In her first mayoral report on Tuesday, Acting Mayor Carole Smitherman told the Birmingham City Council that the current city budget, prepared and passed under former mayor Larry Langford, underfunds essential city services by $20 million, and that the city’s finance office knew of the shortfall when the budget passed. Steve Sayler, Birmingham’s director of finance under Langford, resigned on Monday.

Acting Birmingham Mayor Carole Smitherman

“Yes, you heard me correctly, the budget we passed in June failed to fund $20 million in services that must be performed,” Smitherman told the council. She also said that since 2000, the city has dipped into its reserves to meet expenses. “For a decade, the city has been living out of its savings account,” Smitherman said.

Smitherman emphasized that the city is in good financial condition, and said that the city’s reserves, including the fund balance and the Birmingham Fund, total $160 million. In addition, the city has $41 million in a fund for the city’s debt service.

Smitherman also said that a task force has been assembled to examine the city’s current financial state and analyze the budget process. That task for will include local business leaders John McMahon, Hobby Presley, David Corbin and Doug Turner, along with the Birmingham Business Alliance. Smitherman has requested that the task force prepare an initial report by next week.

During a press conference in Langford’s former office, the acting mayor was asked if Sayler told Langford of the budget shortfall. According to Sayler, members of the former mayor’s staff were told of the $20 million budget shortfalls, though Smitherman said the staff denies they were told. When asked who Sayler allegedly told about the budget problems, Smitherman said Sayler indicated that Langford Chief of Staff Deborah Vance-Bowie, whom Smitherman retained, was told.

Vance-Bowie, who was present at the press conference, said that in the weeks leading up to Langford’s trial, items listed on the budget report drew their funding from fund balance.

“The problem with that is that every week the mayor’s office is put in the position of presenting to council that we have to keep going into fund balance,” Vance-Bowie said. “So I started asking questions.”

According to Vance-Bowie, she requested a full report on underfunded items in the budget from the finance department. She received that report on the Thursday before Langford’s trial began, and it said that $20 million items were not funded.

Asked if this was surprising to her, Vance-Bowie said, “That would be an understatement. It was shocking.”

“I knew some things,” Vance-Bowie said. “You know, Steve [Sayler] had mentioned to us, by us I mean the mayor’s staff, that there were some—hey I’m going to take everything back to FY 08. If I do that, keep in mind that there might be a few things here or there that were not funded. So I expected a few things.”

She was not prepared for such a large figure, she said. When asked if Langford seem surprised when he was informed of the budget shortfall, Vance-Bowie said no.

“I’d be speculating, but I’d say [Langford] wasn’t surprised because he had his own private frustrations leading up to that point, and they were mostly communication issues,” Vance-Bowie said. “I think he was surprised at the number, yes, but I don’t think he was surprised that there was a discrepancy.”

Smitherman reiterated that the city is on sound financial footing, and that transparency about the city’s finances is a priority for her.

“As this information is revealed to me, I’m going to immediately put it into the public realm,” Smitherman said. “Good or bad, it is what it is. We have a problem, it’s just been discovered and we are ready to proceed, whatever it takes.”