Birmingham City Finance Director Steve Sayler has resigned, Interim Mayor Carole Smitherman said Monday afternoon. The announcement came at the Administration, Budget and Finance Committee meeting. About an hour before the meeting, city officials were seen helping Sayler carry personal items to his vehicle.

Smitherman told council members she would give them additional information Tuesday morning. The city is conducting a review of the city’s finances, she said.
Speaking to reporters after the announcement, Smitherman said she felt both the council and the mayor’s office had been misled by Sayler about the budget.

Birmingham (and former Jefferson County) Finance Director Steve Sayler

Sayler is the first and so-far only mayoral appointee to leave or be removed since former Mayor Larry Langford was convicted Oct. 28 on federal corruption charges.

Before being named Birmingham Finance director, Sayler served as finance director for Jefferson County. There, he presided over the accumulation of more than $3 billion of sewer debt, the conversion of the county’s bonds and warrants to variable rate, and the experimentation with complex derivatives known as interest rate swaps.

That debt structure left the county extremely vulnerable to market anomalies. When the county’s bond insurers were downgraded by ratings agencies in early 2008, it set off a chain reaction, leading to interest rates greater than 10 percent the county could not pay. Since then, the county has entered into a series of forbearance agreements with its creditors, and staved off bankruptcy by fending off bond insurers in federal court.

During Langford’s federal corruption trial, Sayler took the stand as one of the government’s first witnesses. Sayler told jurors that Langford had told him Montgomery investment banker Bill Blount was one of his preferred bankers.

However, Sayler said he was left out of the loop on some deals, specifically side-deals the swap counter parties had with Blount. Those deals were disclosed in “side letters” from the banks sent directly to Langford. The side letters were not included with the typical bond documentation and hence beyond the public’s purview.

At the City of Birmingham, Sayler played things close to the vest, often keeping city financial information away from the Birmingham City Council.

Earlier this year, the council and the mayor’s office found itself in a budget-season standoff — Langford and Sayler on one side, and Smitherman and the council on the other.

Sayler and the mayor’s office claimed the city would finish the 2008 fiscal year with a $13 million budget surplus, even though the city’s accounting system showed the city running a $28 million deficit. The mayor’s office firmly denied the deficit, and Smitherman countered by equating the mayor’s proposed budget with believing in unicorns.

After becoming interim mayor on Thursday, Smitherman said he first act would be a comprehensive review of the city’s financial condition. That review would specifically examine the city’s fund balance — the amount of money the city has in its savings.