Richard Berry speaks with NMI and other press on election night.

So far, two of mayor-elect Richard Berry’s appointees will be double-dipping. Both Lou Hoffman and Tito Madrid currently receive government pensions. Police Chief Ray Shultz qualifies for a pension but will not be taking it while working for the Berry administration.

Berry has filled every position but two so far, Berry spokesperson Chris Ramirez told the Independent. Next week he’ll announce his selections for chief financial officer and for director of municipal development. He will not be filling the position of chief operating officer, Ramirez said.

There has been some speculation that Berry might move current Chief Administrative Officer Ed Adams to the position of chief operating officer. But Ramirez told the Independent that the position won’t be eliminated or filled. Instead, Berry’s administration will assess at some point in 2010 whether or not they need to fill it.

Lou Hoffman, who will head up the Department of Finance and Administration, has been retired from the City of Albuquerque since 2006, and currently draws a $67,000 pension from the Public Employees Retirement Association (PERA). His salary will be $97,000, the same salary currently allocated for that position, and he’ll continue pulling his pension.

Tito Madrid, Berry’s Constituent Services Director, is also retired and draws a pension from PERA. The amount he collects wasn’t known by the Berry administration as of Tuesday. His salary will be $75,000. Madrid’s position is a consolidated position, Ramirez said, which means several people were doing the job under Chavez. The combined salaries of those people totaled $82,000.

Ramirez said that both Madrid and Hoffman fall within the guidelines set out in a bill by State Rep. Lucky Varela earlier this year that required a 12 month waiting period before a government retiree could be rehired and  collect both a salary and a pension. This practice, called double-dipping, has been roundly criticized at both the municipal and state level in New Mexico due to what some say is a potential for abuse. Varela’s bill, passed last year by the state Legislature was vetoed by Gov. Bill Richardson.

“The way Lucky Varela’s bill was written, we’re not in violation [of what the state legislature passed],” Ramirez said.  “[Hoffman] isn’t someone who retired then came right back.”

“Hoffman has so much knowledge and Berry felt he truly was an expert in his field,” Ramirez continued, “He was the best pick, and also agreed to take a much smaller salary than most people at his level of experience would have.”

Madrid has not worked for the city, but has held the position of director of field operations for the New Mexico Environment Department. As of Tuesday, Ramirez did not know how much Madrid, who was traveling, collects from PERA.

As for Adams, Ramirez said Berry’s transition team is still looking at what role he might play in the new administration, if any.

While Adams was in a classified position in the past before joining Chavez’s upper ranks, the incoming administration considers him to be unclassified now and not guaranteed a job. They’re still trying to figure out if there is a position for him, Ramirez said.

“We know he’s made a significant contribution to the city and has a lot of knowledge,” Ramirez said, “and are still trying to figure out if there’s a position for him.”

Lou Hoffman with mayoral candidate Richard Romero at a press conference in May. Photo by Marjorie Childress.

Former City Treasurer Lou Hoffman was a vocal supporter of Richard Romero during Albuquerque’s mayoral campaign, but he’ll be the city’s new Director of Finance and Administration when mayor-elect R.J. Berry takes office Dec. 1.

Hoffman is a registered Republican, but supported Romero — a Democrat and arguably the most liberal candidate in the race — because he thought he’d be a good mayor, Hoffman told The Independent Monday.

“It’s non-partisan [city politics],” he said. “But I offered to support Richard before Berry was a candidate. … I thought Romero would be a good mayor, I think Berry has a chance to be a great mayor, and we need him to succeed.”

Hoffman was city treasurer from 1987-2006, and also served for a period of time as the Acting Director of Finance.

“Lou brings exactly what I want for this department. He has three decades worth of experience in finance management and is considered to be an expert in this field,” Berry said in a statement about his appointment of Hoffman. “Lou will help guide our city into a better financial situation.”

Back in May, Hoffman appeared at a press conference with Romero to denounce Mayor Martin Chavez’s handling of the city budget, in particular the transfer of property tax revenue to the operating budget in 2004, 2009, and 2010. The two charged that the city wasn’t living within its means, and that Chavez could start tackling the problem by eliminating political appointees in what they called a bloated city government.

The Chavez administration pointed to the city’s “AAA” bond rating in return, saying it showed how well his team had been managing the city’s finances.

In response, Hoffman said the bond rating showed that the city does well by investors, not necessarily by city residents. As The Independent wrote in the spring:

“Bond ratings speak to a bond holder’s ability to get paid, not to how well the debtor is serving the public interest with the money it borrows,” Hoffman wrote [in an e-mail to The Independent].

“There’s no doubt the city is saving money on interest with the high bond rating, but that’s not the question,” he said. “The question is whether city government is operating on a trajectory that’s sustainable, savings on interest notwithstanding. The city isn’t living within its means.”

Diverting property tax revenue to the operating budget was something both Romero and Berry criticized throughout the campaign. Berry ramped up what became one of his signature issues in an August statement that characterized Chavez’s diversion of property tax as an attempt to hide deficit spending. As The Independent reported this summer:

Since 2005, Berry said, “Marty’s budgets have accumulated more than $196 million in recurring expenses over and above normal recurring revenues.”

Berry said in the statement that Chavez began transferring property tax revenues from General Obligation Bonds into the city’s Operating Expenses in 2004, and by 2006 city expenses exceeded revenues each year. And between 2003 and 2007, he said, Chavez grew city government by 50 percent.

Since 2003, he continued, total expenses over revenues have accumulated to more than $83 million, and $112 million in revenues that would have gone to capital projects like roads and parks “have been sacrificed.”

Hoffman told The Independent this week that the diversion of property taxes has reduced the city’s general obligation bonding capacity by about 45 percent, which reduces the ability of the city to finance capital projects in the long run.

But while it’s a concern, it’s too soon to tell what the Berry administration will do about the property tax issue at this point, he said, because you can only do so much during the transition period.

“One of the big glaring issues is how property taxes were diverted,” Hoffman said. “When Berry is mayor, these policies will evolve. There’s clearly a concern, no doubt.”

Hoffman also said the projected $12 million revenue shortfall for this fiscal year is “consequential, but not unmanageable.”

Photo by Jonathan Lumibao/Flickr

ALBUQUERQUE – Mayor Martin Chavez may not want to be a candidate yet, but his two opponents, Richard Romero and Richard “R.J.” Berry, have already been slamming him for what they say is a bloated city government.

Chavez seems content to let his top brass fight back for him, in this case the city’s Chief Administrative Officer, Ed Adams, and Chief Public Information Officer, Deborah James.

“Their allegations are laughable,” Adams told the Independent. “We’re in an election season, and they have to say something. But if they told you the truth, it would be nothing short of an endorsement for Mayor Chavez for mayor.”

The issue Chavez’s critics are raising is his use of property tax funds — which typically go to the capital program to maintain and build city infrastructure — for plugging holes in the operating budget. The Chavez administration has shifted these funds from the capital program to the operating budget three times in recent years — in 2004, 2009, and 2010.

Romero and former 20-year Albuquerque city treasurer Lou Hoffman, who signed on early as a Romero supporter, said last week that Chavez could address the budget shortfall by weeding out waste in city government, starting with the mayor’s office, which they said has grown disproportionately as it’s been stacked with political appointees.

Berry has also joined the fray, echoing these concerns.

“Now we’re all paying the price,” he told KOB Channel 4, “… and now bad decisions are being made to cover the tracks from the previous bad decisions, and it’s going to take some strong fiscal leadership to get us out of this mess.”

In reply to the criticisms last week, James pointed to the city’s Triple A Standard & Poor bond rating, which is the highest the city has ever received.

“Wall Street investment firms don’t have a political agenda when it comes to Albuquerque, so that says a lot about how the city is doing,” she said then.

But Hoffman isn’t buying it. In an email, he said a high bond rating means the city is doing well for investors but not necessarily for residents who depend on the city to maintain and build roads, parks, and other infrastructure funded by the capital program.

“Bond ratings speak to a bond holder’s ability to get paid, not to how well the debtor is serving the public interest with the money it borrows,” Hoffman wrote.

“Marty’s use of bond ratings as a surrogate for how responsibly he’s managed the city’s finances is a non sequitur – a smoke screen,” he continued.

Adams, though, said that a high bond rating leads to huge cost savings for the city.

“What he’s missing is that if your bond rating is higher, your interest rate is lower, and the amount you then save on debt payments is huge,” he said. “Our entire capital program is bonded. It’s like revolving mortgages. We pay off the bonds ending and bring on the next ones. We’re constantly paying interest on our capital program.”

The difference between a Triple A and an A bond rating is about one percentage point less in interest the city has to pay on bonds, Adams said, which for Albuquerque amounts to about $25 million saved a year.

“Because of our prudent fiscal management, we get to build 24 to 25 million dollars worth of more stuff — parks, libraries, fire stations,” he said. “That is extremely important, and its laughable how they want to minimize that.”

Hoffman countered that these savings don’t make the administration’s practices any more responsible.

“There’s no doubt the city is saving money on interest with the high bond rating, but that’s not the question,” he said. “The question is whether city government is operating on a trajectory that’s sustainable, savings on interest notwithstanding. The city isn’t living within its means.”

Adams defended the size of the city’s administrative staff, which he said is about 33 people in all, saying it was small compared to what they have to administer.

“It’s less than half a percent of the entire combined budget,” he said. “We’re managing a city with more than 500,000 residents, with 6,000 employees, and a billion-dollar budget. Find any company that administers a billion-dollar budget on a half a percent. I think that’s pretty darn sporty.”

Adams said that the administration is committed to moving the property tax back to the capital program as the economy recovers.

But if that doesn’t happen, the next capital budget — which goes to voters in 2011 — will only have about $120 million in capacity, rather than the $160 million being sent to voters this year.