The city today dropped a lawsuit against the U.S. Department of Housing and Urban Development after federal officials denied they had frozen $8 million in salaries and fringe benefits for city workers.
Earlier this week, city lawyers filed suit against HUD after the federal agency warned Mayor Kurt L. Schmoke "not to expend any additional funds . . . for salaries and fringe benefit costs for city employees," according to a letter from HUD.
Baltimore housing officials interpreted HUD's warning to mean that more than 300 city housing, poverty and historic preservation workers would lose their jobs within the month.
The city's suit culminated a 2-year-old dispute over how city employees fill out time sheets accounting for their hours spent working on various housing and anti-poverty programs.
But today a U.S. attorney representing HUD denied that the money had been frozen.
Instead, said U.S. Attorney Jeffrey S. Getty, HUD warned the city that if it spent the money, it would risk the loss of $8 million in the future as part of Baltimore's $24 million allotment of Community Development Block Grant funds.
City lawyers today agreed to drop the suit in the courtroom of Senior U.S. District Judge Herbert F. Murray after the city reached the understanding that "no funds are frozen."
The U.S. attorney's office subsequently released a statement saying the city had been "incorrect" in maintaining that HUD had frozen the funds.
Since August 1989, HUD has warned Baltimore that its time-keeping system is inadequate and does not prove that the hours city employees work qualify for reimbursement from block grant funds.