Riordan Ran Rings Around the City Charter

Outrageous is the only word to describe former Mayor Richard Riordan’s transfer of more than $2 million in city funds in his final days in office to his staff and pet projects. Using techniques commonly associated with money laundering, Riordan abused the powers vested in him by the City Charter. Some of the causes were undoubtedly worthy, while others, like $419,000 in bonuses for his staff, were questionable. But they all undermined the city’s budgeting process and the checks and balances that are at the core of the charter.

Riordan accomplished the budget transfers by using a provision in the City Charter that allows a mayor to transfer up to $50,000 in city funds from one department to another without City Council approval. Money that had been allocated to the mayor’s office in the budget but not spent was then transferred by Riordan to various other uses. Much of the money went to causes that are unquestionably laudable: $400,000 to after-school programs; $350,000 to the Central Library; $200,000 to the zoo. The largest sum, $500,000, went to develop soccer fields in Griffith Park.

The objection is not to the ends Riordan was furthering but rather to the means that he used. Riordan circumvented the charter provision by making multiple transfers in $50,000 increments. This is exactly how money launderers circumvent federal requirements that banks report large cash deposits; they simply deposit the money in amounts just under the reporting limit.

What is particularly disturbing about Riordan’s conduct is that his aides, in urging that this authority be created during the charter reform process, denied that the power ever would be used in such a manner. Those aides, including those who received bonuses from Riordan’s largess with city funds, said that this provision was necessary to deal with emergencies and contingencies too urgent or too minor to warrant going to the City Council for a special expenditure.

Several charter commissioners and former Councilwoman Jackie Goldberg expressed concern that a mayor could circumvent the budget process by making large transfers in small increments. The mayor’s aides replied that the charter was explicit in restricting transfers to $50,000 and that a larger transfer, via many smaller transactions, unquestionably would be impermissible.

Riordan’s action sets a dangerous precedent that threatens the checks and balances built into the charter. Although the mayor proposes a budget to the City Council, ultimately it is the council that must approve every expenditure. What Riordan did allows a mayor to ignore the City Council’s will and set his own priorities for the city. If the council refuses to award funds that the mayor wants for a project, the mayor can just transfer the money from one department to another in $50,000 increments.

Of course, mayors who do this risk the wrath of the City Council and repercussions in other areas where collaboration is essential. What makes Riordan’s action especially galling is that he did this in his final days as a lame duck mayor when there was no way to hold him accountable.

What now, since these transfers have been done? The city attorney’s office should issue an “opinion letter” that transfers are limited to $50,000 from one department to another and that a larger sum cannot be transferred by $50,000 shifts in funds. City Atty. Rocky Delgadillo was a deputy mayor under Riordan and should show his independence from his former boss by condemning this practice. Failing that, the City Council should place an amendment on the ballot to clarify the charter to ensure that no more than a total of $50,000 can be transferred by the mayor for a single purpose.

At stake is the integrity of the most important aspect of government: spending the taxpayers’ money. If $2 million is to be spent, the City Council should be involved in deciding priorities. However noble the causes, one person should not be able to decide how the city’s funds are to be spent. Riordan abused his power. Action should be taken to ensure that it doesn’t happen again.