City Council candidate John Little

City Council candidate John Little,  formerly served as the Scottsdale City Manager in 2009.

City Council candidate John Little served a brief tenure as Scottsdale’s City Manager over a decade ago and the circumstances of his termination have become fodder for his political opponents.

In critical social media posts and op-eds, detractors and surrogates for his opponents have argued Little’s firing in 2009 should disqualify him in the eyes of voters.

“He was fired because he abused his authority by crafting a retirement incentive plan that was way beyond what the City Council had authorized in cost, and benefited his long-time colleagues in the city executive ranks…This cost the city millions of dollars,” resident Andrea Keck wrote to Progress earlier this year.

Keck, treasurer for City Council candidate Betty Janik’s campaign, was referencing a retirement incentive program Little spearheaded as city manager in early 2009.

But Little, who worked for the city for over 20 years, and his supporters argue that critics are distorting the past, noting Council at the time approved the incentive program and a city audit found it did save money in the long run.

Others in both in the pro- and anti-Little camps said Little’s termination stemmed from the Council majority’s move at the time to have the city’s chief financial officer report directly to Council rather than the city manager – a move Little resisted.

Little and senior city staff developed the retirement incentive program as a way to remove high salaries from the budget, one of dozens of moves to trim over $60 million in response to the Great Recession.

“We came up with I think it was 43 different cost-cutting measures that we would bring forward to the City Council really at a moment’s notice,” Little said.

The program offered retirement-eligible employees a package a week of pay for every year of service if they agreed to retire and included payouts for unused medical and vacation leave time.

Little said the program was a way to cut the city’s budget without eliminating services.

Council approved the program on Jan. 20, 2009, but expressed concerns later in the year when costs ballooned well beyond what staff projected.

Some on Council blamed Little and city staff, alleging they willfully withheld information about the program’s actual costs.

“He was keeping it all pretty much to himself and very little information to us as to what that was going to cost us at a time where we had little in the way of a capacity to somehow fund a major departure,” said Mayor Jim Lane, who was in his first term as mayor at the time.

But, in the Council meeting in January, both Lane and Chief Financial Officer Craig Clifford acknowledged there was no way to project exact costs because the city did not know how many employees would opt in.

Little said the unanticipated cost increase was simply due to the fact that the city was rolling out a new program and more employees than anticipated opted in.

Lane acknowledged it would be impossible to give an exact cost-benefit analysis before Council approved it in January 2009.

“We had never done it before,” Little said. “No city in Arizona had ever done it before. The Arizona State Retirement System had never encountered any city proposing anything like this before.”

The initial cost estimate was based on 50 participants – though twice that number eventually opted for the package.

“There was no way of knowing that ahead of time,” Little said.

At 50 employees, staff projected the program would cost $2.8 million but save $3.8 million annually in payroll beginning the next year.

According to a report from the City Auditor, the retirement incentive program ultimately cost the city $11.5 million.

But the auditor also found that the program’s savings also exceeded expectations, citing $8.7 million in annual payroll savings – meaning the program more than paid for itself after two years.

That hasn’t stopped critics from arguing that under Little’s leadership the city incurred unnecessary expenses.

Attorney Tim LaSota, Lane’s chief of staff at the time, said the program was not needed, because the city could have simply laid off high-wage employees instead of incentivizing them to retire.

Lane said there were concerns about the legal ramifications of laying off those staffers, though.

“We were informed that if we forced people who are ready to retire, or we ask them even… that we could be sued,” Lane said. “So we had to incentivize them; the extent to which we had to incentivize them was a matter of some subjectivity.”

LaSota argued many cities in similar situations won court decisions during the recession affirming their ability to lay off employees due to financial hardship.

Little said the decision not to layoff longtime employees was not just about potential legal consequences.

“Number one, I worked with these people since 1985,” Little said. “I know them; I know their husbands and wives; I know their families; I know their kids….It’s anathema to me to imagine doing that.”

Little said he also thought mass layoffs of longtime staffers would have negatively impacted the city’s reputation as an employer and affect its ability to attract talent in the future.

Still, the Council majority then argued the program was overly generous and it continues to draw criticism for benefiting some of the same high-ranking city employees who helped craft it.

LaSota also pointed to the fact that the program accrued other unnecessary costs.

According to the audit, city staff failed to disclose a payment option to Council that would have reduced the city’s bill from the Arizona State Retirement System by more than $4.8 million.

Little reiterated that Council “unanimously approved it twice; once as a program and once this part of the budget approval process.”

Lane acknowledged – both in 2009 and 2020 – that Council carried the ultimately authority to approve the program.

“The accountability is ours as well as staff’s,” Lane said at a Council meeting in June 2009.

In hindsight, Little admitted he would have liked to do some things differently.

“Yes, the simple answer is yes,” Little said when asked if communication to the Council could have been clearer and, given more time, he could have surveyed staff to make a more accurate projection.

“I think if there had been more data and more time, we probably would’ve had a different menu of opportunities, but still given the magnitude of the problem, we were going to have to come up with a structural solution,” Little said.

City documents and public meetings from the time lend credence to the argument that the retirement program was not the central piece that prompted four of seven council members to vote to fire Little.

At the same Council meeting in June 2009 where some on Council spent two hours grilling Little about the cost overruns of the program, members also discussed whether to terminate Little’s contract but chose to take no action that day.

Council terminated Little’s contract five months later on Nov. 2, 2009 ostensibly over his opposition to combining the city’s CFO position with the City Treasurer.

“So that’s what the vote to terminate his contract as the city manager was about; it wasn’t specifically related to the retirement plan,” said Chip Scutari, a Scottsdale resident and political consultant.

The treasurer move essentially reorganized the city government by removing authority over the city’s chief financial officer from the city manager and placing it with Council.

To this day, no other city in Arizona with a council-manager form of government has followed Scottsdale’s lead in removing the CFO from under the city manager’s authority.

Lane, who came into his first term as mayor on a reform platform, pitched the change as a way to increase financial transparency.

“It’s been beneficial for the council and for the citizens,” Lane said. “And, frankly, you could be just happy with a situation whereas the city manager protects you from things so you have plausible deniability, because you’re never given the information, you sort of lack accountability.”

Lane added, “So these also made us more accountable and made us need to be more transparent.”

By all accounts, Little resisted the change, with some council members arguing he actively undermined the process.

Little said he saw the as a violation of the City Charter at the time, which endowed limited powers to the treasurer until a charter amendment was approved by voters in 2010.

Little argued that the Treasurer was limited to handling the cities revenues and investments.

Little went as far as saying Council should have fired him if it lost trust in him but should not rework the city’s system of government.

“The solution is not to change the system; The solution is to change the players,” Little said. “And so I asked them to, to respect my interpretation, that asking you to hire a treasure, which is perfectly fine, but to make the treasurer the chief financial officer was a step too far.”

But before that charter amendment was in place, there was a real debate at the city over both the legality and efficacy of removing financial authority from the city manager.

In an email to Council, City Attorney Sherry Scott, then an assistant city attorney, wrote that a job description proposed by the majority that would have shifted powers to the treasurer “appears to be inconstant with the responsibilities the City Charter currently assigns to the City Manager.”

Scott wrote that at the time many of the financial duties the Council sought to assign to the new treasurer were actually assigned to the city manager, including preparing and administering the budget.

But Lane and others saw Little’s refusal to go along with the move as insubordination.

“You can’t run a city where the city manager believes that he can pick and choose which Council decisions he is going to implement,” then-Councilman Bob Littlefield said in 2009. “It has nothing to do with anything else; that’s the bottom line.”

Other observers praised Little for his stand.

“To see a city manager say to council ‘no, I’m not going to go along with what you want to do, because it doesn’t jive with the city charter’ – my hats off to him for being an honest, transparent public servant,” Scutari said.

Former Scottsdale City Manager Dick Bowers, who served in the role for about 10 years, spoke in favor of Little at the 2009 meeting, stating he too “would probably fall victim in this situation” had the Council proposed a similar change during his tenure. 

“We have a code of ethics that says we will not support anything that is ethically, morally or legally inappropriate,” Bowers said. “We will lose our job for the sake of principal.”

There was a split on Council as well, with Lane, Littlefield Lisa Borowsky and Tony Nelssen voting to fire Little. Suzanne Klapp, Wayne Ecton and Ron McCullough all voted to reject the termination.

“I feel rage; I feel shame; and I feel sadness that we’ve come to this action today,” Klapp said at the 2009 meeting. “And I think the toxic environment that was alluded to will unfortunately become explosive due to this situation.”

“I’m here to congratulate John for having the guts to stand up when he is absolutely, positively right on this issue of this nonsensical, torturing of the Charter to come up with this political treasurer,” Bowers added.

Not everyone bought that explanation, though.

“It wasn’t that he stood on principle,” LaSota said. “It was that he didn’t want to give up power and council had seen what happened when they gave him the power to control all the financial information.”

Though, at the time, the Council majority argued the treasurer move did not violate the Charter, it did send seven charter amendments to voters in 2010, including one that declared “the city treasurer shall be the chief financial officer of the city.”

The change was no less contentious at the ballot box, where it passed with 52 percent of the vote.