Galveston Economic Report
David Stanowski Publisher
Galveston Open Government Project
by David Stanowski
27 August 2009
When citizens first agree to be governed, they give up some of their freedom, and a portion of their income, to do so, in the belief that municipal government will work for the general welfare of the community. However, those who manage and control city governments quickly discover that if they do little more than make sure that the city simply "functions", with little concern for efficiency and productivity, or healthy growth and prosperity; it leaves them free to focus on making municipal government operate for their own personal benefit, if they choose to do so.
When elected officials fail to provide the necessary oversight to a city government that is being "held hostage" for this purpose, the only option left is some kind of action by the voters. Unfortunately, this rarely happens, because voters have to spend most of their time making a living, with little time left to act as watchdogs on their government. While voters are busy living their lives, city management has all the time they need to protect their "franchise".
It is difficult to actually quantify how our City government compares to others, but it is not hard to make the case that it is certainly not "promoting the general welfare" of the residents. It has probably been this way for many years, and it is not getting any better. In its current manifestation, the priority of the inner circle of the City staff is to maximize the income, benefits, and perks that they receive, and to further the interests of a few well-connected insiders, in the private sector, whose support they need, in a local version of Crony Capitalism that undermines the rest of the business community. There is little that anyone can do to change this, because the public is shut out of the political process as power flows strictly from the top down.
This article will propose the establishment of a so-called "government watchdog group" known as the “Galveston Open Government Project" (GOGP) that will attempt to bring some semblance of oversight back into City government. It will pursue a four pronged strategy in an attempt to reestablish something resembling a representative form of government in the City, and with it, the possibility of growth and prosperity.
This strategy relies on the formation of a non-partisan non-ideological educational foundation whose purpose will be to establish an open, transparent, honest, accountable, and representative government in Galveston. This group will be modeled after Judicial Watch which performs these functions on a national level. Judicial Watch "advocates high standards of ethics and morality in our nation’s public life and seeks to ensure that political and judicial officials do not abuse the powers entrusted to them by the American people." It "fulfills its educational mission through litigation, investigations, and public outreach."
The GOGP will also focus on greater public access to government records, accountability in public spending, ending selective treatment and favoritism in such areas such as code enforcement and business development, and will document and publicize conflicts of interest and misuse of public funds by elected and appointed officials.
The GOGP will need the seed money to set up a 501(c)(3) organization, and then will seek funding from national foundations, and other sources, to open an office and hire a staff. Part of the budget will be earmarked to hire lawyers, investigators, and consultants; when necessary.
The formation of such a group is critical to achieving these goals, because the current City government has been very successful at blockading the attempts of the voters to bring about reform for so long that they have become exhausted and comfortable in their apathy. Uncoordinated and disorganized volunteer efforts by individuals or groups simply have little or no chance against the powerful machine entrenched at City Hall. Paid employees of the GOGP will still be out numbered by the City staff, but they will have a much better chance of making progress than most efforts by well-intentioned volunteers.
The new group StopGalvestonCorruption.com has already been successful in exposing the alleged misuse of public funds by some in City government, but will they be able to bring about real reforms without the type of group proposed in this article?
The Four-Pronged Strategy of the GOGP:
The first two goals of the GOGP have the potential to yield results shortly after the formation of the organization. The other two, which are the ultimate aim of the group, will take longer to achieve.
One - Investigation:
The staff of the GOGP will investigate the "irregularities" in the operation of City government, and publish reports on its findings. In situations where City government stonewalls the release of public information, subject to the Texas Public Information Act, the GOGP will work with the Attorney General in an effort to compel the City to do so, and if unsuccessful, consider filing suit to force its disclosure.
In situations where the GOGP sees the gross abuse of process, or outright corruption, it will consider filing suit to bring the wrongdoing to light, to attempt to force a change in policy, and encourage the District Attorney to prosecute the wrong doers.
Two - Grant Writing:
Part of the budget of the GOGP will be earmarked to pay grant writers to apply for money to fund projects that the City government has ignored such as public restrooms on the Strand, connecting the cruise-ship terminal to the Strand Historic District, public restrooms and other improvements on the Seawall, a beach re- nourishment system, and capital to rebuild or demolish derelict or vacant buildings.
Three - Restructuring City Government:
The City of Galveston employed the Aldermanic Form of Government from 1884 to 1900. The residents elected a Mayor and an Alderman from each of the 12 Wards. After the 1900 Storm hit the City, marshal law was declared, and the Aldermanic government came to an end. For one year, Galveston was without a Mayor or a formal government.
On 02 September 1901, the Commission Form of Government was "invented" and implemented, for the first time anywhere, in the City of Galveston. Governor Sayers appointed William Tennant Austin as Mayor-President and I.H. Kempner, Valery Austin, A.P. Norman, and H.C. Lange as Commissioners. Each Commissioner controlled a specific government function such as: finance, police and fire control, water and sewage, streets and public improvements. Since the original plan was obviously undemocratic, it was subsequently revised to provide for the election of its officials. The Commission Form of Government spread to other cities, before World War I, but faded in popularity by the 1920s.
The Commission Form of Government seemed to function fairly well, for 59 years, but for reasons that are unclear, in the historical record, on 23 April 1960, the residents of the City voted to abandon the Commission Form of Government in favor of the City-Manager Form of Government.
The City-Manager Form of Government is structured just like a corporation where the residents/voters are the stockholders, council members are the board of directors, the mayor is the chairman of the board, and the city manager is the president and chief executive officer (CEO).
The owners (stockholders) elect the board, and the board appoints the president, by majority vote; exactly like the City-Manager Form of Government.
Corporations are very unlikely to function to the satisfaction of the owners, if the owners do not maintain enough involvement to vote wisely for board members, and/or if the board is not well informed and strong enough to select a good president, and then exercise effective control and oversight over him.
Uninformed and uninvolved stockholders often result in the selection of a weak and ineffective board which usually leads to a president who uses a corporation for his personal benefit, at the expense of the stockholders. The most important and powerful person in a corporation is the president, but he is one step removed from the direct control of the owners. The situation is the same with the City-Manager Form of government; a city manager is one step removed from the direct control of the residents/voters. That is a flaw in this form of governance that can be exploited by a corporate president or city manager; which is exactly where the City of Galveston finds itself today.
To make matters worse, when the City of Galveston set up its new government, it defined the Council positions, including the Mayor, in such a way that it made them much weaker than they could have been. Seven part-time unpaid term-limited Council Members are faced with the task of providing oversight and control over a City Manager and his staff of top lieutenants who are full-time, well-paid, and not subject to term limits. Voters should be very grateful to the people who have been willing to serve as Mayor, and on Council under these very difficult and restrictive conditions, but it is clear that these offices should have been set up as paid positions.
At the present time, the City Manager and his 24 top lieutenants, i.e. the City staff, earn over $2 million per year, plus generous benefits. In addition, between August 2002 and August 2008, the average civilian employee received a 20.5% increase in compensation while members of the City staff enjoyed much bigger raises; some as high as 68-75%!!
This strategy of creating an elite staff that is highly rewarded with pay and benefits is designed to build support and loyalty for the City Manager's agenda even when it is obviously counter to the best interests of the average resident. There is no doubt that the number one priority of the inner circle of the City staff is protecting the franchise that they have created to reward themselves so generously! Running City government for the benefit of those who live here is much less important. Add to this the hundreds of thousands of dollars that are spent every year on an array of "consultants" who are hired to "confirm" and "parrot" the positions and policies promoted by the City Manager, and his staff, and you have a power and resource imbalance between Council and the bureaucracy that has allowed the City to fall into a downward spiral.
On some level, nearly all the voters in the City sense that the extreme power imbalance between their elected representatives, and the bureaucrats that they were elected to control, has become so extreme that a representative form of government no longer really exists. As the situation has continued to worsen, voters have become apathetic and disengaged. Why be concerned with City Council elections when the outcome makes very little, if any, difference?
How has the City fared over the first decade (1997-2007) of the current City Manager's tenure in office? The case was made in "Voting With Their Feet" that population growth is a good proxy for economic growth and opportunity when other measures are not available. Even though many people would love to live in this City, many find it difficult or impossible to generate enough income to do so, so the City does not grow. In fact, there was an actual loss of population during this period!
From 1997 to 2007, the population of the State of Texas grew 23.0% as the City suffered a population decline of 5.4%; a truly dismal performance!
Source Texas 1997: Texas DSHS
Source Texas 2007: Texas DSHS
Source Galveston 1997: Census Bureau
Source Galveston 2007: Census Bureau
However, as the population of the City was declining 5.4%, the number of City employees increased 16.7%! This means that for the ratio of City employees to City residents to be the same in 2007 as it was in 1997; the number of City employees should have been reduced 23.4%! In other words, City employees are feasting more and more at the expense of the residents, as the number of "loyal troops" under the City Manager's command continues to grow.
Source: City of Galveston
This level of bloated staffing doesn't even consider the fact that each employee should have become more productive between 1997 and 2007, which would have allowed still leaner staffing levels. With this irresponsible approach to City staffing, the City payroll consumes close to 3/4 of the general fund. When most of the budget is going to payroll, it is not difficult to understand why the things that are important to the taxpayers, such as code enforcement, streets, parks, sewers, traffic flow, street cleaning, an efficient permitting process, and public bathrooms in the Strand Historic District, and on the Seawall never seem to get adequate funding!
While the voters of the City realize and appreciate the fact that many City employees are dedicated, hard working, and productive; what the City management fails to understand is that the residents have to work very hard at their jobs in order for the City employees to get paid, so there has to be a limit on the load that they are expected to carry.
As of 03 July 2009, there were 755 City employees on the payroll serving an estimated population of only 45,000. This means that the City is currently 45.5% more overstaffed than it was in 1997, when the current City Manager began his tenure. It may not be possible to cut some City positions, even with a much smaller population, but the current overstaffing is grossly unfair to everyone else who lives here, and has to shoulder this burden!
Does this government effectively manage the infrastructure and services of the City; or is it really primarily a jobs program? see 2009 City Budget
Source Galveston 1997: Census Bureau
Source Galveston 2007: Census Bureau
Source Galveston 2009: City of Galveston
Source City Employees: City of Galveston
What caused the great disparity in population growth between the State and the City, and why did the number of City employees grow as the City population was shrinking?
At the end of 1997, there were 30,108 jobs in the City, but by the end of 2007, there were only 24,601; the City lost 18% of its jobs during this period! This will certainly curb population growth, and encourage people to leave the City! During this same period, the State added 16% more jobs.
Even as the private sector was losing jobs, there was no discipline by the City to keep its payroll under control, which put further pressure on the free market to pay for the City's largess to its employees.
In 2007, the Median Household Income in Galveston was $35,610, 25% less than that for the State of Texas; $47,548.
Where was the oversight of the City Manager, and the accountability for this dismal performance? The last time the City Manager received a performance review was on 14 March 2003; more than six years ago! He has never had a review during the term of the current Mayor. Apparently, he was doing such a good job that he didn't need a review!
His compensation seems to support that way of thinking. Steve LeBlanc became Acting City Manager on 01 February 1997 at a salary of $70,000, but after his first ten years in office had ended, his salary was $139,050; almost double!
And finally, after suffering through the performance outlined above, Steve was just named City Manager of the Year by his fellow bureaucrats! Most likely, this was just their recognition of the City for its struggle to recover from Hurricane Ike. Although some residents may think that City government did an acceptable job leading the recovery effort, there are many that are just as unhappy with it due to its bungling and missteps after the Storm as they are for the operation of the City between 1997 and 2007.
Some residents of Galveston focus their blame on Council Members who served between 1997 and 2007 rather than the City Manager for the decline of the City
during that time. It is a valid argument since they are the elected board of directors of City government, but the City Manager is still the most important and powerful person in the City government; he is the individual that directly manages the day-to-day operations.
The simplest answer may be that if the City Manager is doing an outstanding job, the Council is really unnecessary, because in this situation, the Council could be weak and ineffective without causing any harm to the City. Ultimately, each voter must determine whether the City management team or our City Council is most responsible for the problems between 1997 and 2007, and after Hurricane Ike, and act accordingly.
Many cities in the State of Texas are very pro-business, but this does not include the City of Galveston. Our city government does encourage residential real estate development, in some cases, but it is down right hostile towards actual economic development and the business community. Members of the City government often state that real estate development is "economic development", because they don't understand the difference between entities that create on-going economic activity and jobs, versus those that just build "housing units".
Section 311 of the Texas Tax Code created an entity known as a Tax-Increment Reinvestment Zone (TIRZ).
TIRZs have become more controversial since their creation in 1981, but the original statute made it clear that an area considered for a TIRZ should contain "a substantial number" of substandard and deteriorated buildings; that is burdened with "unsanitary or unsafe conditions"; and that the area is "a menace to the public health, safety, morals or welfare in its present condition." Under these conditions, such an area could properly meet the standards as "unproductive, underdeveloped, or blighted".
Our local government has raised Crony Capitalism to an art form by the use of TIRZs that fall far outside of these guidelines. Insider deals are celebrated and institutionalized in three of the City's notorious TIRZs which were used to build luxury residential real estate, on the beach front, and other prime land, while areas that should be properly considered, like the one surrounding and containing the old Falstaff Brewery, is ignored.
In true Orwellian Doublespeak, City staff, and some Council Members, support and praise the concept that developers should chair and control the boards of the TIRZs that reimburse them for their expenses with the taxpayer's money. In our city government this is considered "prudent and independent oversight", and not a blatant conflict of interest! Those who serve with the most extreme conflict of interest are said to do so with the utmost integrity.
A 1999 article in the Houston Press stated that Houston's nineteen then-existing TIRZs would cost taxpayers more than $2 billion over the next 30 years, if the projects proceed as planned. If they fell short of the plan, it would be even worse. In Galveston, TIRZs were sold to the voters by claiming that they would save the taxpayers money!
Private developers have every right to ask the City to set up a TIRZ, and subsidize it with taxpayer's money, but it is up to the City Council and City Manager to reject ideas like TIRZs that are not in the taxpayer's best interests. Only time will tell whether our City government has done its fiduciary duty, or become entangled in a web of conflicts of interest.
The favoritism shown to these TIRZ developers, and a handful of other "business interests" makes it much more difficult for independent entrepreneurs to be successful in this city. To be fair, City government should post a sign to warn would-be entrepreneurs as they cross the Causeway:
Is it a case of causation, correlation, or just coincidence that the population eventually peaked at the same time that the City switched to the City-Manager Form of Government, in 1960, and has declined ever since?
Does anyone need more evidence that the City Manager Form of Government has been a complete and abysmal failure in this City? Its effectiveness has surely fluctuated with different Councils and City Managers, but the long tenure of the current City Manager has allowed him to increase his power to an unprecedented level which has made the inherent problems with this form of government painfully obvious!
There is a school of thought that the power imbalance in City government can be rectified and remedied with a series of individual meetings with Council Members on each important issue where they can be persuaded to micro-manage the City Manager. Anyone who has ever tried to get a response to an email or phone call to many of the current Council Members, let alone schedule a meeting knows how ludicrous this strategy truly is! The alternative approach is a coordinated effort to field, and then elect, a slate of candidates for Council who would have the strength to either bring this City staff in line, or make personnel changes, but the odds of getting four or more like-minded Council Members elected at the same time is very slim.
The only realistic, and yet difficult solution, is to change the form of government used by this city. The GOGP will seek to persuade the voters to adopt the following reforms:
1. The City-Manager Form of Government must be replaced by a Mayoral Form of Government. The City needs to be governed and managed by a CEO who is paid, elected every two years, and is subject to a six-year term limit. The City could certainly be cursed with bad Mayors, under this system, but they can be voted out every two years! In theory, the City Manager can be replaced by Council, but in reality, it is a very difficult thing to do!
2. All Council Members should be paid a reasonable salary so that residents who own and operate businesses, or who work for a living, can consider serving without severe financial hardship. The unpaid nature of the current Council leaves the job open primarily to those who live on trust funds or pensions, are supported by a spouse, or who work for government agencies; people who often have little or no stake in or understanding of how the City must operate to provide the opportunity to earn a living for those who wish to live here. If the voters of Galveston ever thought that they were getting a bargain by electing unpaid volunteers to serve on Council, they should be painfully aware of what a bad idea that was by now!
3. Adding at-large Members to Council would include some people who would be forced to consider City policies from an overall perspective. It would also give each voter the opportunity to vote on at least three members of Council. At-large Members would perform a function similar to U.S. Senators, with the Council Members from each District acting like U.S. House Members.
4. The boundaries and numbers of the City Council Districts need to be reconsidered and possibly redrawn.
5. The City's two major agencies were set up as mini City-Manager Forms of Government. This merely multiplies the problems discussed above. The City needs to disband the Wharves Board, and privatize the Port through a sale or long-term lease to a private company. The folly of an arm of City government owning and operating the City's most valuable asset has been covered at length in "The Port of Galveston".
The Park Board should also be disbanded so that its functions could become a City department. With this change, its operations would be the direct responsibility of the Mayor. There is no reason to continue to manage the Park Board's area of responsibility as a separate and unaccountable entity.
Four - Public Integrity:
It is the Galveston County District Attorney's responsibility to investigate and prosecute public corruption in City government. The historical record appears to show that there has been a long history of a hands off approach towards public corruption in Galveston County. This combined with the lack of direct voter over sight of the City Manager has allowed things to get much more out of control than if the CEO of the City was elected, and the DA provided additional effective oversight.
The final goal of the GOGP will be to build public awareness of and support for the need to create an office of public integrity within the DA's office whose sole task it will be to investigate and prosecute public corruption in the cities of Galveston County. The following commentary about the Travis County DA's Public Integrity Unit speaks to the similar needs of Galveston County, and the City of Galveston.
"The Texas Legislature is infamous for its pay-to-play culture. Most of the time, we suspect, corruption operates just below the surface, silently poisoning the democratic process. There is but one check on this process." "... the power to criminally investigate state officials ..."
"... while prosecuting drug dealers and burglars was necessary, his most important work was protecting the democratic process from malignant special interests."
The Texas Observer, 21 January 2007
I do not live in Galveston due to an accident of birth (BOI). I am the consummate immigrant (IBC) who made the well-considered decision to live here after visiting many other places, and the experience of living in a variety of communities. I never criticize my new home town because I dislike it; I do so out of great love and affection, and because its lack of proper leadership is the only thing preventing it from realizing its potential.
"I cannot accept your canon that we are to judge Pope and King unlike other men with a favourable presumption that they did no wrong. If there is any presumption, it is the other way, against the holders of power, increasing as the power increases. Historic responsibility has to make up for the want of legal responsibility. Power tends to corrupt, and absolute power corrupts absolutely. Great men are almost always bad men, even when they exercise influence and not authority: still more when you superadd the tendency or certainty of corruption by full authority. There is no worse heresy than the fact that the office sanctifies the holder of it." Lord Acton, 1887
To some degree, all city governments are
inefficient and corrupt. To expect otherwise would be naive and unrealistic.
Although they do perform some services that generate income, if the private sector did not provide the balance of their income through taxation; they could not survive.
Many define, this relationship as that of a parasite and its host. It can be mutually beneficial, or symbiotic, if the parasite makes sure that the host remains healthy, so that it can continue to grow. The evidence seems to show that our City government has been bleeding the host dry, and if this continues, the host will eventually become totally exhausted, or possibly even "critically ill".
The whole City is to blame for our very low expectations regarding the competence and integrity of our City government. There have always been a few brave souls "making an effort to change things", while our major institutions, civic groups, and influential citizens have watched from a safe distance, and remained silent. As the saying goes, "You get the government that you deserve".
Those who believe that a major reform might come through the next election, in May 2010, should remember that the 2008 election swept in four new Council Members, which generated high hopes for major changes. These hopes were quickly dashed by the machine at City Hall. Elizabeth Beeton has made heroic efforts to implement reforms, as the other Council Members left her twisting in the wind for the massed counter-attacks by the business-as-usual Council Members, City staff, and their consultants. With the City-Manager Form of Government, elections come and go, but the City staff is always there protecting its turf, and its $2 million per year feast provided by the taxpayers.
Is it the right time for the type of reforms that are necessary in this city, or do things have to get much worse before people wake up from their current cocktail of choice: apathy, cynicism, denial, and fear?
The newly-formed group "Stop Galveston Corruption" is making an effort to bring about reform by documenting the alleged misuse of public funds by the City staff, but will anything come of that effort unless it awakens and angers the public into action, or the DA convenes a grand jury and begins to bring indictments?
This proposal continues the process of extricating myself from the tar baby that is our City government that began when I first recognized the Mokita that plagues this city. For a short period of time, I hoped that the Galveston Founders Party could be the tool to bring about major reform to the existing City-Manager Form of Government. However, I quickly discovered that our problems are far too serious for this approach to have any chance of making a meaningful impact, so something much more profound must be attempted. After you consider what we are really up against, why should anyone waste any more time trying to reform, or change our City-Manager Form of Government when the Mayoral Form of Government would be much more responsive to the desires of the voters, and needs of the City?
I do not have the resources, the time, or the inclination to try to set up and run the Galveston Open Government Project by myself, so unless other people are willing to step up and help bring the GOGP into existence and operation, it may never happen. The first step is to raise $2,000-$3,000 to set up a 501(c)(3). Then we will be in the position to apply for grants to get the funding we need to actually provide effective oversight of our City government, and to educate the voters about necessary reforms.
We need to do something very bold to bring about the fundamental changes outlined above, if we are to have any chance of creating positive change in this city!
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