Anchorage audit faults former mayor, assembly

Posted: Thursday, August 19, 2010

ANCHORAGE - An independent audit examining Anchorage's financial matters during former Mayor Mark Begich's last months in office faults both Begich and the assembly.

The audit, first reported by the Anchorage Daily News, concludes that the administration of Begich, now a U.S. senator, did not provide key reports to the Anchorage Assembly, and assembly members did not demand them.

The reporting came under scrutiny because in late 2008, during the last months of Begich's administration, the national economy crashed and city investments lost millions.

Two weeks after Begich left office, his successor, Acting Mayor Matt Claman, announced a $17 million deficit in the 2009 city budget.

The audit performed by MRW Consulting Group of Plantation, Fla., was released Wednesday. Begich could not be reached Wednesday; he attended the funeral of the man he defeated in the 2008 U.S. Senate race, Ted Stevens.

Begich's press secretary, Julie Hasquet, released a statement afterward that said the report makes it clear that hysterical allegations of misconduct or violations of law had no basis.

"It's easy and often helpful to look back retrospectively and evaluate how things could have been done differently," she said. "Clearly, many good lessons have been learned that can be implemented in the future.

"But the findings in the audit report need to be evaluated in context. The events and decisions analyzed occurred during the most extreme economic conditions since the Great Depression. Those conditions at the end of 2008 created challenges for governments and businesses in Alaska and across the country that were unparalleled. They were certainly unprecedented in the history of the municipality of Anchorage."

In one conclusion, the audit said Begich's administration did not produce monthly reports of revenue and spending for the assembly as required by city code.

The audit also concluded that the municipality's fund balance at the end of 2008 was substantially less than the required 8.25 percent of revenue plus reserves, and that the assembly was provided a projected fund balance calculation that was determined later to be substantially incorrect. The audit concluded the errors appeared to have resulted from incorrect methodology regarding projected revenues and expenditures, given the state of the economy during the last quarter of 2008.

The audit determined that the municipality had enacted numerous ordinances and guidelines regarding the fiscal management of the city, but the administration often didn't follow them and the assembly didn't demand necessary information, "thus leaving the assembly in some instances without adequate business data and information to assess the financial condition of the city and to enable them to make informed decisions regarding fiscal and budgetary issues," the audit said.

Current Mayor Dan Sullivan has been critical of the budget and labor contracts Begich approved before he resigned in January 2009.

In a compromise between Begich critics and supporters, the assembly voted in February to spend up to $50,000 for an independent audit. The assembly hired MRW in April.

The assembly has scheduled a work session on the audit for Friday.

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