Saturday, July 10, 2010

The North Bay Village Trujillo Tax

The costs of mismanagement, that is making the wrong decisions, represent a hidden tax on the citizenry and we need to address this.

The most obvious of these decisions are personally motivated firings of people the commission just doesn't like.

Firing someone is the most radical decision that a manager can make. That's not to say that it should not be done but that it is a drastic move and should not be taken lightly.

Good managers get this. They know that no employee is 100% in all areas of the job and good managers manage to the strengths. That's why there are managers.

Bad managers focus on their own dislikes and project their own weaknesses on the employee. Bad managers fire right and left without regard to the consequences.

Let's look at some of the consequences through a cost lens.

The Institute for Research on Labor and Employment, University of California, Berkeley found that "turnover costs for a manager average 150% of salary, including tangible costs of hiring new workers and relocation, and intangible costs such as the new worker's inefficiency and lost productivity while the job is vacant."

(The detailed study is available at the IRLE website.)

That's the turnover costs. It does not even begin to address the costs of payouts, abrupt departure and no reasonable transition that result from a capricious firing.

Our commission is currently dominated by a trio of bad managers. Since April, our Vice Mayor George Kane, our former Vice Mayor, Rey Trujillo, and Mayor Emeritus, Paul Vogel, have fired our city manager and may or may not have fired our city attorney. Their reasoning is specious, characterized solely by personal dislike and not the good of the city.

If you remember with Schwartz, the original reasoning was that he was managing the police department. When Kane and Trujillo became aware that this was a specific function of the city manager, Trujillo, at that time vice mayor, switched to accusations of "poor communication.", a nonsensical lie. Kane, who was busy weighing his options on how to deal with the findings of the Miami-Dade Commission on Ethics that he set up a deal to use city money , agreed.

They both spoke eloquently and movingly about Schwartz's ability to bring money to the city and build the projects, while firing him.

Since the instigator of this move was former Vice Mayory Rey Trujillo, let's call these results the Trujillo Tax. The Trujillo Tax includes the cost of compensation for two city managers, the additional cost to the city to pay outside contractors to create the budget, the damage done to the city staff morale (it's in tatters.) and the loss of potential grants.

It's fair to assume that the Trujillo Tax is somewhere around $200,000 right now. In hard costs.

In soft costs, the damage is worse. Our city's success in lobbying for federal and state funds depends on our reputation, and our reputation is bad again. Other cities have figured out how to make their projects shovel ready and are competing. And we have no one managing this process. So our debt service will increase instead of decrease. And our development will stop.

Our credit is at risk. Banks are skittish nowadays and when they see such obvious mismanagement, they back away.

Our foreclosures are driving down property values. 7525 East Treasure Drive still stands vacant and ugly and nobody's doing squat about that.

The Trujillo tax will cost us millions, in hard costs, soft costs and declining property values.

Now Trujillo wants to fire Joe Geller. There are lots of reasons not to like Joe Geller, I imagine. He's often long winded for one, and leans more towards protective union and employee rights stances than I might like. But as City Attorney, he has consistently provided transparently reasoned advice even when that advice was unpopular. He has done the job of trying to save the city from the commission.

Former Vice Mayor Trujillo complained in his recent surprise motion that Geller did not act quickly enough to hire Deede Weithorn so he should be fired. Well, first of all we wouldn't have needed outside services if Mr. Trujillo hadn't instigated firing Schwartz. The municipal budget is not that complicated. But "did not act quickly enough." This from a man who took the month of May off? Maybe if he had shown up in May, it would have been done. But even if Geller did not act quickly enough, that's not enough reason to put the city's legal structure at risk. We have literally millions of dollars in exposure from lawsuits, mostly around the police, and we need consistency.

We can't afford more Trujillo Taxes. I have little hope that rationality will prevail on Tuesday. I'm sure the ongoing collusion among the three will prevail so that their egos are assuaged. I hope I'm wrong. I really want to be wrong.

Kevin Vericker
July 10, 2010

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