By DOUG MILLER
, which he helped draft and that includes a 25 percent increase in the property tax levy, is the sound and responsible way to overcome some $1.5 million in shortfalls the city faces.
Eaton said in a memo dated May 5 that the city was currently operating under a budget, prepared by former City Manager Charles Theofan, that was "at best, inartfully crafted" and contained several glaring holes in its forecast revenue that made the budget increase necessary.
Eaton singled out recently enacted collective bargaining agreements with the city's police, fire and lifeguard corps; shortfalls in legal costs, judgments and tax certoriari settlements; temporary salaries for seasonal employees who were kept on, Eaton claimed, after their seasons ended; and the termination pay given to former City Manager Charles Theofan, who resigned at the end of December.
Typically, budgets are prepared by the city manager, and the proposed 2006-07 budget bears John Laffey's signature. But shortly after he was hired in January, he brought Eaton on as a consultant on this budget. When the draft was released to the public and the proposed 25 percent hike became public, City Council Vice President Robert Tepper vowed to vote against the budget unless Eaton provided an audit.
Republicans Jim Hennessy and Tom Sofield bitterly criticized the tax hike, insisting that the city's finances will fall into place once the sale of the Superblock property becomes final.
The city's agreement with Superblock developer Janow Associates calls for the city to sell a vacant stretch of Shore Road to Janow for $3 million, but the money won't be available until the sale is finalized.
Sofield insists he could get the budget down to a zero-increase with $3 million from the Shore Road sale plus another $1.5 million he said is coming from Janow. He estimated the previous surplus at $3.3 million, not the $2.8 million the current budget assumes, and he predicted the Superblock development would generate $600,000 in building and permit fees.
"After that, cutting another $1 million out of that budget should be doable," Sofield said.
Eaton's memo doesn't exactly refute this. He writes "If (and this is a big 'if'), the City should receive the $3 million for the sale of Shore Road prior to June 30 (the end of the fiscal year), it could actually find itself with a small surplus for the year's operations."
The Republicans also insist that there is no excuse for a budget that increases the tax levy so drastically while increasing the salaries of City Hall employees - Laffey's and the council members' included - while demoting three police detectives back to uniform.
"Eaton was involved in the budget process for months," Sofield said. "The time for him to make these suggestions wasn't in a memo after he comes up with a faulty budget. The time was while the budget was being developed."
The police demotions have been a rallying point for the Republican opposition, which has complained that they smelled of reprisal. Among those slated for demotion are Detective John Sharpe, the head of the Long Beach PBA (which endorsed the Republicans in November), and Detective Sgt. James Canner, a close friend of Hennessy's. Sharpe said at the council's good and welfare session May 2 that the sting of the demotions was made worse when Laffey gave the names of the targeted detectives to the Herald, which printed them.
Eaton's disdain for the circumstances surrounding Theofan's departure in December is at best thinly veiled. When the Democrats won last November, Theofan asked to stay on, according to several people close to the situation. When his request was denied, he resigned a few days before the new council was to be seated Jan. 1.
In circumstances Eaton described as "quirky," Eaton wrote, "Mr. Theofan not only participated in the negotiation of his own severance package, but also executed it." Rather than a straight buyout, Theofan accepted a month's severance pay plus "a general release for the benefit of the city for all matters arising from his employment with the city."
Eaton wrote, "This was thoughtful of the gentleman but came at a cost. In exchange ... the city agreed to pay Mr. Theofan the sum of $22,729.89."With benefits and unused sick time, Eaton estimated Mr. Theofan received $55,000.
Theofan, now the commissioner of planning and economic development for the Town of Hempstead, said his termination pay was signed off on by the corporation counsel with the tacit approval of the council's then-Republican majority.
He added that the derogatory manner in which his leadership was described by Eaton said more about the speaker than the subject. "If the multitude of people who replaced me would spend more time trying to solve the city's finances rather than point fingers, the city would be far better served," he said.
Tepper called Theofan's settlement outrageous. "Between his time as corporation counsel and City Manager he was here two years," Tepper said. "And the end result is Jim Hennessy's personal lawyer [Theofan] gets $55,000."
Prior to his employment by the city, Theofan had represented Hennessy in his suit against the city. Hennessy claimed his failed run for office in 2001 cost him his job as a lifeguard. The suit was eventually settled.
In his memo, Eaton concludes that the proposed budget hike is unavoidable. Since terminating personnel is not an option, and knocking $250,000 out of the budget is necessary for each 1 percent reduction, the city is stuck in the situation it's in, he wrote.
"Being fully cognizant of the desire of the governing body to reduce upward pressure on the tax rate, I must, nevertheless, emphatically state that savings of the size desired are not to be found in this budget," Eaton wrote. "Any efforts to force same would essentially gut what is a tightly constructed, responsible financial plan."
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