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State to Secure $35M Bailout Loan for Bankrupt Lawrence

CHAOS in LAWRENCE

Fiscal Disaster in Lawrence Could Lead to

More Money Pouring into The City of Waste

 

By: Tom Duggan – February, 2010

Lawrence Mayor Willie LantiguaIf Governor Deval Patrick has his way, the City of Lawrence will be able to borrow $35 Million to pay for their (to date) $24.5 million deficit. House Bill 4421 will allow Lawrence to borrow the money which would be backed by state taxpayers and have no fiscal control board, no receiver and no oversight. State Representatives David Torissi, (D) North Andover, Barry Finegold (D) Andover and Willie Lantigua (who also serves as mayor) all support the bill.

Lawrence Mayor Willie Lantigua is also the Lawrence State Representative in the legislature and serves on the powerful Ways and Means Committee. He will be able to vote on the very bill that will give him a $35 million loan to spend as the mayor of Lawrence.

No Infusion of Capital?

Last month Governor Deval Patrick told the Valley Patriot that the help he and the state would be giving to Lawrence would not be financial but would help Lawrence become more accountable with the millions of dollars Lawrence spends every year.

“I will say that what we are looking at in Lawrence is not an infusion of capital,” he told a Valley Patriot reporter. “It’s getting at some reforms that make sure that they get on sounder fiscal footing and management so that this sort of thing doesn’t happen again.”

 (AUDIO OF INTERVIEW WITH THE GOVERNOR)
(RELATED STORY)

Governor Patrick is now lobbying heavily for the $35 million loan for Lawrence at the state taxpayers expense. All the while Lantigua has been using his power as mayor to settle political scores, which will cost the city millions in unemployment compensation, lawsuits and contract labor disputes.

The Hit List

So far, Lantigua has fired Myles Burke, the city’s Inspectional Services Director, tried unsuccessful to fire Planning Director Mike Sweeney, and fired Mary Lou Nichols an office manager at the DPW. He demoted Deputy Chief Mike Driscoll and promoted his campaign manager Sgt. Melix Bonilla to be Deputy Chief.

He also targeted Recreation Director Linda Schiavone but withdrew her name from the council agenda after reaching a secret deal with her to stay on until June and then retire on her own. Lantigua refuses to disclose the terms or the details of that deal. Coincidentally, Burke, Nichols, Sweeney, Driscoll, and Schiavone, all openly supported Lantigua’s rival Dave Abdoo in the mayors race last November.

Because Lantigua chose to lay off Mike Sweeney and other city workers he will be paying unemployment to at least a dozen employees as well as those he plans to hire to refill those jobs. According to postings in Lawrence City Hall, Mayor Lantigua has since posted the jobs of employees he has laid off, in violation of state law.

If HB 4211 passes, State Representative Lantigua, who also serves as mayor of Lawrence, will be in charge of spending that $35 million.

Lenny Degnan, Patrick Blanchette, Rick D'Agostino

No Cash Flow

Lawrence has been deficit spending since January because City Council President Patrick Blanchette adjourned the ‘08-’09 City Council session without setting a tax rate and sending out the property tax bills. As of the date we went to press (February 4th) the tax rate in Lawrence under the new council has still not set a tax rate or sent out property tax bills. This means the City of Lawrence has no cash flow while continuing to pay for police, fire, dpw services and other city functions.

According to Mayor Willie Lantigua the city’s deficit has climbed from $9.5 Million in early December, to $17.5 million by the beginning of January, to $24.5 Million by the end of January. Lantigua says he inherited the budget mess and shouldn’t be penalized for prior mismanagement. But Lantigua’s new acting Economic Development Director, Patrick Blanchette was chiefly responsible for the city’s financial crisis.

Interference/Lack of leadership

In the last two years, the Lawrence City Council has raided the school building construction account, the cash reserve account and refused to raise fees, permits and fines, contributing to Lawrence’s dwindling cash flow.

The city has been hit with massive cuts in state spending in the last two years. At one point Lawrence took a $10 million cut in state funding. Mayor Sullivan restructured the budget to bare bones with no layoffs in city personnel, but further cuts in state aid, a lagging economy, and a burst in the real estate market have all lead to Lawrence’s financial demise.

In addition to all that, Lawrence has not held a stable Budget and Finance Director in the last eight years. This was due to city councilors abusing their authority and threatening city workers with their jobs if they did not comply with political demands.

Former Budget Director John Griffin resigned after a few short months in the budget position, telling The Valley Patriot that it was constant interference and dirty politicking by Council President Patrick Blanchette that lead to him resigning. Griffin said at the time that he was constantly being harassed and bullied by Blanchette and other city councilors to sign off on expenditures or change budget numbers to suit their political agenda.

Former Comptroller Jim Limpiris told the Valley Patriot in May of 2007 that Council President bullied him into making expenditures he felt were “illegal.” According to the city charter, the Council President has no authority over the day to day operations of the city and only has the authority to officially act when at the council table.

Limperis says that on several occasions he refused to sign off on city expenditures that he found contained “very suspicious activity” and fell under the category of “excessive spending.” According to emails and memos obtained by The Valley Patriot in 2007, Limperis refused to sign off on non-union raises. He also questioned how the city could legally give raises to non-union workers when no money was available in the city budget and while collective bargaining was still in progress with the city’s 22 labor unions.

That’s when Council President Patrick Blanchette sent an email to Limperis demanding that he not question the expenses, stating:

“Again, the city council voted to appropriate money in the form of a transfer. No other questions should be asked. Let’s stop with the games and leave our difference at the door. Unfortunately I think titles are going to some people’s heads. Even though signatures are needed – it does not allow for people to be obstructionists. Also, no need to involve someone from DOR (Department of Revenue) in this city matter. Let’s keep our issues in our own house.”

Limpiris says that during the entire seven months he was comptroller, he routinely experienced harassment and interference from Blanchette to approve expenditures he felt were “illegal” because there was no funding source for Blanchette’s appropriations.

Patrick Blanchette taxesLantigua’s New Economic Development Director?

Former Council President Blanchette has not only mismanaged the finances of the city of Lawrence but has also mismanaged his own personal finances. In early 2009, the IRS put a tax lien on Blanchette for his refusal to pay approximately $9,000 income taxes over a period of three years. To date, Blanchette has not paid his income taxes.

At the time Blanchette failed to pay his taxes he was making $70,000 as a conciliator in the industrial accidents Board in Boston, $17,000 as the city council president, had a free cell phone, blackberry, an out of state travel budget to go on junkets, free health insurance and contributions to his pension.

Blanchette does not own a property, is not married and has no children.

Lawrence Mayor Willie Lantigua has named Blanchette to be his acting Economic Development Director and will be largely responsible for spending the additional $35 million Deval Patrick is going to let Lawrence borrow with the backing of your state tax dollars.
CLICK for larger EAF Form Where Blanchette signs off on his own raise while city workers are being laid off.

Conflicts of interest

Lawrence’s new mayor Willie Lantigua appointed Blanchette to a city job in violation of a state law that prohibits elected officials in local municipalities from taking city jobs in the communities they served for at least six months after leaving elected office.

 

Patrick Blanchette and James McGravey

Patrick Blanchette and James McGravey

Mass General Laws Chapter 268A. states:

“This section shall not prohibit an employee of a municipality with a city or town council form of government from holding the elected office of councilor in such municipality, nor in any way prohibit such an employee from performing the duties of or receiving the compensation provided for such office; provided, however, that no such councilor may vote or act on any matter which is within the purview of the agency by which he is employed or over which he has official responsibility; and provided, further, that no councilor shall be eligible for appointment to such additional position while a member of said council or for six months thereafter. Any violation of the provisions of this paragraph which has substantially influenced the action taken by a municipal agency in any matter shall be grounds for avoiding, rescinding, or canceling such action on such terms as the interest of the municipality and innocent third parties require.”

Blanchette, who lost the mayor’s race when it was learned that he refused to pay three years worth of income taxes to the IRS was legally responsible for the city’s budget according to the city charter. When he left office on Monday, January 4th, Blanchette left the city with a $17.9 million budget deficit, did not set a tax rate or balance the budget as required by law.

Keeping the seat open for himself

Fired Economic Development Director Thomas Schiavone was denied a contract by Blanchette and the city council two months before the end of Blanchette’s term. Schiavone had spent nine years on the job without a contract. Blanchette not only voted against Schiavone’s contract, but as the council president he lead the charge to convince other councilors to vote against Schiavone’s contract as well. Two months later, Mayor Lantigua appointed Blanchette to Schiavone’s job, which was only vacant because Blanchette himself denied Schiavone a contract keeping the job open for himself.

Schiavone, as well as other members of the Sullivan team say they plan on taking legal action against the city and have already retained lawyers to represent them in a lawsuit against Lantigua.

Lawrence Council President Patrick Blanchete and Counsilor Grisel SilvaBlanchette/Councilors took while services were being cut

At the same time the Lawrence Police Union, Fire Union and laborers unions in the of Lawrence were taking furloughs, facing layoffs and losing benefits, Patrick Blanchette and the Lawrence City Council raised their own pay. In the six years Blanchette has been president of the council he has raised the city council pay from $5,200 per year (times nine councilors) to $15,000 per year with a $2,500 bonus for the council president himself. The Lawrence City Council also had free cell phones, blackberries, an out of state travel allowance to go on junkets, free health insurance and payments into their pensions.

Three city councilor fought during the last budget cycle to cut the council’s pay and reduce their own budget, but Blanchette and his Budget Committee Chairman Grisel Silva buried it in committee and the proposal never saw the light of day. During the subcommittee discussion Silva said she would not support a cut in the council’s pay because she “could not afford to take a furlough”.

Since then Lawrence has laid off essential personnel, reduced benefits for city workers, cut staff, become slow to pay vendors doing business with the city, closed two fire stations, is down to one food inspector and the city council has yet to reduce their own pay, perks or their budget … even under the new council.

Over their Heads

Two years ago the Lawrence City Council was so bogged down with petty squabbles and political agendas that they were incapable of passing the city budget. After three months of stalling a budget vote, (then) Mayor Sullivan had to go over their heads and get the city budget Certified by the Massachusetts Department of Revenue without a vote of the city council.   Councilors had violated so many policies and procedures while trying to hold up the Sullivan budget that Sullivan had the legal footing to go over their heads, in effect rendering them irrelevant. City Councilors vowed revenge against the Sullivan administration for putting an end to the dog and pony show that included screaming fits, degrading members of the public from the council table, berating city employees and wild accusations about conspiracies.

No End in Sight

Even if the Lantigua administration in Lawrence gets the $35 million loan, that will only go to pay for the current operating deficit in city expenses. A new budget cycle will begin July 1st, if the new city council passes a 2010-2011 budget on time. That budget will include additional cuts in state aide, increases in pension and unemployment payments, raises for union and contracted employees, a lagging economy, a decrease in local property tax revenue and the expense of repaying a $35 million loan that the state is allowing them to borrow.

Lowell State Representative Tom Golden (D), Lowell, and several other state representatives on Beacon Hill have already said they oppose giving Lawrence a state backed, $35 million loan to cover operating costs in the current city budget unless there is an oversight board and a receiver to control the money Lawrence’s mayor will be allowed to spend. Several reps. have predicted that this would be “bailout 1” for Lawrence as the economic prospect for Lawrence’s financial future “is going to get worse before it gets better”.

Governor Patrick and officials at the Department of Revenue say that if House Bill 4421 is passed without a receiver or fiscal oversight board, Mayor Lantigua and the Lawrence City Council will have until January of 2011 to get their fiscal house in order or face full receivership.

But some state officials like Karyn Polito (R) Shrewsbury, say that is too late with the financial crisis in the state getting worse every day and the deficit in Lawrence becoming insurmountable to the point where Lawrence is no longer solvent.
Mayor Lantigua has yet to name an economic team or present a spending plan to manage the city’s finances, nor has he revealed what he would do with the $35 million if the legislature passes the loan measure.

Related Story> Sweeney pens letter to the ethics commission: As Deadbeat Dad Lantigua admits getting ex-wife a job in the Police department


Lantigua Attorney likens firing employees to Normandy Invasion

 

Tom Duggan

Tom Duggan

Tom Duggan is president and publisher of The Valley Patriot Newspaper in North Andover Massachusetts, a former Lawrence School Committeeman, former political director for Mass. Citizens Alliance, a 1990 Police Survivor and hosts the Paying Attention! Radio Program on 980WCAP in Lowell, Massachusetts. You can email your comments to valleypatriot@aol.com.

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