Whistle-blower Hotline What’s that number again?
By Craig Powell
On Oct. 11, just as absentee voters were beginning to cast their ballots on Measure U, the proposal to increase the city sales tax, city officials issued a breathless press release announcing the “launch” of a whistle-blower hotline that city employees could use to report waste, fraud and abuse in city government. The Sacramento Bee dutifully ran a story the next day reporting that the city has “launched a whistle-blower program” that “will include a 24-hour hotline for city employees.” Even Channel 13 news covered the “launch.”
But there was a rather glaring omission in the city’s press release and the resulting media coverage: No one actually reported the hotline’s phone number. Why? Because there is no whistle-blower hotline and, according to city auditor Jorge Oseguera in statements to Eye on Sacramento’s Erik Smitt, there likely won’t be one until early next year.
Why are city officials touting the launch of a whistle-blower hotline before it actually exists? To divert the public’s attention from criticism the city council has been drawing for its multiple failures to fund such a hotline since it was first proposed by Oseguera back in February. That’s when Oseguera reported to the city council that a robust hotline program could save the city as much as 5 percent of the city budget—potentially $30 million per year in savings—based on his survey of the savings realized by other cities that have robust hotline programs.
Oseguera told the council that he needed $220,000 in investigative resources to do essential follow-up on calls to the hotline without hamstringing his current staff of busy auditors. Did the council fund the $220,000 for the hotline program when it came before the council in March? Nope. Councilmembers kicked the can down the road, saying that they would consider funding the hotline as part of the council’s budget deliberations in May and June. But the city manager failed to include funding for the hotline in his proposed city budget in May, and the city council failed to fund it in the city budget they approved in June.
On Aug. 15, Oseguera reported to Smitt, Eye on Sacramento’s assistant policy director, that no funding had been authorized for a hotline, even though The Bee reported that city manager John Shirey claimed he was moving forward with the hotline back in June. If he was, he sure didn’t share any of his funding plans with Oseguera any time before Aug. 15.
After growing criticism at public forums and in the pages of this publication of the council’s repeated failures to fund the hotline proposal, Shirey decided to investigate city waste and fraud on a shoestring, asking Oseguera to line up a third-party vendor to operate what is essentially a voicemail line for the hotline at an annual cost of $15,000, but providing zero additional resources to Oseguera to investigate calls to the hotline.
Shirey’s approach to the whistle-blower hotline is akin to a police department announcing the establishment of a 911 number for police emergencies, then not hiring any actual police officers to respond to frantic calls from the public for help.
In the past year, the city council spent close to $1 million on arena consultants on an arena deal that went nowhere, more than $200,000 to hold an election on a charter review commission that no one asked for and about $750,000 on five police union leaders who perform no actual police work while collecting sizable city paychecks. But the council balked at the idea of spending $220,000 to eliminate as much as $30 million in wasteful, fraudulent and abusive city spending, ignoring its own auditor’s recommendation.
Just how bad of a business decision did the city council make in refusing to fund a serious whistle-blower hotline? Let’s assume that the auditor’s projected $30 million in potential annual savings is overstated by a factor of three and that actual savings from a robust hotline would amount to only 1.5 percent of current city spending, or $10 million annually. Savings of that amount would produce a stratospheric 4,545 percent annual return on a city expenditure of just $220,000, making it perhaps the best investment in city history.
If the council had funded a robust hotline in February, when Oseguera first proposed it, and the city had the hotline and associated investigative resources in place and operational by April 1, the city would have already saved $7 million through Nov. 1 of this year (based, mind you, on a more conservative $10 million annual savings projection), roughly equal in amount to next year’s projected deficit in the city’s general fund.
City officials’ announcement of the still-nonexistent hotline was largely window dressing, designed to provide political cover for a council bent on imposing $28 million in higher sales taxes on Sacramento residents and businesses while recklessly blowing off the best idea yet for eliminating up to $30 million annually in wasteful, fraudulent and abusive city spending. City officials’ failure to take timely and responsible action on the hotline proposal is a pretty stark and compelling example of their continuing lack of seriousness in reducing waste, fraud and abuse in city spending.
Voters may want to consider city officials’ clear lack of concern with how our city taxes are spent as they decide whether they want to increase the city’s sales tax rate from 7.75 percent to 8.25 percent, making it the highest sales tax rate in the region.