Philip R. Michael, who served as New York City's budget director during turbulent fiscal times, resigned on Thursday at Mayor David N. Dinkins' request following a report criticizing his handling of the recommendation for a privatization contract.
Michael, who was appointed to the post in January 1990 after Dinkins took office, tendered his hand written resignation after a long discussion in a basement office at City Hall with the mayor, who is in the middle of a heated re-election race.
The mayor concluded that as a result of the report's findings, Michael would have had trouble carrying out his duties as budget director. In a letter to Michael, Dinkins thanked his budget director "for your faithful and distinguished service. "
Michael. while gracefully following the mayor's direction, contended in press reports that he had done nothing wrong, and that he had sought the contract because the company said the city would gain about $100 million in revenues a year.
Michael could not be reached for comment.
City Hall observers said if Michael had not resigned, he could have become a political liability in the Dinkins' campaign against Republican-Liberal opponent Rudolph W. Giuliani. The contract in question had shades of a city parking scandal that rocked City Hall in the early 1980s and saw a number of public officials indicted, one of whom later committed suicide.
New York City Finance Director Carol O'Cleireacain, appointed to the post in 1990, was named to succeed Michael. Kathleen Grimm, first deputy commissioner of the department of finance, has agreed to serve as acting finance commissioner.
A report released by the city's Department of Investigation on Wednesday heavily criticized Michael's strong recommendation of a company, Lockheed Management Information Services Inc., for a $150 million to $200 million five-year contract to handle almost all the functions of city's Parking Violations Bureau.
The report also found fault with the way Lockheed had access to city officials.
Lockheed acquired Datacom Systems Corp. in the early 1980s. Datacom was at the center of the earlier parking scandal. In 1986, Datacom's president admitted in Federal court that the company had paid bribes to get city contracts. Datacom was barred from obtaining further city contracts.
The DOI report, issued after a five-month investigation, found that Michael, while committing no criminal activities, had showed favoritism to Lockeheed. Mayor Dinkins terminated the contract on Wednesday night.
The report, which also criticized other senior city officials, including First Deputy Mayor Norman Steisel, also noted that Michael had recommended the same company for a contract with the Department of Transportation.
For Michael, 53, Wednesday signaled the end of his public service to New York City. The native Californian, born in San Francisco, has served the city almost continuously from 1972. He stepped into the private sector briefly, joining a securities firm.
Michael started his public career with the city in 1972, when he moved to New York City to become Deputy Commissioner of Trials in the police department. He later worked in the Department of Investigation and served as Commissioner of Finance.
He served one year as executive director of the New York State Financial Control Board, the state-created fiscal watchdog of the city, before joining the Dinkins administration as budget director.
During his tenure as budget director, Michael was faced with consecutive billion dollar budget gaps. While the Dinkins' administration has been roundly criticized for the way it has not addressed long-term structural budget problems, it has received credit from fiscal watch-dogs and monitors for dealing with each fiscal crisis.
While the city, socked with a painful recession, has seen its rating lowered by Moody's Investors Service to Baal since Dinkins took office, further downgradings have been thwarted by quick action on budget problems. Standard & Poor's Corp., which rates the city's debt A-minus, took the city off negative Creditwatch, but still assigns it a negative outlook.
Much of the credit for keeping the city's ratings and maintaining budget balance has gone to the Office of Management and Budget.
