Municipal attorney Dennis Wheeler concludes in his report to the Assembly that then-Mayor Mark Begich failed to disclose the severity of the city's potential budget shortfall before the Assembly approved the 2009 budget and long-term labor contracts. We agree.

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Mark Begich

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So, did Begich lie about the city's finances, as some of his political opponents suggest?

In our opinion, his actions fall somewhere between reckless political spin and calculated duplicity.

ALARMS DISMISSED

At best, the Begich administration was considerably more optimistic about the chances for a swift rebound in the national economy -- and the city's investment income -- than the circumstances of fall 2008 justified. Eventually his chief financial officer, Sharon Weddleton, began sounding her own alarms in e-mails in November and December. Begich later described her warnings as worst-case scenarios, rather than a realistic base for budgeting. The mayor and other staff, including Weddleton, emphasized Anchorage's good fortune compared with other cities and minimized the risks of investment losses.

One problem, documented in the Wheeler report, is that the Begich administration gave information to the Assembly in bits and pieces. The Assembly never got a complete, clearly presented overview along with a straightforward warning about just how big the budget shortfall could be.

Naturally, Begich and administration members take a different view. They argue that the Assembly had all the information it needed to make budget and public employee contract decisions in December 2008. Matt Claman, who chaired the Assembly during these debates, says he had enough information to guide his votes.

Economic problems obvious

Certainly, anyone who didn't live in a cave knew the U.S. economy was in a shambles and deteriorating. As we wrote at the time, the Assembly had ample reason to be skeptical of Begich's generous five-year union contract proposals.

Assemblywoman Sheila Selkregg has said she might have made a different decision if she'd had better information from the administration, and changing her vote might have changed the outcome. While that may be true, she had plenty of reason to question the financial implications of those contracts without more information.

After the contracts were approved, bad budget news came fast. Within a month, with Begich gone to the U.S. Senate, the Assembly was forced to confront a $17 million shortfall. The city had to go back to its unions for temporary wage concessions and had to start cutting other services.

By then the revenue picture was clear: Much of Weddleton's "worst-case scenario," the one Begich had dismissed, was reality.

WHERE DOES THIS LEAVE US?

So where does this leave us?

We stand by our earlier judgments:

• Begich should have spelled out in greater detail what the risks were, instead of betting the budget and the union contracts on a best-case outcome (a decision that benefited his Senate campaign). The Wheeler report questioned the administration's competence on this count. Fair question.

• The Assembly shouldn't have rushed into five-year labor agreements with the nation's economy on the brink. The relative financial strength of Anchorage was just that -- strong relative to other cities but not strong enough to carry these contracts and balance the budget.

Whatever the shortcomings of the administration's information, Assembly members knew full well that the economic picture was dicey at best, and all of them were either too passive or generally ineffective in their scrutiny of the administration's proposals. Assembly critics of the mayor actively opposed the contracts for both financial and philosophical reasons, and history has proven them correct.

• Begich's critics appear determined to play this issue politically for all it's worth. They're doing their best to demonize Begich and blame him and the unions for every tough decision the city has to make. They are unlikely to point out that a tanking economy would still have put the city in a bind -- though one not quite as deep -- even if Begich had been more pessimistic.

TIGHTEN UP THE LAW

Wheeler's report recommends that the Assembly spell out precisely what financial reporting, including early warning of potential revenue shortfalls, the mayor must provide. That's a good idea. So is restoring a budget analyst for the Assembly, a position that today's critics of Begich eliminated a few years ago. But, in the end, there is no substitute for Assembly members who ask tough questions and refuse to spend money until they get good answers.

As for the rest, Begich erred. His Assembly allies were too trusting. His Assembly foes have ridden those facts into the ground. Now it's time to move on and produce a responsible 2010 budget.

BOTTOM LINE: Wheeler report confirms what we already knew -- Begich did not alert the Assembly to the prospect of big budget problems.

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