Today’s finding by Isabel Mercedes Cumming that the city had failed to collect $3,906,779 in street cut permit fees from “Company 2” – which The Brew has identified as Baltimore Gas & Electric – underscores a much larger managerial problem that the Inspector General and others have unearthed recently:
A collections problem.
This is not a reference to loose garbage blowing down city streets or accumulating on vacant lots. It’s Baltimore’s “back-end” government not collecting millions of dollars owed in fees and for services.
Last month, Cumming reported that the Baltimore Housing Authority had $7.9 million in outstanding water bills, dating back years. (HABC disputed the report, while the Department of Public Works, which prepares the billing, affirmed the numbers.)
In August, City Auditor Josh Pasch faulted the Department of Transportation for absurdly long – up to 20 years – delays in submitting the paperwork needed for federal and state reimbursements of highway projects.
And a few weeks ago, Cumming reported that Baltimore city schools failed to collect the retirement contributions of some 500 employees, leaving a $5 million gap that had to be recouped from general school funds.
$45 Million in Bad Debt
In a chilling aside, today’s IG report disclosed that the Department of Finance has moved to write off $44,714,886 in “bad debt” arising from uncollected fees citywide between 2005 and 2017 – a considerable sum so far unpublicized by the Scott administration.
That’s one end of the financial ledger.
On the other, the city’s glitch-ridden Workday and other accounting systems are keeping contractors waiting months for payments.
In one instance, failure to pay the supplier of calcium oxide, or quick lime, led to the brink of “an emergency health crisis,” according to another Cumming report.
It was only after a public works supervisor pleaded with the vendor to deliver a load of quick lime to the city’s Montebello treatment plant that the city escaped from running out of a chemical needed to prevent drinking water from picking up lead and other contaminants.
Lax and Punitive
For a government so lax and lenient in invoicing and collecting big bills, Baltimore City can be ruthless in punishing a family that fails to settle a minor dispute.
Deanna and Liam Woodward know that well, as they protest the tax sale of their modest rowhouse in East Baltimore over a $3,000 water bill.
“The city has two different rules,” says their attorney, Thiru Vignarajah.
“There’s one rule for poor homeowner in disinvested communities where, if they fall behind by even a few hundred dollars, their whole home is at risk, and another rule for city agencies and corporations where they can be millions of dollars behind in payments, and the city looks the other way.”
In today’s report, Inspector General Cumming looked into a complaint that an unnamed company had not been invoiced for 152 right-of-way (ROW) permits to perform street cuts, or excavations, between 2019 and 2023.
Cumming noted that her office had looked into the issue in 2021, when the city failed to invoice the very same company for ROW permits, leaving $46,600 on the table.
That uncollected amount had since risen to $245,365, and a Bureau of Accounting and Payroll Services (BAPS) supervisor had an explanation ready when interviewed by Cumming’s office.
KICKBACKS FOR WAIVED FINES
From The Brew Archives:
The permit applications were made out in the names of third-party contractors on behalf of the company.
As a result, only two invoices found their way to the company, and the rest were scattered about the U.S. Postal network because “the BAPS team did not appear to be reviewing the addresses when billing.”
After the IG investigation began this spring, BAPS began directly invoicing the company.
By August, the company had been billed for about 85 permits, “but claimed approximately 64 were still outstanding, totaling $131,203,” Cumming noted.
Halting Progress with BGE
The same sort of modest success took place in billing BGE (“Company 2”), whose crews and subcontractors are responsible for the vast majority of private street cuts in Baltimore.
Last April, there was a $3.9 million balance in outstanding permit fees. After Cumming’s investigation began, BAPS and the Department of Transportation worked to resolve the matter.
“As of September 5, 2023, a Workday invoice report showed that Company 2 had an outstanding balance of $1,367,654.50 for permits” with additional $521,150.29 of unpaid Miss Utility bills, Cumming wrote.
What caused the billing system to fail so badly before her office shook up the status quo?
One reason was that, despite BGE’s requirement that all invoices be submitted to them by email, BAPS had continued to bill to the company’s physical mailing address, Cumming noted.
It took four months of communications between BGE and BAPS to finally sort out the instructions for billing ROW permits and Miss Utility bills, the report said.
The Response of City Heads
To get future invoices paid on time, Cumming recommended that the city departments “share information” and “work to develop documented procedures to ensure a consistent approach for ROW permit invoicing.”
Finance Director Michael Moiseyev promised to do that, but said it will take time.
“DOT and Finance will meet in October 2023 to discuss the reason for the lack of payment on open bills,” he said.
The agencies will then develop a written work plan by December 2023 that offers “next steps and defined responsibilities,” he concluded in his written response to Cumming.
Let’s develop a “seamless integration of all systems” to improve permit billing – DOT Director Corren Johnson.
DOT Director Corren Johnson is pushing for a very different solution.
The current permitting system lacks the capability to interface with Workday or Paymentus, she said, which means a brand new billing system will have to be installed.
“We are actively collaborating with the Baltimore City Office of Information and Technology (BCIT) and the Department of Finance to evaluate and procure a new system that will facilitate seamless integration of all systems. We anticipate that the new system will significantly reduce billing inaccuracies, allow for an improved reconciliation process and allow for transparency across the enterprise.”
Johnson does not give a time frame or a cost for the seamless integration she imagines.