 22 meetings, equals approx. 90.9 minutes per meeting. If you count the time from all meetings of the board, the total was approx. 2,734 minutes, divided by 60, equals approx. 46 total meeting hours if you round up. Even assuming a very high billable rate of $300/hr, times 46 hours, only equals approx. $13,800. Even a flat fee arrangement of, say, $750 per meeting up to 2 hours (since the average meeting time last year was only approx. 1.5 hours), times 25 meetings, equals $18,750. What about the meetings that last more than 2 hours you ask? There were four meetings during that period lasting over 2 hours, and none that lasted over 3 hours. Let’s assume $300/hr for every hour over the flat fee rate and you’re still looking at just another $1,200. All of these numbers appear to be smaller than the $110,577.36 salary we’re currently paying our part-time town attorney.

And none if this even takes into account the money spent by the town related to other costs of hiring a full-time employee like 401K and retirement contributions, work comp, health insurance, etc.

Slightly less than 2,000 words just on a single department of the town, and one of the smaller departments at that. If you want to know how government wastes your money so easily this is how – attrition. Eventually you just get tired of reading the budget and tired of asking questions about what each line item means and tired of defending proposed cuts to each different special interest and you finally just vote so you can go home.

Eric