When contractors finish a job, they expect to get paid. But vendor payment is a perennial issue for Baltimore City, where the most recent finance department audit found 5,253 outstanding invoices — nearly a third of which were overdue by more than a month.
This November, Baltimore voters will weigh in on a ballot measure that the mayor and comptroller say will stabilize the vendor payment process. A “yes” vote on Question J would move the oversight of about 10,400 vendor invoices each month out of the finance department and to the Office of the Comptroller.
If passed, the measure would create a department of accounts payable under the comptroller. The finance department currently operates the Bureau of Accounting & Payroll Services, which oversees vendor payments, supports agencies with payment matters, and processes employee paychecks and expenses. Employees in the bureau’s accounts payable division would shift to the new office, while payroll responsibilities would remain within the mayor’s office.
City ballot measures tend to pass overwhelmingly: Baltimore voters approved all referendums in 2016 and 2020.
Comptroller Bill Henry, who was elected to the office in 2020 and replaced longtime Comptroller Joan Pratt, said the charter amendment was conceived after he approached Mayor Brandon Scott to offer to take over some of the administration’s responsibilities.
“We said, ‘You’ve got 99 problems. We’ve got four. How can we help?’ And they said, ‘How would you feel about taking accounts payable?’” Henry recalled during an interview at his desk, which is home to a sign that says, “TRUST ME, I KNOW WHAT I’M DOING.”
Henry said he also asked the administration, to no avail, to consolidate the Department of Real Estate, which is housed under the comptroller, and the acquisition and disposition team, which buys and sells property, at the mayor-controlled Department of Housing and Community Development.
Scott said moving the oversight to Henry’s office would both modernize City Hall and spread the balance of power. Henry, who describes his position as Baltimore’s financial watchdog, already oversees audits. The mayor said adding accounts payable to his portfolio would better the city.
“I know it sounds crazy for a mayor to say that in order for the city to be better, the mayor has to give up some power,” Scott said. “But one thing that we all can agree is that city of Baltimore’s government has been outdated for a long time.”
The comptroller said his office will be able to devote more time to vendor payments than the administration, which is responsible for virtually every aspect of city operations. By next year, Henry’s office is due to finish the bulk of its modernization efforts for both the Board of Estimates contracting process and the digitization of bank records, and the city will have transferred more of its operations from paper records to Workday financial management and HR software.
“That will put us in a great position to apply the lessons we’ve learned over the first half of the term,” Henry said.
He noted that consequences from vendor payment delays range from hurting smaller businesses without the cash reserves to larger businesses refusing to work for the city, reducing the available pool of vendors and possibly raising the cost of contracts.
“We’ve had anecdotal complaints of businesses that have had to lay off employees because it took months or a year or more to get what the city owed them, and they couldn’t afford to keep paying the people who had done that work that the city still hadn’t paid for yet,” Henry said.
He posits the backlog may be connected to an insufficient number of staff. The Bureau of Accounting & Payroll Services’ accounts payable division currently has 10 full-time permanent positions, as well as one position funded from the city’s $641 million portion of federal coronavirus relief money.
Over the past year, the accounting and payroll office has also had between eight and 10 temporary workers to help assist with overflow. Should Question J pass, Henry said he will try to convert the temporary positions into permanent ones, as well as to standardize the invoicing process.
The most recent audit of the finance department attributed the backlog to insufficient funds, expired vendor contracts, closed contracts and unauthorized purchases. It also noted that the agency does not track the timeliness of the vendor process.
Pointing to an August report from the Office of the Inspector General, which found that a series of cascading errors by finance department and city vendors led the Bureau of Revenue Collections to inadvertently send the wrong entity a check for $2 million, Henry said his new internal protocols would include having an employee double-check that any checks above a certain amount of money are correct.
The election is Nov. 8.