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Vero finance chief bails on 2011 budget
BY LISA ZAHNER - STAFF WRITER (Week of March 11, 2010)

 The head of the city’s finance department quietly announced his retirement last week – preparing to bail out March 30, ahead of what is expected to be the city’s worst budget year in recent memory.  

Finance Director Stephen J. Maillet spent 25 years as a city employee. He has been the staunchly loyal and enthusiastic cheerleader of a tight-knit team of top city staffers who promised lower utility bills under a contract with Orlando, who recently failed to explain why the city accepted delivery of tens of thousands of barrels of fuel oil to run electric units that might soon be mothballed, and who promised that annual 5 percent furloughs for employees could prevent further layoffs at city hall.  

Maillet was also a vocal supporter of the idea that the city should retreat – and serve only utility customers within its borders.  With his impending departure, which will occur on the very first day he could retire with a full 25 years under his belt, the city will have no manager on hand with any long-term experience creating an annual budget. He will also be the second department head to leave amid the utilities controversy.  

Two weeks ago, Vero Beach 32963 laid out in grim terms the budget pressures pushing against Vero from all directions -- sinking property values, decreased state cost-sharing funds, rising healthcare costs and a money pit of a pension system, coupled with the prospect of losing about $11 million siphoned off the utility bills of county and Indian River Shores residents.  

Likely, there will be painful cuts to city staffing and services in the coming months.  No doubt, after serving as Finance Director since 1992, these revelations were no surprise to Maillet.  

Maillet, who declined requests to be interviewed about his retirement, has been accused of using a creative form of accounting -- allowing failing funds and departments to run in the red by borrowing from other city departments and funds that were in the black-- to keep Vero’s flagging finances afloat.  

The result, however, has been financial reports and budgets that are so bifurcated and compartmentalized that it’s nearly impossible for the non-accountant to figure out exactly what’s going on with the taxpayers’ money.  

For example, when Vero Beach 32963 asked for a simple budget to- actual report for one city department, with previous year-over-year comparisons, the newspaper was told the city does not capture information that way.  

In order to find out if a department had gone over its budget, we were provided with general ledger books and told to figure it out.  

“It’s important that if a council member, a citizen or a member of the media asks to see A, B, C and D, that the finance department be able to provide that information,” said Councilman Ken Daige.  

“We need to see that this happens going forward.”  

Maillet got an unexpected start in city government some 30 years ago. In the 1970s when he was graduating from Georgetown University with a degree in international affairs and serving as a payroll sergeant in the U.S. Army National Guard, Maillet was called in to participate on some international projects with China – and a career in politics seemed to be in his future.  

He worked his way through college as a cashier at a Safeway grocery store, moved to Florida in March 1980, and went to work as a night auditor at a Holiday Inn while earning a second degree in accounting at Rollins College’s Brevard campus.  

While working as an internal auditor and budget analyst for the City of Melbourne, Maillet applied for an operations accountant job with the City of Vero Beach and was hired in April 1985.  

Commissioner Bob Solari, who served one term on the Vero city council, said that, in his opinion, Maillet’s retirement should not be viewed as a crisis, but as an opportunity.  

“I think the city has a great opportunity to strengthen their finance department, if they go about the process in the right way and take the time to look hard for someone that will significantly strengthen the city,” he said.  

Councilman Ken Daige agreed that Maillet’s retirement is a chance for the city to move forward and to possibly take a different direction in the area of finance.  

“It does no good beating up this one or that one for things in the past. We need to look at how we can do things better going forward,” Daige said. “I believe in good government and in using the taxpayers’ money in the best possible ways.”  

Vero needs someone with a strong planning and analysis background if it is to tackle some of the tough issues coming up -- potentially selling the electric utility, cutting back on health care benefits , and a possible water and sewer consolidation. A strong finance director could also compensate for the weaknesses of other top city leaders.  

“The city manager has a lot of strengths, but as a former police chief, I don’t believe that finance is one of them,” Solari said. “That’s not a problem for the city if he surrounds himself with someone who is very strong in that area.”  

The finance director’s job entails the oversight and management of $141 million in the city’s various budgets and funds and the supervision of the 32 employees in the accounting, budget, information systems, purchasing and warehouse divisions of the Finance Department, including cashiers who collect utility payments. Just as the city attorney is expected to provide non-political, objective legal advice based on fact, the finance director is tasked with making sure all the decision makers -- both politicians and staff -- have fact-based fiscal information.   

Maillet came under fire in January and February for coming out in favor of the City of Vero Beach pulling back into its city limits to serve only city utility customers. He made a speech before the Finance Committee on Jan. 20 saying this plan was in the “best interests” of the city taxpayers and said city residents were being dehumanized by all the debate about selling off the electric utility.  

A few weeks earlier, Maillet and Gabbard met with the budget task force of the Taxpayers Association of Indian River County and stated that the city could remain financially sound if it cut its losses and let the county and Indian River Shores customers go elsewhere.  

Commissioner Bob Solari took Maillet to task on this, wondering why staff was making such policies without the direction of or consent of the City Council. Solari also asked for any reports, models or data being used by Maillet or other city staff to support such a move.  

Maillet had no data to send to Solari to fulfill his public records request because no studies, schedules or models had been conducted. The finance director admitted that he and Gabbard were making statements based on no more than a hunch and a working knowledge of the city’s current finances.  

“The utility issue is just one example where the city is looking at making policy without having the data to back it up. There was never any independent financial analysis,” Solari said.  

Solari said this independent analysis -- as he receives at the county when decisions are made -- is not the sole factor in policymaking.  

“I don’t mean that the best financial choice is always the right choice,” Solari said, noting that elected officials must look at the whole picture and all the parties affected by a decision. “If there’s a valid political argument to do something else, it’s still important to have the financial analysis. It’s not valid to say you don’t need the data, even if you make a political decision.” The problem seems to be twofold -- the analysis is not being produced, and analysis also is not being requested by the city manager or by elected officials before they make a decision.  

Daige said he almost always requests more information than what is provided in the council backup in the way of financial data before weighing in on an issue.  

“It’s up to the individual council member,” Daige said. “If I feel that I need to go further to get what I need to make a decision, it’s my responsibility to do that, to go get more information.”  

When scenarios are developed around an issue, consultants usually take on the job and only analyze the options that they’re directed to by staff and the council.  

“To me, there are two types of accountants: one type reports on what has happened and the other plans for the future, for what will or could happen,” Solari said.  

For the past two decades, Solari said the city has had the past-reporting type of accountant and it really needed the future-planning type.  

From what he could gather, Maillet inherited antiquated, ledger-based public accounting systems laid out by former Finance Director Tom Nason in the 1970s and carried them through -- virtually unchanged -- into the new millennium.  

“I may be wrong, but I think Mr. Maillet’s predecessor set up the finance system and that person probably knew what he was doing and what he was looking at,” Solari said. “And Mr. Maillet just took over what was already in place.”  

Already the city has been searching for a Director of Electric Utilities since R.B. Sloan resigned in November, so Maillet’s retirement will leave yet another void in the city’s leadership at a key moment.  

This month Maillet was scheduled to begin a series of annual meetings with the city’s finance committee, which was dragged out of mothballs in January to brainstorm approaches to the impending budget crisis.  

Though Gabbard said in a memo to the City Council that he would immediately begin the search for Maillet’s replacement, it is expected to take some time to get someone new on board.  

In the interim, Maillet’s staff will need to fill in the gaps and get the city through the upcoming budget season, with workshops scheduled throughout the summer. Fortunately for the city, Maillet leaves his assistant finance director Jackie Mitts on the job.  

Mitts, a 59-year-old barrier island resident, was first hired by the city in 1972 as a clerk typist for the building department, for which she was paid $2 per hour. She worked on and off for the city over the next six years as a temporary employee, joining the staff full time in 1978. She’s been there ever since, now making $76,000 per year, and serves as Maillet’s right hand at the helm of the finance department.  

In a letter recommending a promotion and raise for Mitts in December 2007, Maillet wrote that “Jackie has the skills and training to run the department and is ready for additional assignments and duties.”  

Solari said he thinks the staff should be able to fill in the gaps until a replacement can be hired.  

“I think the staff is more than capable of carrying out the day-to-day responsibilities, as they have been doing,” he said.  

Daige said his top priority, in the interim, is for the staff to maintain “good order” in the budget process while the position is vacant. Though the council will not have a say in who is hired to replace Maillet, Daige said he has some high expectations of Gabbard as he makes his selection.  

>“The way it is done, Gabbard would be doing the hiring, but this is what I am looking for from the city manager, that he knows what the city needs and he knows what the issues are,” Daige said. “I would expect that he make a wise and prudent choice so we can make some positive changes and move forward.”