DiGiacinto Spars With Bethlehem Officials Over Poor Audit

David DiGiacinto has only been a member of Bethlehem City Council since January, but was clearly disgusted by Bethlehem's bad marks in an independent audit of the City's finances in 2009. In a local government known for its civility, he had some testy exchanges with Business Administrator Dennis Reichard and Controller Meg Holland at an August 11 Finance Committee meeting.

Listening to a presentation by Tracey Rash, a CPA with MaherDuessel, he summed up his complaints. "Basically, we had a negative fund balance ..., we have misuse of transfers, we transferred funds we shouldn't have transferred. Some of them, I guess, are considered illegal, against City Ordinance. We had internal control failures. We had an inability to make payments, pension fund payables. I'd say that's pretty much a disaster, fiscally mismanaged year. Wouldn't you agree with me?"

"No," answered Business Administrator Reichard. "There's not one bank statement that was negative. ... We did not fiscally mismanage this City. I take exception to that. Every bill was paid, every debt service was paid, every payroll was made."

"That's not what this audit says," countered DiGiacinto.

"This isn't stuff that anybody's going to jail on," responded Reichard, becoming defensive. "You may want to look at fiscal mismanagement. We're managing the City the best that we can. That's your words, that's mine."

"Where's the Mayor. By the way, where's the Mayor?" asked DiGiacinto. Mayor John Callahan was absent from yesterday's meeting, and DiGiacinto's question went unanswered as Chairman Reynolds tried to keep the meeting from spinning out of control.

DiGiacinto: "Is it true or not that the casino revenues last year, without the transfers from the Escrow and the fact that you didn't pay a lot of bills on time, ... that's how you really got through last year, Dennis? Let's be factual."

Reichard: "Isn't it true that if the federal government didn't bail out all the corporations ... "

DiGiacinto: "We're talking about Bethlehem here."

Reichard: "Awww, same thing. Same thing."

At the end of their exchange, DiGiacinto said he's simply unable to understand how Council adopted this year's budget, to say nothing of 2009. "You have a bad economy, as everyone likes to say around here, and you don't act conservatively? That's the disappointing part about all this. Instead, you raise the budget by six million bucks."

Then DiGiacinto asked Controller Meg Holland, "Where've you been?"

DiGiacinto had been Meg Holland's Democratic opponent when she ran for Controller in 2007.

Furious, Holland exploded, "You want to know where I've been. I want to know where the person before me was. That's what I wonder, because this has been going on for years. ... It has not been the fault of this Administration."

She then detailed some changes she's recommended: increasing fees when police serve at private functions; increasing medical premiums; adding use permit fees; and re-billing accounts receivable; stopping the practice of allowing some City employees to take cars home, which costs $100,000 per year; and re-negotiating cleanup costs with ArtsQuest, which often costs the City more than it receives in payment, which is sometimes ten months after it was billed. "I think an expense like Musikfest - the cleanup and whatever, there should be some up front money given for that. We're paying people on a daily basis to go out there and clean up. We're not gonna' get paid 'till ten months later? We should be getting half of that fee up front."

DiGiacinto pressed Holland, asking her what she's doing about the problems identified in the audit, such as juggling funds in different accounts. Holland replied that was being done thirty years ago. "I'm asking you now, I'm not asking about thirty years ago," insisted DiGiacinto. "What are you gonna' do about it? Nothing? Just let it go, it's OK? It's a simple question. I mean, I thought that was part of what you were going to do."

"Darn! Or was that gonna' be you, as the Controller?" sniped Holland.

Once again, Chairman J William Reynolds intervened, and another question from DiGiacinto went unanswered.