The following is a Civitas guest column:
Towne Taxpayer Ripoff
by Peter MacDonald
What if an elected official cost taxpayers several hundred thousand dollars in an attempt to give a contract to a friend? And what if he misled the public about it while posturing as a fiscal savior? Welcome to your hometown and the partisan politics of Accounts Commissioner Stephen Towne.
Last year, at the Feb. 5, 2002, City Council meeting, Towne complained that he was facing a budget shortfall and needed an extra $100,000 to cover the city’s upcoming liability insurance contract. He said this estimate—$435,000 in all—was based on conversations with "brokers."
Why Towne was talking with insurance brokers when the city was midway through a favorable three-year contract with The St. Paul (the premium to be negotiated each spring) is a question only he can answer. It’s telling, though, that he made no mention of negotiating with The St. Paul or its brokers. Many believe Towne wanted to give political pal Phil Klein, of Wise Insurance, a chance to win back the contract he had lost under former commissioner Ben Mirling. Undoubtedly Klein was one of the brokers Towne had consulted, perhaps the only one.
Jim
Kunstler's Not-Quite--Annual Lecture on Town Planning
Sunday February 23 3:00 p.m.
Saratoga Arts Center (Film Forum Theater)
The timing was certainly lousy for rebidding: The city’s claims were twice its insurance premium ($701,000 vs. $331,000 in 2001), and carriers in the post-9/11 climate were looking for excuses to dump clients. Besides, the city’s surplus stood at $3 million, and Towne could have dipped into it to cover a third year with The St. Paul. But he wasn’t listening.
By mid-April, after Towne had unilaterally dissed The St. Paul and put the insurance contract out to bid, Wise was one of just two brokers to submit proposals. In the end, the contract was awarded to New York Municipal Insurance Reciprocal for $568,000, a 70% increase over the existing contract! Wise failed to find even one company to submit a bid, and instead proposed a prohibitive and risky self-insurance scheme.
Was Towne serious when he said at the Feb. 5 meeting that "he is requesting proposals in an attempt to save money on insurance costs"? Or was he angling—in concert with GOP city chair Tom Roohan—to return Wise to its customary seat at the public trough?
NYMIR’s winning bid was $237,000 more than The St. Paul contract, and $133,000 more than Towne’s estimate. Even worse, the deductible increased from $2,500 to $25,000. Total a police car and forget about compensation. The contract also omitted coverage on Article 78 suits, those filed by individuals dissatisfied with decisions of standing boards. Translation: The city’s total cost of risk (premium, plus losses not now covered) could climb this year by $500,000 or more.
Would the city have fared better if it had negotiated the final year of its St. Paul contract? Probably. But we’ll never know.
And now Towne is blaming everything from the "mayor’s budget" to 9/11. He has also insisted that The St. Paul sent a notice of non-renewal because of the city’s loss history. But that’s just the legalese in the notice. It’s common knowledge in city hall that The St. Paul was prepared to negotiate the third year of its contract until it was, in effect, fired by Towne. Mayor Ken Klotz says as much at the April 16, 2002, Council meeting.
At the Council meeting of October 15, 2002, Towne took his deception further. He indicated that he’d decided to go out to bid only after receiving the non-renewal notice from The St. Paul. This is an outright falsehood. That letter didn’t arrive until March 4; yet by mid-February brokers were already picking up copies of the RFP. The people of Saratoga Springs deserve better.