Council substitutes ordinance to phase out city—s external reimbursable fund after HACM balance found

The Finance and Personnel Committee advanced a substitute ordinance aimed at ending or phasing out the city—s use of external reimbursable accounts after President Jose Perez said a review found large, longstanding unpaid balances tied to the Housing Authority of the City of Milwaukee (HACM).

"In totality, how much money is owed to the city of Milwaukee by HACM?" President Jose Perez asked during his introduction of the measure, telling the committee his review showed "over $4,000,000" owed and that more than $3,000,000 of it was attributable to a 2004 cooperation agreement that left DCD fronting payment and later leaving the balance in reimbursables.

Comptroller Bill Christiansen and accounting director Rick Baer described the reimbursable fund and how it currently operates. Christiansen said external reimbursables sit in a separate fund and do not automatically get written off; departments initiate write-off processes and amounts under $5,000 can be processed through city attorney and comptroller review while amounts over $5,000 require Judiciary and Legislation Committee approval. He said the reimbursable fund currently contains roughly $13,000,000 in outstanding external reimbursables and that DPW accounts for the largest share of projects and dollar volume.

Alderman Robert Speicher pressed the administration on oversight, asking who triggers write-offs and whether the budget office is alerted when a department—s reimbursables grow. Christiansen said departments are responsible for follow-up and DCD had not been designated to follow up on HACM payments; he said his office can run a report of outstanding external reimbursables and that the comptroller—s office would work on an executive summary presentation for the committee. Speicher also asked whether a single central oversight function (often described in the meeting as a "debt czar") might be warranted; Christiansen and Budget Director Nick Kovac indicated the administration could examine that possibility.

Perez said the substitute ordinance is intended to "eliminate this loophole" so the city does not need the tax stabilization fund to backfill unreimbursed amounts. Committee discussion included operational questions about collection practices, whether outstanding reimbursables lead to blocking contractors from future work, and whether the city—s collection firm (Cone) is used for large unrecovered amounts. Christiansen said his office refers uncollectible accounts to the same collection processes used for other receivables.

Alderman JoCasta Zamarripa (moved by Alderman Michael Coggs on the floor) moved passage of the substitute ordinance; the chair called for objections and, hearing none, ordered the ordinance passed. The committee also directed the comptroller to provide an improved summary report on outstanding external reimbursables and to craft a phased approach to close out existing balances while avoiding immediate impacts on the city's eligibility under the state expenditure restraint program.