Former interim City Manager Jesús Garza violated Austin's ethics rules when he hired two former City Hall staffers to serve as consultants after the 2023 winter storm, a report has found.
The report, commissioned by the City Auditor, found Laura Huffman and Joe Canales were paid $200 and $190 an hour respectively over their 10 months at City Hall. Garza pushed to hire them, the audit found, skirting city rules requiring a vote from the Austin City Council on contracts over $76,000 a year. The audit found both were effectively full-time assistant city managers.
Canales was paid a total of $268,375; Huffman received $285,800. Both worked with Garza during Watson’s first stint as mayor in the late 1990s.
Garza was appointed interim city manager in February 2023 after the City Council fired Spencer Cronk in the wake of a winter storm that led to widespread power outages. After he was hired, Garza approved contracts for Canales and Huffman through her firm Civic Solutions Partnerships.
The consultants were brought on to tackle the fallout from the 2023 storm and the scuttling of a labor contract with police, but the report found their responsibilities exceeded that initial scope. Previous reporting from KUT and The Austin Chronicle highlighted the influence they asserted, as well as their pay. Canales and Huffman were two of the highest-paid people on the city's books in 2023, though they weren't technically employees.
Through a review of internal communications and interviews with city staffers, the audit found Garza used "special privilege" to secure the pair's contracts. Garza reportedly told city finance "this had been done when he was City Manager in the late 1990s and early 2000s."
Austin's ethics rules require a contract brokered by the city manager to go to the City Council for a vote. Garza avoided that requirement by subcontracting their work. The report found he used a 2017 contract with PFM Financial Advisors to hire Huffman and Canales. That contract applied to debt- and bond-related consulting, however, which is not what they did.
"It appeared that their focus was on issues related to organizational health, human resources, and supporting the executive leadership transition as opposed to technical financial issues described in the scope of work for the City’s contract with PFM," the report said.
Garza left the city earlier this year when T.C. Broadnax took over the role permanently in May.
In a statement to KUT, Garza defended his hiring of Huffman and Canales, saying the city was facing "unprecedented crises" and that the hirings didn't require council approval.
"It was essential to have the right expertise, so in the essence of time, I brought two highly skilled former City of Austin employees to address and solve these issues effectively," he said. "They upended their lives to serve the city and organization they care deeply about, achieving widely recognized and outstanding results that fully justified their compensation."
In a written statement, a City of Austin spokesperson said the city "has been apprised of this allegation ... and will let the process run its course."
The issue is now before the city's Ethics Review Commission.
