Who's minding the store?

Auction losses: How can a city as needy as Baltimore fail to collect nearly a $1 million?

June 11, 1999

FACING A budget deficit of $153 million, the city learned recently that its auctioneer kept $744,636 in proceeds from the sale of abandoned and surplus automobiles. Some of this money has been owed the city since 1994. The total loss was closer to $1 million before the company paid $210,000 of what it owed.

Auction Alliances Services Inc. of Towson has said it cannot pay more, so the city is exploring the possibility of legal action and attempting to recoup its loss by calling in the proceeds of bonds posted by the company.

Comptroller Joan M. Pratt's auditors discovered the debt during a routine examination of the auctioneer's dealings with the city. But what sort of system would allow such a circumstance to go on for so long?

Mayor Kurt L. Schmoke wondered during a Board of Estimates meeting Wednesday whether the city is owed more money by others with whom it does business. Well he might.

An adviser to City Council President Lawrence A. Bell III says the city has had trouble with auctioneers in the past. Was anything done to solve those problems? If so, it was obviously not enough.

William R. Brown Jr., the city's director of finance, suggests that checks written for auction purchases should be made out to the city, which could then pay the auctioneer. Mr. Brown's idea is reasonable, though it may need some fine-tuning.

City government's $1.8 billion operation makes it a business, demanding businesslike procedures. Without them, "leakage" could be even more catastrophic. The lost money would have saved a handful of jobs now threatened by the budget shortfall.

When the city asks taxpayers or the state of Maryland to help it close a five-year, $153 million budget gap, it must show it is doing a much better job of collecting the money it's owed.

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