City nearing adoption of new expenses system for council, top officials

Process would include more accountability

May 11, 2004|By Laura Vozzella | Laura Vozzella,SUN STAFF

The city is expected this week to formally do away with a lax expense account system that provided the City Council and other elected officials with at least $5,000 a year with no oversight and allowed them to keep any money they didn't spend on city business.

Mayor Martin O'Malley called for an immediate end to the practice in March, after The Sun reported that U.S. Attorney Thomas M. DiBiagio was looking into the accounts as part of a broader investigation of the council.

The Board of Estimates is expected to formally adopt a new expense account policy for the council, mayor and comptroller at a meeting tomorrow.

"Everybody involved wants accountability," City Council President Sheila Dixon said yesterday. "The new process just puts the elected officials in line with other government employees."

The new policy would discontinue the practice of advancing expense money to the elected officials, who would no longer be allowed to keep leftover funds as income.

The policy also would spell out what qualifies as a legitimate city expense and what does not, something that was vague under the old rules. Among the items that would not qualify are gifts and charitable contributions, which several council members defended as a proper use of the funds in March.

Using the money to buy alcohol, make political contributions or pay for meals and entertainment at gatherings where city business is not conducted would also be explicitly forbidden.

Under a system that had been in place since 1968, council members were automatically advanced expense money in quarterly checks that, in recent years, amounted to $5,000 a year. Dixon, as council president, received $7,000 a year. They were not required to submit receipts and were allowed to keep money not spent on expenses as income.

City Comptroller Joan M. Pratt was advanced $5,000 a year on the same terms, and Mayor Martin O'Malley received $15,000.

Several council members have said they put the money in their personal checking accounts and did not keep records of how they spent it.

O'Malley has kept his expense money in a city account, submitted credit card receipts for all expenses and returned unspent money to the city's general fund at the end of the year, city officials have said.

Under the new system, the elected officials would be entitled to the same amount of expense money. But they would no longer receive it as an automatic advance; instead, they would be reimbursed after submitting receipts to the city's Department of Finance. The city would provide cash advances in some circumstances, such as before a trip for official business. But any unused money would have to be returned.

The old expense account system appears to have violated federal tax laws, which require money to be reported as taxable income if employees do not provide their employers with receipts or a detailed accounting of how they spend it, tax experts have said.

The council's expenses are being scrutinized by federal prosecutors as part of a wide-ranging investigation into members' finances.

Council members are scheduled to begin testifying this week before a federal grand jury in connection with the probe into their finances, relations with certain businesses and campaign records, according to sources familiar with the investigation and a subpoena obtained by The Sun. The sources asked to remain anonymous because of the secretive nature of grand jury proceedings.

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