Court: Palm Beach County cities don’t have to pay for Inspector General

Palm Beach County cities don’t have to pony up for the countywide inspector general’s office despite voter approval of a referendum that called for municipal support for the office, the 4th District Court of Appeal ruled Wednesday.

Cities heralded the ruling, which overturns a lower court decision but sets the stage for a possible challenge to the Florida Supreme Court.

“It reaffirms our sovereign immunity,” said Jeri Muoio, mayor of West Palm Beach, ones of the leaders in the lawsuit against the county over the inspector general funding plan.

But Inspector General John Carey said he was “deeply disappointed” by the ruling, which he argued leaves his office without adequate resources.

“My disappointment is that we must continue to provide the OIG oversight to the county and all municipalities at approximately half staff,” Carey announced in a statement released after Wednesday’s ruling.

The county has been stuck with paying for the Office of Inspector General and was the defendant in the court case.

Asked if the county will take the issue to the state Supreme Court, County Attorney Denise Nieman said, “We’re exploring our options.”

The case stretches back to 2009 when a grand jury convened to investigate a series of corruption scandals that rocked the county. The grand jury recommended the creation of an Office of Inspector General.

Voters embraced that recommendation in 2010, approving a referendum calling for the establishment of an Office of Inspector General, which would have authority to look into matters in the county and in the cities. The referendum also said the office would be “funded by the County Commission and all other governmental entities subject to the authority of the Inspector General.”

A majority of voters in the county and a majority of voters in each of the county’s municipalities backed the referendum.

The county established the inspector general’s office the next year and required cities to help pay for it. Fifteen cities sued, arguing that the county’s attempt to force them to pay for the office violates their municipal sovereignty by giving the county control over how city finances are spent.

Palm Beach County Circuit Judge Catherine Brunson sided with the county in 2015, saying that the fact that the office and its funding mechanism was created by a referendum of voters in very city “eliminated any discretion by the municipalities to avoid funding the program.”

But in the ruling written by Judge Carole Taylor, the three-judge appellate panel, said, “Notwithstanding the constitutional principle that ‘[a]ll political power is inherent in the people’ … voters may not waive a municipality’s sovereign immunity through a local referendum.”

The order, to which Judges Alan Forst and Mark Klingensmith concurred, went on to say, “In sum, we hold that the municipalities’ decision whether to budget funds for the OIG program is a discretionary decision protected by sovereign immunity.”

In ruling for the cities, however, the West Palm Beach-based appeals court did say the central question in the case — whether municipal sovereignty bars a county from charging cities to pay for a voter-approved, county-wide inspector general program — is one “of great public importance” that could “impact the legal framework by which municipalities and counties interact throughout the state.”

That’s the court’s way of saying the case would be an appropriate one to be decided by the state Supreme Court.

In an email to county commissioners, Nieman said that while she is disappointed by the ruling, “I’m not completely surprised. What was created in PBC in response to the Grand Jury’s report does not exist anywhere else, and has been a series of challenges from its inception. This is yet another.”

Carey said the ruling is especially troubling because “the majority of our correspondence, complaints, and resultant work is conducted in the municipalities” but the office is working with a staff closer to the 20 originally envisioned “to provide oversight for the county government. With the 2010 voter referendum … our office was approved to be staffed at 40. Then came the lawsuit and the staff was frozen at the current level of 23.”

Asked if cities were ignoring the will of the voters by suing the county instead of paying for the program, Muoio said: “I don’t know that cities are refusing to pay. It can not be imposed on us by the county. That’s the important part.”

Cities would have paid $4.4 million if they had been paying since the office’s establishment, according to figures from the county’s budget office. Another $1.2 million would have been due for fiscal 2017.

Muoio said part of the reason cities have objected is what she described as the office’s lack of financial accountability.

“There’s no oversight on how the money is spent,” she said. “The OIG can hire as many people as they want, and the cities would have no say. There’s no way to be fiscally responsible with this.”

From the county’s perspective, however, the cities are getting a service and not paying for it.

“I hope the issue for a fully funded OIG will be settled sooner than later,” Carey said. “In the mean time, I and my dedicated small staff of professionals will continue to provide the best oversight with what we have to all those under our jurisdiction. This we owe to all the citizens who voted for an independent ‘watchdog’ to guard their taxpayers’ dollars and to promote integrity, efficiency, and effectiveness in government.”

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