Opponent: Butkovitz, GOP had PPA deal

DID CITY Controller Alan Butkovitz pull his punches in a recent investigation of the Philadelphia Parking Authority as a favor to city Republicans?

The GOP's candidate for controller, Al Schmidt, says that it looks that way to him, based on the tepid results of the probe and the warnings that he received from a couple of Republican leaders, telling him to tone down his criticism of Butkovitz.

" 'Back off him - I got 500 jobs to protect,' " Schmidt says that he was told last December by the Parking Authority's executive director, Vincent J. Fenerty Jr., a Republican ward leader.

Four months earlier, Schmidt said, he ran into Fenerty at the Wildwood shore home of state Rep. John Perzel, the Northeast Philadelphia Republican who had engineered the GOP's takeover of the Parking Authority in mid-2001.

Standing in the hallway outside Perzel's kitchen, Schmidt said, he asked Fenerty what was happening with the audit. Fenerty replied that Butkovitz was being "very helpful," Schmidt recalled.

"He said that Butkovitz planned to bury the PPA audit by releasing it the last week of December, around Christmas, these words I remember, 'so that no one will read it,' " Schmidt said.

The controller's report on the Parking Authority - scaled down from an audit to what was called an "operational review" - was officially released last month.

Butkovitz acknowledged in an interview that it could have been "more extensive" and "more aggressive," but he said that the $120,000 review by a private accounting firm, Milligan & Co., was all that his office could afford.

Butkovitz denied that he'd ever told Fenerty that he would go easy on his agency.

Fenerty said that he had no memory of the two conversations Schmidt described, and never discussed any aspect of the controller's report with Butkovitz.

Butkovitz declined Schmidt's suggestion that they both take polygraph tests.

"Those have not been proved to be reliable in a court of law," Butkovitz said. "I'm not gonna play games."

Schmidt and Butkovitz face each other in the general election on Nov. 3.

Schmidt decided to run last fall. In December 2008, he sent a letter to the Daily News, criticizing Butkovitz for not warning earlier about the city's deteriorating finances.

The letter was published Dec. 17. The next evening, Republican Party leaders convened for dinner at the Michelangelo Cafe, in Somerton, to discuss the upcoming races for controller and district attorney.

Schmidt said that Fenerty sat a couple of seats away and referred angrily to the letter.

" 'Butkovitz said he would wrap it [the audit] up this week, but the people he hired are four weeks behind and now he is frothing at the mouth because of the letters,' " Fenerty told Schmidt, according to Schmidt's notes. "Back off him - I got 500 jobs to protect."

In the general discussion that followed, Fenerty said that he was opposed to slating Schmidt and called the race against Butkovitz " 'a kamikaze mission,' " Schmidt recalled.

"Why do you want to ruin a promising career?" Fenerty asked Schmidt, a former analyst for the Government Accountability Office, the investigative arm of Congress. Schmidt was then working as executive director of the local Republican Party, for $45,000 a year.

"I found the exchange [with Fenerty] pretty startling," Schmidt told the Daily News. "I wrote it down in my BlackBerry at that moment."

Fenerty said that he remembered asking whether anyone in the Republican hierarchy had authorized Schmidt's letter to the Daily News, and suggesting that Schmidt consider a City Council race instead of controller. But he said that he didn't recall saying anything about protecting jobs at the Parking Authority.

Whatever schedule was originally expected, the first public word on Butkovitz's review of the Parking Authority leaked out in late July, when the Inquirer obtained a preliminary draft.

It suggested that the Parking Authority has too many managers and inadequate control of its own expenses. But overall, it disclosed little that hadn't been reported two years ago in stories by the Daily News and Inquirer - the coverage that prompted Gov. Rendell to urge a "desk audit" of the agency.

Rendell explained how it would work: "Auditors come in and they say, 'All right, Mr. Jones. You get paid $120,000. Show us what you do. What did you do last week? The week before?' And let's find out if there is dead wood."

But Butkovitz chose what the Milligan firm described as "a limited operational review of PPA."

"Our procedures did not constitute an audit of the information provided and we do not express any form of assurance on the completeness or accuracy of the information," the firm said.

One new piece of criticism involved the Parking Authority's allegedly loose controls over "red badges," which permitted free parking at Philadelphia International Airport.

But even in that area, the controller's report stopped short of disclosing what the Daily News reported the following week: that the Parking Authority had provided these parking passes to five of its part-time board members, who have no responsibilities requiring the use of airport parking.

Schmidt, who used to run performance audits of the federal Department of Homeland Security, was critical.

"This is not a financial audit, a performance audit or a desk audit," he said. "It is not what the governor requested, and, looking at it, I don't see how it saves taxpayers one cent."

Helen Gym, a civic activist who's been critical of the Parking Authority for its failure to provide more funding to the Philadelphia School District, described the Butkovitz study as "a disservice to the city and its school children. . . . It's just another free pass for this agency."

When Perzel convinced the legislature to let Republicans take over the Parking Authority in 2001, he said that the change would deliver tens of millions of dollars in additional aid to the School District.

Instead, the authority payroll doubled in size, from 500 to more than 1,000 employees, management salaries soared and the projected money for the School District never materialized.

Fenerty, who currently makes $183,000 a year, was identified as the ringleader of a political fundraising effort, demanding that employees hired with Republican sponsorship pay $275 a year to the city's Republican Party.

Butkovitz's consultants reported that the top three executives at the Parking Authority got an average salary of $164,000 a year over the three-year period from 2005 into 2008 - more than double the $77,000 benchmark reported by the International Parking Institute for authorities collecting at least $10 million a year.

But instead of comparing Parking Authority salaries to those at other big-city parking agencies, the consultants accepted the authority's contention that "there is no other parking authority in the country comparable to PPA."

Besides its on-street and off-street parking operations, the legislature has expanded the authority's operations to include taxi-cab regulation and a camera program to catch drivers running red lights at 15 busy intersections.

In a telephone interview last week, Butkovitz acknowledged the limits of his Parking Authority review.

"There's no question it could be more extensive, it could be more aggressive," he said. "But this is an agency that will be a repeated object of our office for years to come, as will PIDC [the Philadelphia Industrial Development Corp.] and other agencies. . . . I would be enthusiastic about a full audit of the Parking Authority if we could afford it."

But Butkovitz scoffed at the idea that he went soft on the probe for political reasons.

"That's ridiculous in so many ways," he said. " . . . I had a fight in the [Democratic] primary, a significant fight, but I don't really care what the Republicans do."

Both Butkovitz and Fenerty said that they may have had casual conversations running into each other on the sidewalk around City Hall, but they said that they had no discussions about the scope or timing of the investigation.

Butkovitz's top deputy, Harvey M. Rice, said that he probably talked with Fenerty while the probe was going on "because I was concerned about how long it was taking them to get information to my consultants."

Rice said that he threatened to report that the agency was "unresponsive and uncooperative" in providing information, and may have told the agency of an end-of-year target date for completing its review.

Butkovitz became the city controller in early 2006, after 15 years in the state House, representing the Oxford Circle area of Northeast Philadelphia.

Early in his career, Butkovitz was close to state Rep. Bob O'Donnell, then the House Speaker, now a consultant to the controller's office, receiving about $25,000 a year.

When a rift developed among House Democrats in the early 1990s, leading to O'Donnell's ouster by Rep. Bill DeWeese, Butkovitz edged closer to Perzel.

In their political campaigns, Butkovitz and Perzel have shared the services of the same political consultant, Marty O'Rourke, who also has government contracts with the controller's office and the Parking Authority.

Butkovitz said that O'Rourke was not involved in the controller's review of the Parking Authority, however.