Nobody earns a higher salary in Tacoma city government than the director of Tacoma Public Utilities.
Bill Gaines’ annual take, more than $319,000, has become a flashpoint with several City Council and community members who say the council needs more oversight of the utility director’s position.
The Tacoma Public Utilities board is solely responsible for hiring the director who oversees the city’s water, power, rail and cable utilities, which collectively have a $1 billion biennial budget. The board also reviews the director’s performance every year and votes on his employment contracts.
The elected City Council members appoint the TPU board but that’s where their say ends.
That could change in November if voters decide to change the city’s charter, essentially the city constitution.
Supporters of the charter amendment include council members and community activists. Some say the city’s taxpayer-owned utility could use more transparency in its operations and leadership, and that the city’s highest-paid employee should be accountable to elected leaders.
But the measure has left opponents asking: “Why now?”
The city’s appointed charter review committee recommended in May that the council seek only confirmation authority of the director’s initial hiring. That proposal had the support of a former and a current member of the utility board as well as a number of elected officials, according to a report from the charter committee.
But members of the business community as well as the current TPU board and former TPU officials have lined up against the charter amendment as it emerged from the council. Some of those critics say letting an elected council have the last word on the utility director’s continued employment will politicize the office.
Tom Pierson, head of the Tacoma-Pierce County Chamber which is opposed to Amendment 6, said the elected city council is not the expert on TPU’s complex operations — the five appointed members of the TPU board are. Gaines is one of the chamber’s 39 board members.
“What is the problem, and is this going to fix the problem? I don’t know what the problem is,” Pierson said of the charter amendment. “… TPU looks like a pretty well-run organization. Does (Gaines) communicate that to the council? I don’t know what the disconnect is.”
Disagreements between city hall and TPU are nothing new. They have tangled several times over the proper use of utility funds. In 2012, the city had to reimburse TPU $1.3 million for misusing restricted reserve funds to help balance the city’s general fund budget.
Last year, Gaines spoke up when the city manager said ratepayers would not see increases from a proposed tax on utility earnings to pay for street repairs. In an email to the city manager, Gaines said the utility would not be “part of a scheme that attempts to mislead.” That email was disclosed in response to a public records request.
Pierson recently wondered whether the council had lingering resentment over Gaines’ role: “Is (the charter amendment) because he didn’t agree with them on the utility tax?”
Mayor Marilyn Strickland said no.
“We love the work they do,” she said of TPU. “However, there’s a level of accountability and transparency that people in the 21st century expect out of the government.”
For instance, she was unaware the TPU board signed a five-year employment contract with Gaines last year that provides an annual $50,000 contribution to a retirement account in addition to his regular salary. She only found out after the benefit was mentioned in a year-end compensation and benefits report.
If voters approve the charter change, the council would have the final say in the director’s employment, Strickland said, “in the same way we have final say on a rate increase or the budget. It’s in no way an attempt to take over the operations of the utility.”
Strickland said the TPU director also could work more closely with council on citywide initiatives.
“The owners of the utility are the residents of Tacoma, and we as a city have a vision and a mission, and we want to make sure this asset we own is helping fulfill those things,” Strickland said.
But Pierson said the council and the director can work together now without a charter mandate.
“If they think the director isn’t doing well, really what they are saying is the board of directors isn’t managing the director very well,” Pierson said.
Former TPU director Mark Crisson said he feared future TPU directors could cave under pressure from elected council members, who could later decide if the director had a future at the city. Crisson, who now lives in California, led the utility from 1993 to 2007.
Tacoma’s current environment allows the director to make tough decisions relatively free of political repercussions, he said.
Crisson contrasted Tacoma’s utility governance with Seattle’s, which he called “a very political environment.”
While Tacoma has a separate utility board, the Seattle City Council is the governing board for Seattle City Light. The Seattle council also has an up or down vote on the hiring of the mayor’s choice of director for Seattle City Light. The director faces reconfirmation every four years, but only the mayor can fire the director.
Seattle City Councilman Mike O’Brien said his city’s system works.
“Like Tacoma, we have some of the cheapest power in the country. We have high reliability and high customer satisfaction,” he said
O’Brien, the former chairman of the Seattle council’s energy committee, said Seattle’s system “means there’s transparency and a public debate about these decisions, and that to me is good.”
But he often hears from people who say Seattle should be more like Tacoma. O’Brien said he can see both sides of the argument.
“The counterargument is, running a utility is a complex business. The utility director should have expertise. The city council members don’t have expertise and the city should have a separate board,” he said.
Under the Tacoma charter amendment, a council decision to not reconfirm the utility director would not necessarily mean the director is fired, City Attorney Elizabeth Pauli said.
“Depending on what the issue was that is causing the council to have concerns about reconfirmation, the results might be an addressing of those issues,” she said. “That is the far more likely result, but it depends on what the issue is.”
Councilwoman Victoria Woodards said the charter change would not allow the council to meddle in TPU’s day-to-day operations. It would emphasize the director’s “responsibility to the citizens of Tacoma and the people they elect.”
“The highest-paid city employee of the city should be confirmed by the council,” Woodards said. “I don’t think there’s anything wrong with that.”
Former mayor Harold Moss, who co-authored a statement against Amendment 6 in the voters pamphlet, said change is unneeded.
“There’s nothing that has occurred that compels us to make these kinds of drastic and destructive changes,” Moss said. “We haven’t had a bad director of utilities, period. … What’s the rationale for the City Council being involved in the selection?”
City Councilman Ryan Mello said the TPU director should face the same scrutiny as the city manager, whom the council reviews annually, part of which is done in public session.
The council also votes on whether to retain the city manager every other year.
The charter change “allows the scrutiny of the highest paid public employee in Tacoma,” Mello said. “This person makes double the salary of the governor of the state of Washington.”
TPU officials defend their high salaries as a necessary recruitment tool because they compete with both the private and public sectors for talent. Salary and incentive packages of executives at investor-owned power companies around the region routinely top $1 million.
Mello said he’s never seen of one of Gaines’ reviews. Gaines said no one on the City Council has ever asked for a copy.
“In 60 years there’s never been a director who’s been asked to resign,” Gaines said recently. “… I don’t know what we’re trying to solve by changing it.”
Edwina Magrum, a co-author of a statement on the voter’s pamphlet in favor of the amendment, said she’s happy with the service her East Side home gets from the city-owned utility. But she said someone who earns as much money as the utility director should be overseen by elected officials.
“If something goes wrong in the city, we can look at the City Council and say ‘Are you giving credible oversight to the people that run the city?’ I can’t do that with TPU,” Magrum said.
Crisson said he thinks the city would have a tough time recruiting people to Tacoma Public Utilities with the proposed charter change.
“Would you pick up stakes and move to Tacoma when the people who are hiring you don’t have the final say on your contract?” Crisson said. “The competition for top management positions is getting increasingly intense.”
“It’s an exceptionally generous compensation package,” Mello said. “I think there would be plenty of viable candidates long into the future.”