Mayor Steve Bach took office in mid-2011, just as the curtain rose on the economic recovery. Sales tax revenue was going up, and layoffs that had cost the city dearly — amounting to $3.25 million in unemployment benefits and severance pay — had been absorbed.
But if you thought those bills were in the past, you'd be wrong. Under Bach, the city has paid over $1 million in severance and another $548,203 for unemployment — annually averaging more than three times what the city paid in pre-recession year 2008, according to data released to the Independent under a records request.
The only thing that's really different between before and after the recession is Bach and the mayor-council form of government. Bach has swept out top executives and mid-level managers, making severance payments and replacing them with his appointees. Meanwhile, Council more than doubled its staff and operational budget from 2010 to 2014, due to its need for staff when it can't turn to the mayor's for support.
When sales tax revenue dropped in late 2008 and 2009 amid the recession, the city shed workers. Some got severance packages. Many collected unemployment, which pays about half a person's salary, up to $529 per week. The city was required to pay 26 weeks of it.
In 2008, the year before the layoffs, the city's unemployment costs stood at $61,512. In 2009, the tab was $521,798, and in 2010, it was $515,719, city records show.
Severance pay skyrocketed from $93,885 in 2008, the year before the recession began taking its toll, to $419,971 in 2009 and $1,789,895 in 2010. Since then, the city's payments have remained far above pre-recession levels. Unemployment for 2011, 2012 and 2013 combined came to $548,203, while severance pay amounted to $1,056,041.
A big part of those costs can be attributed to Bach's downsizing of city government, which might account for the higher-than-normal unemployment bill. Last year, for instance, he presided over reductions in IT and fleet.
Bach also got rid of many high-level officials, some of whom retired and received severance payoffs, such as former city attorney Patricia Kelly, who left in September 2011 with $96,164 in severance. It was the same story with varying amounts for the fire chief, police chief, HR director, budget director and others. City attorney Chris Melcher resigned in January and was not paid severance, however. Neither was former chief of staff Laura Neumann, who left March 1.
The city says via e-mail it has no record of cost savings associated with layoffs and severance pay but notes those are "fixed" costs compared to the "ongoing expense" of salaries.
In Denver, where the mayor-council form of government has been in place for decades, there are no such severance payouts when a new mayor takes office. "Denver's Mayor does appoint his own cabinet," Rowena Alegría, chief communications and neighborhood outreach officer, says in an email. "Those appointees serve at the will of the Mayor and do not receive severance pay at the end of an administration" — as per Denver's charter.
Severance pay wasn't a factor considered by at least some of those who pushed for the change in Colorado Springs' form of government. Kevin Walker, who headed the ballot initiative to switch to the mayor-council, says paying severance to accommodate each new mayor "was not specifically identified" as a byproduct of the change. The only cost contemplated, he says, was the difference between a city manager's salary, about $210,000, and the mayor's charter-imposed salary of $96,000.
An IBM white paper released in 2011 concluded that cities with city manager forms of government "are nearly 10 percent more efficient that cities with strong mayor forms of government." A 2008 study by economics departments at Cornell and Brown universities found that mayor-council forms of government can be expected to spend less, because both the mayor and council have to sign off on budgets, not just the council alone as under a council-manager form.
Jim Mullen, city manager from 1996 to 2002, says rarely paid severance during his career. Acknowledging there's been no analysis of the promised savings from a council-mayor setup, Mullen, who still lives in Colorado Springs, says he's not feeling the benefit. "I can't get potholes fixed in my neighborhood that are as big as sinkholes in Florida," he says.
And elected leaders are costing the city more today than they did under the council-city manager form of government. In 2010, the last full year under the council-city manager form of government, Council's staff and operations cost $286,035, and included 2.5 employees and the nine councilors' pay of $6,250 each per year. The city manager's budget in 2010 totaled $812,432 and covered five employees.
Total tab: $1,098,467.
This year, Council's budget for staff and operations is $615,272 and includes five employees, while the mayor's budget is $627,652.
Total tab: $1,242,924 — 13 percent more.
Council administrator Eileen Gonzalez explains via email that Council has beefed up its staff over the last few years "since the executive branch staff no longer reported directly to Council through the City Manager." She also notes that expenses such as cell phones and IT support, were moved from a city department to Council's budget.