Suit May Settle Eugster Budget Maneuver Little Agreement On Whether Excess Funds Can Be Used To Pay City’S Legal Bills For Parking Garage Defense

The most likely way the Spokane City Council will sort out its latest conflict may be through - guess what - a lawsuit.

While no one on the litigation-weary council is rushing to file a suit on whether city revenue can be considered excess before the year’s end, the state auditor said it may be the only way to sort out who is right on that issue.

State Auditor Brian Sonntag said it’s not clear if the funds are in excess or if the council majority could spend them with just four votes.

If the City Council majority approved funding for legal bills without the five votes normally required of a budget ordinance, it could be grounds for a lawsuit, Sonntag said.

“It could be challenged, and it would be up to the court to make a decision,” he said. “That’s probably where it belongs.”

In an effort to secure funding for River Park Square-related legal bills, Councilman Steve Eugster has proposed declaring revenue from either I-695 replacement money or sales tax dollars to be in excess of what was budgeted.

If the money is in excess, Eugster believes state law allows the council to approve spending it with only four votes. Emergency budget ordinances, which spend unbudgeted money, normally require five votes, and as a result, the council majority fell one vote short on a July 31 attempt to pass a funding ordinance to pay the legal bills.

The defeated ordinance would have freed up funds for $560,000 in past and future legal bills. On Monday, the council voted to approve $175,000 in bills past due.

The real question before the council is whether funds can be declared excess before the end of the year.

Eugster believes they can, members of the council minority do not, and city staffers aren’t sure.

If a fund is scheduled to receive an allotment of sales tax money, and that amount is received before the end of the year, the balance is in excess, Eugster said.

While that condition may not currently exist, “I believe that it will by Oct. 1,” Eugster said.

Councilwoman Roberta Greene said the maneuver was improper for several reasons. It may not be legal, Greene said, and if it is, the excess funds should be available to all departments, not just for funding the legal battle over the mall’s garage.

“All the departments should have a fair crack at it,” Greene said. “Every single one has gone through cutbacks. It’s sort of like raiding the coffers of the city for your pet project.”

But Eugster said there is no greater need for the approximately $400,000 in city money right now than fighting the legal battle, given what it could cost the city if the garage continues to founder for years.

The City Council pledged to financially support the garage with parking meter revenue in a 1997 city ordinance. But the current council refused to loan the agency that runs the garage the funds, citing the agency’s inability to repay the money.

“I see the city faced with $2 to $3 million-a-year hemorrhage,” Eugster said. “I think we are in a critical situation and we don’t have much of a choice.”

River Park Square is being developed by an affiliate of Cowles Publishing, which owns The Spokesman-Review.

While Eugster also had hoped to apply the excess revenue to funding an internal auditor for the remainder of the year - another item unlikely to get five votes of approval - he said Wednesday that it no longer would be necessary.

Given how long the hiring process could take, the city could just include the funds in next year’s budget, he said.

Last week, Eugster sparred with city Finance Director Dick Cook over whether there would be any excess revenue or not. Eugster later resigned from the Finance Committee, which Cook helps run, accusing Cook of working against him to sabotage his budget maneuver.

Eugster has since rejoined the committee, saying he has sorted out the matter with Cook.

“I think we can work well together,” he said.

The disagreement between Eugster and Cook led Cook to suggest what the city really needed was a firm legal opinion, a point echoed by the state auditor.

“We consulted a deputy attorney general, and his best guess is to go with the advice of the city attorney,” Sonntag said.

But that becomes complicated, given that the council majority voted that it had no confidence in City Attorney Jim Sloane. As a result, there has been no legal opinion on the budget move from city staff, only from Eugster.

“The legal reading came from the attorney who happens to be a City Council member,” said Greene. “We are out there on the basis of one person’s opinion.”

Eugster said he can live with that.

“I have to make my own judgments and hope that my own judgment is correct and hope I can get four votes,” he said.”