Months of simmering quarrels about what the Anchorage Assembly knew, didn't know or should have known when it approved long-term labor contracts late last year broke into the open this week in a flurry of accusations and counter-accusations between some members and former Mayor Mark Begich, now a U.S. senator.

At issue are five-year union contracts that cover wages and workplace rules for hundreds of the city's employees. Mayor Dan Sullivan and some Assembly members say the contracts are complicating attempts to balance future budgets in the wake of the national recession.

Here's the latest:

• In e-mails sent to news media late Tuesday night, Eagle River Assemblyman Bill Starr released a series of e-mails among top Begich administration officials he obtained through a public records request. Starr said the e-mails demonstrate the Assembly was deliberately misled "on the fiscal condition of the city" and whether the city would have enough money to pay for the new contracts.

• On Wednesday morning an opinion by a private attorney hired by the Assembly concluded that two of the contracts are invalid because Begich's chief financial officer didn't certify that funds to cover the five-year agreements had been appropriated. Some members, and the financial officer in question, have said that can never happen because the city appropriates money for its budgets annually, not years in advance.

• Begich soon responded with a pair of written statements. One calls Starr's allegations "outrageous, untrue and entirely unsupported by the facts," and accuses Starr of spinning the labor issues for political gain. The second Begich statement addresses the attorney's opinion and insists that the labor agreements were fully vetted by his legal and labor relations departments. "Every labor contract that my administration submitted to the Assembly for approval was done so with complete information and fully in compliance with the law ..."

• At an afternoon news conference on other issues, Mayor Dan Sullivan said city attorney Dennis Wheeler will review the opinion by private attorney Joseph Levesque and recommend what, if anything, the city should do. Sullivan said city officials will help dig out additional information Levesque said might be important.

• Later, one of the unions mentioned in the attorney's opinion, the Anchorage Police Department Employees Association, issued a statement flatly rejecting the notion that its contract is invalid for any reason. "Our union reached an agreement with the Assembly and the Municipality of Anchorage in good faith, and we've been providing the services described in that contract and upholding our end of the deal," APDEA President Derek Hsieh said. The second union, the International Brotherhood of Electrical Workers Local 1547, is expected to release a statement today.

All of this will land before the Assembly at its next meeting Tuesday night.

Assembly Chairwoman Debbie Ossiander said she's not sure what will happen then.

"At this point, we've got some unanswered questions," Ossiander said. "Certainly some response is merited from the Sullivan administration, since they're the entity (charged) with enforcing contracts.

"I think the municipal attorney should weigh in at the very least."

If the city attorney agrees the contracts are legally invalid, Sullivan said, "I would think we could certainly ask a higher power to maybe make a decision on it. That's the sort of thing that would invariably go to court."

Short of going to court -- usually a long and expensive proposition -- another option might be to ask the unions to reopen the contracts, said Sullivan, who has criticized the labor agreements as unwise and too costly since they were passed in November and December.

"Maybe you sit down and start negotiating again," he said. "That would be a possibility."

In any case, the mayor said, it should have been no surprise to anyone that Anchorage was entering perilous financial straits when the contracts were on the table.

"It was no secret that we had just gone into a worldwide recession," he said. "It was no secret that the (city's) bed tax was going to be declining ... and certainly the city's trust fund was hit just like every other trust fund with the crash of the stock market. So if there was ever a time for hold-the-line contracts, December of 2008 was it."

In his e-mail to media, Starr said he plans to ask Ossiander to grant him subpoena powers to investigate further, and that he may try to rescind contracts with the police and fire unions, among others.

Starr and Assemblyman Dan Coffey said the city's charter and laws require any mayor to disclose revenue shortfalls to the Assembly when they become apparent. In his statements, Begich insists he did so.

Among the Begich administration e-mails released by Starr Tuesday is one dated Dec. 9, describing financial risk factors, in which then-chief financial officer Sharon Weddleton tells Begich that the city's "November investment returns were horrible," and that some departments "have started blowing their budgets several weeks earlier in the year than normal." Weddleton went on to ask for permission to direct department heads to institute "an immediate hiring freeze" and halt discretionary spending.

Repeated phone messages left by the Daily News for both Starr and Weddleton were not returned.

Begich fired back in a statement issued at midday Wednesday. He accused Starr and other contract critics of "trying to use Anchorage's budget challenges for political advantage or political assault."

He said Weddleton and other administration officials "took numerous steps to ready our city for the potential impact of the recession" and accuses Star of twisting some of the information in the e-mails he obtained.

"I am pleased to help answer questions city officials may have about budget actions under my tenure as mayor, within the constraints of my duties as a United States Senator," Begich says in the statement.

"But I will not tolerate a character assault on me or members of my administration ..."

Assembly members Elvi Gray-Jackson and Mike Gutierrez, who supported the labor contracts, said Starr is just revisiting disputes that have been examined and refuted before.

"That's just irresponsible," Gutierrez said. "We've been over and over and over that over the last six months."

Both also questioned the selection of Levesque to study the labor agreements. The attorney notes in his submission to Ossiander that his firm represents municipalities throughout the state but does not concentrate on employment or labor union law.

"My colleagues hired an attorney who said right up front he's not a labor attorney ... who's not even an expert in the field," Gray-Jackson said.

Ossiander, the Assembly's chair, said she specifically looked for such a lawyer.

"I didn't want an attorney who had worked for or against unions," she said. "I wanted somebody familiar with municipal law."

Budget balanced ... for now Anchorage has enough money to pay its bills for the rest of this year, Mayor Dan Sullivan said Wednesday. Next year is another story. Sullivan has projected a deficit of about $20 million for 2010. Sullivan said Wednesday that a combination of modest revenue improvements and better-than-expected savings appears to have closed a budget deficit he had once estimated at about $9 million.

Last month, Sullivan laid off 27 workers and left another 56 positions vacant. He said then he needed to find another $2.5 million or so in reductions.

"Finally, I think we're able to present that we've gotten to that magic number, and we're prepared at this stage to say that the 2009 budget, at least as of today, is balanced," the mayor said.

Budget director Cheryl Frasca said the Anchorage School District's decision to contribute $400,000 to pay for police resource officers in schools helped. The city's investment earnings have improved somewhat, too, and some of the reductions Sullivan made last month turned out to carry more punch than at first thought, she said.

Bottom line, Frasca and Sullivan said, is that the city's budget now looks to have about a $235,000 surplus.

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