Good Idea or Trojan Horse?

HomeCampaign FinanceGood Idea or Trojan Horse?

More than $137,000 in ‘dark money’ spent to put Austin efficiency audit on the ballot

Investigative Report by Ken Martin

In Greek mythology, during the Trojan War the Greek army could not breach the walls of Troy. Even a 10-year siege failed. Then the Greeks suddenly disappeared. Left behind was a large wooden horse, inscribed with words offering thanks to the gods for safe passage home. Believing the war to be over, the Trojans hauled this seeming work of art into the city. Then, while the city slept, the soldiers hidden inside descended. They opened the gates and the invading Greek army plundered and burned the impregnable city.

Today in Austin we must wonder: Is conducting an efficiency study of the city government an idea worth voting for on the November 6 ballot?

Or is this initiative a Trojan horse that its financial backers have pushed onto the ballot for some as yet unseen purpose? If it’s such a great idea, why do those who funded the petition drive want to remain anonymous? Why use so-called “dark money” given to a nonprofit that’s not required to disclose its donors?

The petition ordinance would require an “efficiency study,” defined as “an impartial, objective review of the city’s operational and fiscal performance.” (The Austin Efficiency Audit Petition, including the Proposed Efficiency Study Ordinance, is linked at the bottom of this story.)

Carol Guthrie
Carol Guthrie

Maybe it’s a great idea to take a hard look at how the City of Austin spends taxpayers’ money. Yet the local union chapter is “absolutely opposed to this,” says Carol Guthrie, business manager of the American Federation of State, County and Municipal Employees (AFSCME), which claims to have more than 3,000 members.

Michael Searle
Michael Searle

Guthrie draws a straight line between the petition organizer, Michael Searle, and Council Member Ellen Troxclair, for whom he worked as an aide till earlier this year.

Guthrie notes that Troxclair, the lone Republican on the City Council, is a member of the American City County Exchange (ACCE) and its executive committee as well. ACCE is a creation of the American Legislative Exchange Council (ALEC).

Guthrie said, “This is right out of their playbook. It sounds smart and good but it will be a slash-and-burn way to look at privatization and a reduction in the workforce.”

ALEC is an organization financially supported by Charles and David Koch. An article in The Nation exposed these financial connections in 2011 and reported that Koch Industries has been a member of ALEC’s corporate board for almost 20 years. ALEC publishes hundreds of model legislative bills that align with conservative agendas and can be enacted wherever there’s sufficient political support.

One of those pieces of model legislation is called the Independent Performance Audits Act. Although aimed at state government, not cities, and would direct state auditors to conduct the reviews, not private consultants, among the nine elements to be addressed in such performance audits are identification of cost savings, identification of services that can be reduced or eliminated, and identification of programs or services that can be transferred to the private sector.

Troxclair supports ACCE and efficiency study

Ellen Troxclair
Ellen Troxclair

Troxclair said she is not familiar with the Independent Performance Audits Act and she defends ACCE. She said she’s been a member since being elected to the City Council in 2014 and that ACCE is composed of “nonpartisan officials who get together and share best practices.”

The ACCE mission statement, posted on the website, “is to engage local elected officials and leaders from business and industry for the advancement of limited government and free market principles.”

Nevertheless, Troxclair said, “There is no connection between ACCE and what’s going on in Austin with this petition. It’s good governance and common sense to have the information the audit would provide so we can make the best decisions for the city.”

It’s no stretch to say that Troxclair is a contrarian in Democrat-centric Austin. She has testified to the Texas Legislature in opposition to the City Council’s legislative agenda. Her four-year term ends December 31. She has chosen not to seek reelection.

It may be a Hail Mary Pass, politically speaking, but Troxclair said she still intends to ask the City Council to adopt the petition ordinance calling for an efficiency study, in lieu of putting it on the ballot.

“I’m hopeful the council will adopt it,” Troxclair said. “We all want government that works. We’re in an affordability crisis and we want to spend our tax dollars as efficiently as possible. I hope to make that argument successfully from the (council) dais.”

Pool won’t support it

Leslie Pool
Leslie Pool

Leslie Pool is not inclined to support Troxclair’s call for adoption, which is itself something that seems historically unprecedented.

Traditionally in Austin, City Councils have only begrudgingly placed initiatives on the ballot. Sometimes the council throws up alternatives to citizen initiatives, such as when the Save Our Springs Ordinance went before voters August 8, 1992 and on November 6, 2012 when there was a City Charter amendment to create 10 geographic council districts. In both cases, voters favored the initiatives over the alternatives. Recently it took a court order to get the CodeNEXT petition ordinance on the November 6, 2018, ballot.

“What is the audit intended to accomplish?” Pool asked. “I would also ask where is the money coming from to pay for it? Estimates are from $1.5 million to $2 million and I don’t know what the City would buy with that money or receive in return with the efficiency audit.”

“The council should work with the City Manager—barely six months into his tenure now—and the city’s employee union to put together a systematic assessment of each department,” Pool said in an email.

“Department-by-department reviews would be a natural third phase of the Council’s strategic planning process: The first phase was crafting the Strategic Plan (begun last year, finalized early 2018); the second is aligning the budget with the strategic plan (underway, with the FY19 budget process); a third phase could be comprehensive reviews of the city departments and offices, with those results feeding into the FY20 budget process and continuing on a cycle of assessment and improvement.

“Such an approach should also, naturally, have Austin values top-of-mind,” Pool wrote.

Tovo skeptical as well

Kathie Tovo
Kathie Tovo

In a phone interview while she was awaiting a flight out of the airport, Mayor Pro Tem Kathie Tovo said, “It bothers me that we don’t have a clear idea who funded the petition drive.”

“Aside from that, I have concerns about the measure itself. It imposes a cost burden on the city and I don’t understand why that’s necessary.

“We have a robust audit department that reports directly to the council. If the audit department needs to focus on different issues or departments, voters need to hold the council accountable and have us refocus our efforts. I think the audit department does a good job. If other things need to be looked at, we can order that be done.”

Tovo recalled that during the 2014 council campaign several candidates were calling for an external audit. “I didn’t understand it then I don’t understand now why it’s needed.”

“As a result, the council started talking about a sunset review of departments to find efficiencies. Departments that may have done a great job five years ago and now need reevaluation. The city manager set up that process and I believe we will continue that work.”

Voice of experience

Terrell Blodgett
Terrell Blodgett

Terrell Blodgett is the LBJ School of Public Affairs’ Mike Hogg Professor Emeritus in Urban Management. He said hiring a private consultant to do an efficiency study is a terrible idea.

Blodgett served as assistant city manager in Austin 1955-1960, city manager of Waco 1960-1963, and city manager of Garland 1963-1964. Further, he said he spent 13 years as a principal in the international accounting firm KPMG (known earlier as Peat, Marwick, Mitchell & Co.).

“I do not think the efficiency audit is at all warranted,” Blodgett wrote in an email.

He said the City’s Budget Office “is already under constant pressure from the City Council and City Manager to find ways to do more with less.”

City Auditor considerations

Corrie Stokes
Corrie Stokes

City Auditor Corrie Stokes notes that under the City Code her office is charged with looking at the efficiency of the city government and already conducts efficiency audits.

Stokes said the City does hire outside auditors when needed. For example, Deloitte is used for external audits of the city’s compliance with state and federal grant programs. Matrix Consulting Group was used to examine the city’s community policing program, she said.

“In my office, if we don’t have the expertise, we hire out,” Stokes said.

She was unable to estimate the cost of the efficiency study called for in the petition ordinance and said if voters approve it, the city would have to issue a request for proposals. “It’s written as a very broad analysis. I can see it as being expensive, but I don’t know how expensive.”

Stokes said, “Many cities around the country have a rotating audit schedule of one to three departments a year, looking for efficiency savings. (This proposal) would take a really long time to accomplish, but could come in and have good recommendations.”

In contrast to the work her office does, Stokes said, “We take on a topic and try to narrow it down to a specific area, dig deep, and make recommendations about that area. That’s the way we leverage our resources most efficiently. … That’s hard to do with a very large scope.

“I think most government entities identify where’s the biggest risk and zero in on that area.”

Stokes said an efficiency study, which is what the petition ordinance calls for, is different from an audit, which follows government auditing standards that require “sufficient and appropriate evidence for every line in your report.”

“There’s not an equivalent standard for a study,” Stokes said.

The money mystery

What motived financial backers to pony up $137,000 to pay for gathering petition signatures?

We can’t ask them because we don’t know who plopped down those big bucks. Citizens for an Accountable Austin, a specific-purpose political action committee (PAC) that filed its only campaign finance report July 16, took this money from Austin Civic Fund Action, an organization that does not have to disclose its donors.

While there is no legal bar to disclosing this information, petition organizer Michael Searle, treasurer for Citizens for an Accountable Austin, told The Austin Bulldog, as reported May 25, 2018, “They gave on the assumption they would not be named.”

Records filed with the Texas Secretary of State show that The Austin Civic Fund filed formation documents with the Secretary of State three times over a five-month period, changed its board of directors once, and modified its purpose.

Asked the reason for the flurry of filings, Searle said, “In April a decision was made to expand the purpose of The Austin Civic Fund to support innovation in Austin, so we refiled the organization to achieve that mission.”

As it now stands, these records indicate:

The Austin Civic Fund is a 501(c)(3) nonprofit charity. Searle said the intent is “to give charitable donations and grants to innovative organizations addressing Austin’s most pressing community and social problems.”

Austin Civic Fund Action is a 501(c)(4) organized to promote social welfare. 501(c)(4) organizations are not required by law or regulation to disclose the names of donors.

Citizens for an Accountable Austin is a PAC that was dissolved when it filed its only campaign finance report. Searle said, “We remain hopeful that the City Council will vote with the public on this and simply approve an audit. In the event the initiative is placed on the ballot, we anticipate a broad coalition will be formed to support the audit. There are no plans currently to receive funding from a 501(c)(4).”

Must an idea be rejected because of its origins?

Bill Aleshire
Bill Aleshire

Attorney William Vance “Bill” Aleshire served as Travis County Tax Assessor-Collector and then a dozen years as County Judge before giving up elected office to earn his law degree from the University of Texas in 2001.

(Disclosure: Aleshire has represented The Austin Bulldog in two public information lawsuits against the City of Austin for its failure to comply with the Texas Public Information Act.)

After so many years in public office and going on two decades holding government officials and agencies accountable through his law practice, Aleshire still disfavors a mind-set that would reject an idea merely because of who proposed it.

“It bothers me that we won’t support something because ‘so and so’ supports it. How do we ever get a majority? That’s why we’re deadlocked in this country.”

He’s not saying he supports the idea of an efficiency study, though.

“I don’t know if that will really produce tangible results,” he said. “I’ve seen a lot of bullshit consulting contracts in my years in government. Sometimes they’re zingers, sometimes they’re very expensive fluff.”

But he’s a strong supporter of transparency and not happy that donors who paid for the petition drive are hiding behind the shield of a 501(c)(4) legal decision that provides anonymity.

“You would think that for something that would encourage closer scrutiny of our government, they would be really proud, want to be publicly known and congratulated.

“If you’re doing something socially good, why wouldn’t you want people to know? Why not claim credit for it?”

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Austin Efficiency Audit Petition including Proposed Efficiency Study Ordinance  (2 pages)

Citizens for an Accountable Austin, Specific Purpose Committee Campaign Finance Report July 16, 2018 (16 pages)

The Austin Civic Fund formed December 4, 2017, and terminated March 22, 2018  (8 pages)

The Austin Civic Fund formed April 12, 2018, and renamed Austin Civic Fund Action May 22, 2018  (5 pages)

The Austin Civic Fund formed May 25, 2018 (6 pages)

Related Bulldog coverage:

Efficiency Audit Headed to Ballot: Citizens for an Accountable Austin PAC claims more than 21,000 signatures were validated, July 12, 2018

Petition Seeks Austin Efficiency Audit: People are already hustling signatures to get this measure on the November 6 ballot, May 25, 2018

Trust indicators:

Ken Martin has been covering local government and politics in the Austin area since 1981. See more on Ken on the About page. Email [email protected].

Who funds this work? This report was made possible by contributions to The Austin Bulldog, which operates as a 501(c)(3) nonprofit for investigative reporting in the public interest. You can help support this independent coverage by making a tax-deductible contribution.

An alphabetic list of donors who have contributed to The Austin Bulldog since the organization was formed in 2009 and the cumulative amount each person has given through July 9, 2018, are listed on the Contribute page.

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