FINANCE COMMITTEE MEETING MAY 6, 2014

Committee Chair Ms. Vaughn opened the meeting at approximately ­­­6:00 p.m. Members of the Committee in attendance were Ms. Vaughn, Ms. DePledge and Mr. Licht. Present from Council were Mr. Hoefle, Mr. Evers and Council President D’Ambrosio. Mrs. Quinn-Hopkins was absent and excused.

In attendance from the Administration were Mayor Morley, Finance Director Slocum and Service Director Rubertino.

Also in attendance were members of the public.  

RE-APPROPRIATIONS

Ms. Vaughn: Mr. Slocum?

Mr. Slocum: The first part of the re-appropriations is for increases in salaries for three people – the Mayor’s secretary, the Council Clerk and the Tax Administrator. Section 155 employees are never subject to any raise. There is no provision within 155 to raise their pay based on years and experience. For the Mayor’s secretary – the top pay rate for that position is almost $42,000 and she has been at $33,259 since the day she was hired. We would like to move her to $35,000. We would like to move the Clerk of Council to full for her position which will take her from $40,600 to $42,000 and we would like to increase the Tax Administrator by $5,000. I know there was concern in doing this due to how we are doing budget-wise with the taxes. I have provided you with the financial report for the month of April. The only thing I will point out is that budget-wise our year to date variance is within $3,000 of budget. We are meeting budget right now and with that there is no reason to change any of the revenue numbers at this point. We should be able to make it. That is why you will see under personal services for the Mayor’s office, the Clerk and the City Income Tax it is for actually increasing the wages. The other two are for the Medicare tax and the other is for PERS. The Recreation/Parks is a little bit different. We have received a ruling from Mr. Klammer that we can use Fund #620 “Capital Recreational Improvements.” We were going to spend $12,000 out of the General Fund for a fence at Jakse Park. That is a capital recreation item so we are looking to take that $12,000 out of the Recreation/Parks and move it to Fund #620. In its place we are looking to be able to hire two summer people at $10 per hour for 40 hours for 12 weeks. We would be able to cover our costs there. The net effect to the General Fund for everything is an increase in expenditures of about $9,500 which we are still projecting to be in the black. We are looking at a budget ending balance of about $43,000. We are not going too close to zero at this point.

Ms. Vaughn: The original reason we were not comfortable with some of the appropriations was because of the Union negotiations. Now, we have settled several of the contracts so it will not be an issue with them but do you feel it will be an issue with the remaining contracts?

Mr. Slocum: I do not believe so. Let’s talk about secretaries.

Ms. Vaughn: I have no problem with any of it. I know how we feel but how will they feel?

Mr. Slocum: When you take people like the Clerk and the Mayor’ secretary if they were in a Union they would be making more than what they are today because they have a mechanism to move up after so many years to take it to maximum. Their salaries will not be out of line whatsoever with an equivalent Union position. We do not believe they will have any effect. When you look at the Tax Administrator who is a Department Manager – he is making less than any policeman except for the first year policeman who is on probation and less than any fireman. I am worried about keeping him and am not convinced today that even with the $5,000 that we will keep him. God forbid he leaves and we have to replace him because it will not be for what we are paying him and not even for what we are going to pay him after this raise. I am not worried about defending this in the event the Union would look to make it a point in negotiations and in the event we went to fact-finding or conciliation.

Ms. Vaughn: That was raised before. I just wanted to clear the table.

Mayor Morley: I do not think it is an issue. My secretary is the second lowest paid person in the City.

Ms. Vaughn: I realize that.

Mr. D’Ambrosio: Those are the same concerns I had. As far as the $12,000 for the recreation for the fence – did we get some preliminary prices? Will it go around the whole facility?

Mayor Morley: Yes. We have a P.O. – we were just waiting. It will be by the path at Waverly. If you look at the fence you will know why we are replacing it.

 

Mr. Rubertino: It is about 160-170 feet on each side.

Mayor Morley: It is top heavy and hanging over into people’s yards.

Mr. D’Ambrosio: The money has been tied up for so long. I think it is good you actually found a way we can use it and put it back into the City instead of it sitting there. I think this is a good way to use the funds.

Mr. Hoefle: In regards to the increase for the Tax Administrator. Where is he in the range?

Mr. Slocum: The top we have for his range is $52,000. This will take him to just over $50,000. He was at $45,000 and when we made that adjustment when we did away with the pickup he got a .08 increase in that. Our ranges – we have not tried to adjust our ranges to see where they are at because I guarantee you that range is low. We are not looking to try to get everyone in 155. When you are looking at the managers you are either going to have to pay or do without managers.

Mr. D’Ambrosio: Doesn’t the Tax Department bring in 60%-65% of the City’s funds.

Mr. Slocum: That is pretty accurate.

Ms. Vaughn: Committee?

Ms. DePledge: I am okay with everything.

Mr. Licht: Yes.

Ms. Vaughn: The first part of the re-appropriations is satisfactory. Now we will discuss the Street Construction Maintenance and Repair Fund.

Mr. Slocum: We have money in the Street Construction fund. Right now we are budgeting that we will end the year with $281,000. We are looking to do two things - first of all putting $100,000 aside for additional road repairs that we are not paying out of the road levy fund. Instead of half a million out of the road levy fund this will give us an additional $100,000. The other $10,000 is to allow Mr. Rubertino to have overtime for his people working on the roads so we can get more done and work a ten hour day versus an eight hour day. I know it has been Mr. Rubertino’s opinion and the Mayor concurs that we will get a lot for that extra two hours. We are not actually projecting to spend the entire $10,000 but I wanted to have some buffer. The other thing we are changing is with the snow removal overtime. We had spent $41,000 year to date and had only appropriated $50,000 total. So, I know we will need another $20,000 for the fall. As we are looking at this fund now let’s do it now and we should be fine. We will not have any hits to this appropriation until November or December.

Mayor Morley: The overtime we are talking about is two weeks at 10 hour days. We have been on Willowick Drive for about a month and have been doing the other streets upon complaints. We have been stuck over there and this will help get that done. The other $100,000 – we are talking about going from $500,000 to $600,000. We will send out the quotes which will add up to $300,000 to do the main concrete intersections. Mr. Rubertino thinks we will still have $300,000 so we will be able to do some of the asphalt streets and some other repairs. In July we should know from Mr. Gwydir if we have any other Issue 2 money for the other parts of Willowick Drive. He feels very comfortable that we will be able to get a lot of things done between us doing concrete repair with the remainder of the $300,000 after the contractor bids. If a contractor does it the work will be done quickly instead of us trying to do the work and not being able to do anything else.

Mr. D’Ambrosio: Did the hot box come in?

Mr. Rubertino: It is here. The gentleman is going to come out to go over it with us and spend a day with us. The reason it is not out yet is because we are finding that the size of the repairs on Willowick Drive outwork the box? We are working out of a dump truck. That is the point in trying to get the extra time with these guys. It is just two weeks – two extra hours a day for six guys. The intersections on Willowick are massive. Once we get by that I am confident the hot box will put us way ahead fast and we will be able to concentrate on in-house concrete and in-house asphalt.

Mayor Morley: Go look at East 331st Street and Willowick Drive and see the big portion they dug out.

Mr. Rubertino: There is rebar coming out of everything. We have had four flat tires on the backhoes trying to work in that area. That is how bad it really is. The patch that is going in now is basically a permanent patch and we should be fine there. Hopefully, Mr. Gwydir will come up with the money to do the mass repair on the road. This gives us money in-house to be able to tackle the good portion of Glen in-house. We are good at straight away. It is the intersections – it is time. The contractors can come in and be out of here. We can handle the straight away which we can dig out and get replaced at $100 per yard instead of $350 per yard.

Ms. Vaughn: The only point I want to make is – the timing is right. I do not want this to go on three readings because it is cooler now. If we push it back it will get hot and our efficiency is going to drop. How does the rest of the Committee feel?

Mr. D’Ambrosio: The money is going into the City – 100%.

Mr. Licht: This is what the residents have been asking for – fixing the roads is the biggest concern.

Ms. DePledge: Yes.

Ms. Vaughn: I just want to make sure we are all on the same page.

Mr. Rubertino: When we first went out there the Mayor was getting 10 calls a day – as I am sure you were. Now, they can actually see that every day we are on that road and I am not getting any complaints. We have potholes all over and are trying to address them systematically as they come in.

Mr. Hoefle: Will we have enough left to finish the bike path? I remember last year they said they stopped and it was not finished.

Mr. Rubertino: I think the finished it to the satisfaction of the person who was here at the time. Whether or not we can drive a truck on it in the winter to plow may be questionable – in some areas. But, to my knowledge it is completed unless you have an issue.

Mr. Hoefle: I just had a resident ask me when it was going to be finished. I thought it was to be scheduled for this summer again.

Mr. D’Ambrosio: They did not repave the whole thing.

Mr. Rubertino: That was not their intention.

Mr. D’Ambrosio: I did not think it was either. I thought where it was left off at was acceptable to the previous Administration.

Mr. Hoefle: Didn’t they put up Do Not Travel signs?

Mr. Rubertino: That is when the equipment was stuck in there. I do not know if it is repaired to the point where a vehicle can go down there to plow it.

Mayor Morley: We will take a look at it. But, the main goal is the roads. If there is anything left and there is a repair that is needed obviously we will not let something be unsafe – we will take care of it. But, getting the roads done is the main thing.

Mr. Rubertino: You are talking about between Stevens and Vine Street?

Mr. Hoefle: That is correct.

There were no further questions or comments.

Upon review, the Committee agreed to move this legislation forward to the next regular Council meeting.

MISCELLANEOUS

BUDGET REVIEW

Ms. Vaughn: I told the Clerk to include budget review because I was anticipating – thoughtlessly - that we would have the budget by now but we do not. There is no way it could have been done by now. I apologize. The only thing I would like to know is if the taxes are coming in and if we are on schedule?

Mr. Slocum: The big part of the taxes is the income tax and we are right at what our estimate was based on historical percentages year to date. Hopefully we will make that number.

1ST HALF REAL ESTATE TAX SETTLEMENT

Mr. Slocum: Regarding the real estate tax settlement – page 2 shows the 2014 revenues. You will see we are budget-wise at 52% year-to-date. Compared to last year we were at 50%. Collections seem to be a little bit higher this year than last year and we made budget last year. I am hoping it is an indication that it will be made again this year. We are ahead.

Ms. Vaughn: That is all I care about – that we are where we have anticipated.

Mr. Licht: You also gave us the General Fund activity from 1996 to 2014. My question is on the property tax. I am sure we all got the letters in the mail regarding CEI – I see the $53,000 in the black but I also want to be reassured that the City is putting aside that money.

Mr. Slocum: We are not putting it aside. We don’t have the money to put aside.

Mr. Licht: So, that is not taken into consideration with this final number at all – if we get hit with it?

Mr. Slocum: No. Traditionally, what you have seen with these evaluations with CEI is that when you compare what they pay initially and what they say the plant is worth – we got another one last year – they paid based on an assessment of $11,000,000 and the Auditor billed it out at $60,000.000. There are two tax collection years they are fighting.

Mr. Licht: So, last year’s is still pending?

Mr. Slocum: Yes. They are real nice – put the money aside – like you don’t need it. We do not have the money to put aside.

Mayor Morley: I think in Column D they said to put aside $7,600.

Mr. Slocum: That is not entirely out of the General Fund – that is out of several funds.

There were no further questions or comments.

.5-MILL FIRE LEVY RENEWAL: RESOLUTION OF NECESSITY

Mr. Slocum: The Clerk distributed the first Resolution of Necessity which is the first step in putting the .5-mill Fire Levy Renewal issue on the ballot. Basically, we are recommending if we can get this approved at the next Council meeting so we take this to the County Auditor and the Auditor will determine how much this will generate. By doing this Tuesday it is a not a commitment to put it on the ballot.

Ms. Vaughn: It is a resolution of intent.

Mr. Slocum: That is all it is. Once we get it back from the County Auditor we will have the final legislation.

Ms. Vaughn: It is my understanding that the Law Director has said we only need one reading only on this piece of legislation.

Mr. D’Ambrosio: In the past we have always done the resolution of necessity on one reading. All this does is allow us to send it to the Auditor to get the figures on how much the levy will be. When we vote for the levy we usually put it on three readings because it is a ballot issue – that is the way we have done it in the past. We should have plenty of time.

Mr. Slocum: We have until August 6th.

Mayor Morley: We have, unless there are special meetings, until July 8th which is the last meeting before Council break.

Ms. DePledge: We would need this back by the end of May to do two readings in June and one in July.

Ms. Vaughn: I think everyone agrees that we need this fire levy renewed.

Ms. DePledge: Yes. I would like it to go three readings to give the public the opportunity to weigh in on it.

Ms. Vaughn: I think traditionally all levies go on three readings.

Mr. D’Ambrosio: If we have to have special meetings we will do it.

 

There were no further questions or comments.

REVENUE

Mr. Slocum: It is my strong recommendation that the Council and the Mayor figure out a way to raise more revenue in this town. I would like to share with everyone the General Fund activity – the year to date receipts. You can see that this year we are projecting $9.9 million. A couple of years ago we are at $14.5 million. We are not going to be able to run this City the way it runs today going into the future unless we can figure out a way of getting additional money. It is my strong recommendation that we start telling people – what are we going to cut? Are you going to cut the ambulance service? Are you going to cut 24-hour police? Are you going to cut leaf pickup? I am not saying this is what I recommend but what I am saying is that you can only spend the money that is given to the City. We are running out. We have taken so many personnel cuts and are put together by bandaids in some areas.

Ms. Vaughn: But the residents have not seen any cuts.

Mr. Slocum: With the exception of the pool and unfortunately probably ¾’s could care less about the pool. You have ¼ that do and some that are ambivalent about it.

Ms. Vaughn: Seven levies have failed in the past 10 years. What makes you think this one would pass?

Mr. Slocum: Will it pass? We have to do our job of convincing the public about the need. They will have to decide what type of City they want. And, they will make that decision. When they make the decision it will be incumbent on us to give them the City they want. If they don’t want to give us money – and, they have not given us any money since 1982 – that will be loud and clear and you will lose a lot of good people here.

Ms. Vaughn: But, there are other options besides a levy.

Mayor Morley: I go back and forth with this. I think we have built a decent amount of credibility in the last four months. I am worried about – we go out and try to get a levy – and, I know we need a levy – or do we take the position that we know we won’t get a levy passed and start making cuts. If we do that we do not give the people the opportunity to tell us yes or no again. We can take the position – do I think it will pass from the past – no, we could not get $1.57 passed. Has that much changed from December to now? Yes, we are making movement but do we have enough credibility as the Mayor and City Council as a City that the people will say yes or will they vote it down again? The difference this time will be – there is no more to cut. If we start cutting it will unfortunately be services.

Ms. Vaughn: There are two other options and I am not saying yea or nay to any of them – I am just putting them on the table. If the levy did not pass we could increase the reciprocity – or just do it because we do not have to go to the vote of the people. Yes, Council will take some heat but that is an option.

Ms. DePledge: How much reciprocity.

Mr. Slocum: Either .25% or .50% - that could raise a couple million.

Ms. Vaughn: That is what we need. The other option is to put an increase in City income tax on the ballot. That has to go before the people. These are difficult decisions. I have positives and negatives. A large percentage of the population in Eastlake is older adults on fixed incomes who live in houses. The do not like levies because they cannot afford them. But, they may go for an increase in City income tax because many of them do not pay income tax because they don’t have to and it will not impact their living expenses. It would hurt the working people – we have a lot of working poor here too. But, we have a lot of renters who don’t pay property taxes but they do work and have income. If worse comes to worse – the previous Council did increase reciprocity with a cut-off date for a short period of time to get us through a bad time. I have no particular feeling for any option – it us up to Council as a whole to make the decision.

Mr. D’Ambrosio: Mr. Slocum, can you run some numbers so we can see what they would be with reciprocity?

Mr. Slocum: Yes. I was not expecting a decision to be made tonight. I will provide a best guess based on the 2012 tax year. We look at how much money was earned outside the City of Eastlake.

Mr. D’Ambrosio: I know we are just in the talking stages. Have you determined what type of levy you are going to propose?

Mayor Morley: We have talked a little as Directors. Some mentioned if we did three levies and only one passed then we would have to take from the General Fund and we would be no better off. I have no issue with a flat mill levy instead of three separate levies. We have heard in the past the people are most likely to vote on three different ones but it does not matter because none of them every pass. Mr. Slocum has run the numbers from a .5-mill to a 10-mill levy – we need the money – it does not matter to be if it s separate levies or one.

Mr. D’Ambrosio: Whatever we decide we have to make sure it will be enough. Something has to happen. There is no doubt.

Ms. DePledge: With reciprocity if someone files their 2013 tax return they owe the City $300 but the 2% is already taken out because they work in Mentor and with a 1% reciprocity they would pay an additional 1%. People will most likely see that when they pay their City taxes next spring or is it taken out of their checks.

Mr. Slocum: They generally do not have it taken out of their checks – they generally have to pay it.

Ms. DePledge: There is something we should not be overlooking. There is a change of leadership and it is incredibly positive and we are riding a bit of a wave. If we want to capitalize on that it may be the time to try for a levy. We can always do reciprocity after the fact. A lot of positive things are happening. We need to keep that going and be united. 60% of the people believe in the Mayor and they are ready for a change and they made that very clear. I think if we put together the right sort of presentation and get it to the people and let them know just where we are. I know the former Mayor went through a lot with presentations and formal meetings but this is a breath of fresh air and we need to capitalize on it. We all know there was a credibility issue with the prior Mayor and the stadium and that is a negative – they still remember that. It might be the way to get this done.

Mr. Evers: Along with the numbers for reciprocity would you include the numbers for a ¼% increase in a City-wide income tax? That way everyone pays – whether you live here or work here. It is not a property tax.

Ms. DePledge: You are talking about what the County did with the sales tax?

Mr. Evers: It would go from 2% to 2.25%.

Mr. Slocum: If you work in Euclid with a tax rate of 2.85% - will we limit their credit to just 2% so they will end up paying that .25%

Ms. Vaughn: We are taking two different things. He is talking about increasing the income tax. That has to be voted on by the people. Forget reciprocity.

Mr. Slocum: If they work at Lincoln Electric they will never end up paying anything additional to us because their tax rate is 2.85%.

Ms. Vaughn: How many cities have that much higher tax rate than we do?

Mr. Slocum: I will have that number for you too.

Mayor Morley: It is different to go from 1.75% to 2% - we are already at 2%.

Mr. Slocum: I will get the information on raising it to 2.25% and 2.50% as well as the information on the reciprocity.

Ms. Vaughn: Once we have everything then we can make an educated decision. I agree with Ms. DePledge – the attitude of the people has been remarkable. One way we can tell is the residents do not call us all the time – they call the Mayor.

Ms. DePledge: But I think you are building up so much good will. Someone told me today that they had talked to the Mayor and that he listened. We may not have a lot of money but he listened. That is what people are saying.

Mayor Morley: All the Directors are like that too. I am getting more positives than negatives. I think we are doing well and if we put out a levy they may say we are just the same as before. That is what I look at. But, the other side of it is we will have to start taking and I don’t want o lay off any more people. We don’t have people to lay off.

Mr. Slocum: One revenue enhancement would be to stop soft billing for ambulances. We adjust our rate and go after them. That will cut down the number of runs we are doing or having to take out of pocket what their insurance does not cover. I have provided the cost of the levy and what it would generate and two pie charts with the percentages taken out.

Mayor Morley: When people comment to me on how much they pay I tell them to go to the Auditor’s website and it will show exactly how the money is broken down. I use myself as an example – mine is $3,200 and the City gets $259 and they don’t know that.

Mr. Slocum: If you ask the people when the last time was that the City of Eastlake raised taxes?

Ms. DePledge: They say that they now have to pay for garbage – that is a tax increase – their water bills were increased – that was a tax increase. They think we are making a lot more money because of that which we are not. The garbage fee does not come to us.

Mr. Licht: I agree that we are riding a wave and people are seeing change but it has only been four months and I think people are going to ask us what we are doing to try to increase revenue in other places. What are you doing with the vacant buildings? What are you doing with the stadium to enhance more revenue?

Mayor Morley: I have been meeting with the Lake County Economic Development Council and Port Authority to guide me to some areas of how we can make some money. I want to get a broker to try to get the Nike site on Curtis sold. The property is valued at $700,000 but I do not know if it is worth that much money. We just finished painting the Visitors Bureau – it will not be a lot but if we can get $1,000 per month it is $12,000 more. Eventually, I want to look at if we can consolidate City Hall and see if we can get some renters in here. There are now 14 people in this whole City Hall.

Mr. Licht: I think that is the type of thing our residents want to hear. If they are going to vote on a levy they want to know that the Administration is doing everything they can with the assets they have.

Mayor Morley: Today I met about the office building beside Bryant and Stratton. The owner wants to tear it down and Giant Eagle may want to build a Get n Go. They are going to build on S.R. 306 in July and it will be about 40 jobs. We may have a problem with the driveway where the stadium is. I guess it is like a miniature grocery store. We have to look at the traffic to see if it is possible.

Ms. DePledge: We have to pay more attention to traffic patterns.

Mayor Morley: Mr. Gwydir is looking at Rally’s tomorrow. WalMart was to have their surveyors come last week and will possibly start that project the end of May. These are all things we are trying to catch up on.   I have calls and emails out to try to get something to come into the old WalMart building. I spoke with the broker there. I am working on things we can put on the Lake County website that will show some of our empty buildings – that they are available. We have a piece of vacant property we are paying taxes for on Cortland which we are looking to set out for bid or sell.

Mr. Licht: You have to get that out.

Mayor Morley: You cannot put all that I just said into the Gazette. There are things that I know may possibly come but I cannot put it in the Gazette because it is a month behind. I want to eventually meet with the News Herald to put articles in the paper – to try to use the paper to help us instead of what they want to do to sell their newspaper.

Mr. Licht: I think that is a big thing for the residents.

Mayor Morley: Every Director every day is looking for some way to save money.

Mr. Hoefle: There is also the salt bin.

Mayor Morley: There is that too – we have to build that.

Ms. Vaughn: Does the Committee want to move forward with both resolutions of necessity?

Ms. DePledge: Yes.

Mr. Licht: Yes.

There were no further questions or comments.

RECOGNITION OF PUBLIC

There was no one who wished to speak.

The meeting was adjourned at 6:48 p.m.

dac

 

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                                                                                                                                                                                                                        DATE: ________________________________

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