Atlanta City Hall bonuses also went to council staff, new records show

Total cost to taxpayers rises to $811,000, including ‘gross up’ for taxes

The year-end spending spree on bonuses and contest prizes at Atlanta City Hall cost taxpayers a lot more than previously known, and included bonuses City Council members gave to staffers.

Newly obtained documents by The Atlanta Journal-Constitution and Channel 2 Action News reveal that taxpayers were handed an $811,000 holiday tab for year-end bonuses, and prizes for raffles and contests during an “executive holiday party” in December.

The news organizations had reported the price of bonuses and prizes at $518,000, but that just included what city employees netted. The bill jumped by 42 percent, or $217,390, because public money also covered the tax burden on those payments.

Jack Fishman, a retired IRS agent and tax attorney, called it “highly unusual” for a government to award bonuses in this way.

As a result, the public shouldn’t view the five largest bonuses as costing $15,000, because the bill was really $21,261. And those 26 bonuses of $10,000 actually cost $14,805 each.

Fishman said it’s not illegal for the city to cover the tax bill, but he questioned the wisdom.

“As long as Uncle Sam gets the right amount, they’re happy,” Fishman said. “I’m not sure it’s the smart way to do it. Actually, I think it’s dumb as hell.”

In addition, the new documents obtained by the AJC and Channel 2 show that 10 of 16 City Council members also gave bonuses to their staffs, some more generously than others. It added up to $88,000 and includes a $7,400 payment from Mayor Keisha Lance Bottoms to a member of her council staff, who has since taken over as her Director of Constituent Services.

Last week, Bottoms’ chief of staff Marva Lewis called the bonuses given by Reed “excessive,” and criticized the prizes paid out during the holiday party for a raffle, lip sync and ugly sweater contests.

“During her time on Council, Mayor Bottoms, like most other Council members, routinely awarded annual bonuses to employees on her team,” a mayoral spokesman wrote in an email to the AJC.

Council members say their bonuses are different, because the money comes out of a lump-sum allotment given to run their officers. Also, their staff members don’t accrue vacation or sick leave, council members argue.

But Gina Pagnotta-Murphy, president of the Professional Association of City Employees, is criticizing all of it. She said rank-and-file members of her organization are upset, and “this is not going to make it better.”

“That’s awful,” Pagnotta-Murphy said. “It’s very disheartening, and it’s to the point where I’m just tired of speaking of how disgusting it is.”

Councilman Howard Shook gave his two staff members bonuses of $1,480 and one other staff member a bonus of $740. Such payments typically occur after the holiday season and have long been considered part of the compensation package for council staff, he said.

The largest payment described in the records obtained by the AJC is listed as a $34,580 bonus to a member of former City Councilman Alex Wan’s staff.

But Wan said the amount included a bonus and severance payment to a 27-year employee of council who wasn’t eligible for retirement pay.

“On the council side, our staffs are treated very differently in terms of benefits than general employees of the city,” Wan said.

But is it legal?

At an April 25 meeting of the City Council’s Finance Committee, Joan Clarke, a senior assistant city attorney, said she’s not sure if the bonuses were legal. She said the law department wrote an opinion to the city’s Human Resources Department, but that it can’t be retrieved because of the cyberattack.

City Council has suggested legislation that would direct the city internal auditor and ethics officer to review the legality of the executive bonuses.

The Georgia State Constitution’s gratuities clause prohibits public agencies from granting donations, gratuities and “extra compensation to any public officer, agent, or contractor after the service has been rendered or the contract entered into.”

An unofficial opinion from the Georgia Attorney General in 2002 dealt with whether public hospital authorities could offer prospective employees signing bonuses. It said they could “if the authority receives a substantial benefit in exchange for the signing bonus.”

Shook said he couldn’t recall anyone asking if the bonuses violated the gratuities clause.

‘Reasonable and appropriate’

Former Mayor Kasim Reed has defended his decision to give staff bonuses, but he has not answered repeated questions about the legality of giving away tax money as prizes.

“Out of a budget of $2 billion and following a strong record of unprecedented fiscal achievement over eight years, the former mayor maintains that the bonuses were reasonable and appropriate,” Reed spokesman Jeff Dickerson said in a statement emailed to the AJC on Thursday.

Forty-one of the highest-ranking members of Reed’s executive team received bonuses. In addition, Reed’s former human resources director Yvonne Yancy handed out 11 bonuses.

The tax bill on those bonuses came to a combined $206,669.

‘Insult to injury’

Six department heads have returned the money since news of the bonuses became public, including Police Chief Erika Shields. The amount returned to the city’s bank account is $62,500.

In addition, money was added to the prizes for the ugly sweater and lip sync contests so that taxes on those awards were covered. That was not done for people whose names were drawn out of a hat as raffle winners. Most of those winners should have had taxes withheld, Fishman said.

“If you win more than $600 from the lottery you pay withholding,” Fishman said.

The bonus fiasco irked the police union, which reacted especially bitterly because it has been struggling to get better pay and benefits for its officers.

“It’s adding insult to injury,” he said. “Enough is enough. Why say (Reed) used $500,000 when it was $800,000? What’s the big difference? What’s $300,000 between friends?”

Staff writer J. Scott Trubey contributed to this story.

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