FINANCE COMMITTEE MEETING
MARCH 17, 2015
Committee Chair Ms. Vaughn opened the meeting at approximately 6:01 p.m. Members of the Committee in attendance were Ms. Vaughn, Ms. DePledge and Mr. Licht. Present from Council were Mr. Evers, Mr. Hoefle and Council President D’Ambrosio. Mrs. Quinn-Hopkins was absent and excused.
In attendance from the Administration were Mayor Morley, Finance Director Slocum, Law Director Klammer, Service Director Rubertino, CBO Menn, Police Chief Reik and Fire Chief Whittington.
Also in attendance were members of the public.
CITY BOND RATING: MOODY’S REPORT
Ms. Vaughn: Before we review the budget we should all have a letter in front of us from Moody’s regarding City’s bond rating. It is far from good news. I wanted this to go on the record tonight. Mr. Slocum?
Mr. Slocum: I distributed an explanation of Moody’s rating system. For the fifth consecutive time our rating has been downgraded. It started in 2008-2009 but I do not have the report. At that time I know we had an A-1 with a stable rating. In 2010 it went to an A-1 with a negative rating; 2011 it went to an A-2 with a negative rating; 2012 it went to an A-3 with a negative rating; and, now it is BAA-2 with a negative rating. It continues to decline. What would this equal on a personal basis – about 650 fico score. We are two steps above junk. We are one of the lowest rated cities in the State. There is not a lot positive to say. If you look at the report – and we will be posting this on the web – their basic kick to us is the lack of community support. They recognize the job management. And, when I use the word management I am referring to Council and the Administration and how we manage the operations with decreasing dollars. They say one of our biggest challenges – this is not us saying it – this is an independent party that rates all the cities of the State of Ohio – the lack of voter support. Where we recognize it the community has to start recognizing it because this downgrade becomes a report card on the community as a whole and their support for the City. They mention briefly that there is some unfunded pension liability and that is due to PERS and OPERS not being fully funded. Theoretically that could come back to the City but that is with the State and I don’t see it ever happening. They put a dollar on our share of the unfunded liability at $42 million. I don’t see us ever being called for the tax on that. That is there for everyone to see.
Ms. DePledge: For everyone to see?
Ms. Vaughn: Yes, it is public record.
Mr. Slocum: This is not us telling you – this is Moody’s telling us. We are viewed within the investing community as two steps above junk.
Ms. Vaughn: A person from the State Auditor will be present at next week’s Council meeting to talk to us about what if any help they can offer?
Mr. Slocum: Yes. But I do not think they are going to be offering any real help.
Ms. Vaughn: I don’t think so – but, we tried.
Ms. DePledge: I think it is important that we put it on public record as well.
Ms. Vaughn: That we have explored all avenues – and we have.
There were no questions or comments.
2015 BUDGET REVIEW
Ms. Vaughn: I asked the Mayor to request his staff be here tonight for the budget review. We have already discussed the revenue at length and the expenses at length. We know where we stand but we would like to hear from the Department Heads on how they are going to manage their budgets and if they know of any place we can raise revenue.
Mr. Slocum: The only really big change in the budget – there are two – is dealing with the Fire Department longevity. We calculated it wrong and had to reduce it by about $35,000 and because we reduced it we also reduced the amounts going for Police and Fire pension by 24% and the monies going for the Medicare by 1.45%. The other thing is for the tax grants we have. We had to increase that $20,000 because I did not have a good number in what I originally budgeted. It is a good number today. One company did not make their bogie. They came fairly close and we are going to recommend we do for them what we did for a company last year. I still think we need to recognize them. They brought a lot of good jobs into the City. I put money in the budget but cannot do anything until I bring it to you. I am just giving you advance notice.
Ms. Vaughn: I will ask for the Directors input – Chief Reik?
Chief Reik: With the reduction in personnel comes the reduction in the amount of people being out there and not having as much time to do traffic and things like that. We saw more of a drop this year than in years past. Also, the typically more aggressive and guys who are heavier in traffic are usually the younger guys which are the first ones to be laid off. We are trying to keep guys active out there in traffic enforcement. The revenue I feel has always been a by-product on that. People will not change their driving habits without a penalty enforced. The only other thing I have heard being done is billing the insurance company for accidents. Fairport Harbor has done that and I can get some information on it. I don’t think it will be a large amount of revenue. We have done some drug complaints and investigations which go to a specific fund we can use to help fund the next one. We are actively working a couple right now and will continue with that as much as we can. We will continue to get as much as we can from the people we have.
Ms. Vaughn: Is there any money out there from the Federal or State governments – special projects or grants?
Chief Reik: We are working on a grant that got approved for body cameras – not for the entire Department but so we have something out there. It is not a solve all but is a piece of evidence that can help.
Ms. Vaughn: A liability protection.
Chief Reik: Sometimes, yes. Lt. Gonzalez, Victim Advocate Gabaldi and I have been moderating the grants that are coming. The Mentor police got one for theft related things for big box stores like WalMart. We are putting in for that. We do get some small grants - $1,000 here or there. We sent a guy to crisis negotiation to deal with people in crisis. They will reimburse us for overtime. Whether we need it or not it will go back in the overtime budget. Any money out there we apply for and if it is a suitable program we will try for it.
Ms. Vaughn: Thank you for your efforts.
Mr. D’Ambrosio: How many officers do we have in the Department?
Chief Reik: 22 including me.
Mr. Slocum: That is down from a 35 or 36?
Chief Reik: 38 was our high in 2002.
There were no further questions or comments.
FIRE CHIEF WHITTINGTON
Chief Whittington: I believe my budget is fair based on what we have in the City. The one thing I did want to get across – there is an interesting thing that happens in this City for the people that work here. It is the swan affect. All of us are gracefully crossing the water but underneath the water the swan is working very hard to be graceful. I know that none of us are protesting our budgets because we know. However, I do not want anyone in the room to think I am comfortable with my budget. I think it is an awful budget. I think I am in a very difficult situation to try to manage the things I want to do. The Mayor mentioned something the other day – we were on West Island after the flood – he was walking the streets – I was walking the streets – Mr. Rubertino had guys out there – we were doing good things. That is after a 15 hour day for me, the Mayor and Mr. Rubertino being there and it does not cost the City any money. I feel when residents see that and I think that was one of the things the Mayor commented on that there is some comfort – that they say we are doing that so we must be comfortable with the staff we have. This is my seventh budget and in those seven years I have only been able to develop one budget and that was my first year. I could take it to Mr. Slocum and try to defend my budget. Every other year I have been given the numbers. Mr. Slocum is very gracious and generous to listen to things we need individually but all in all he is very limited in what he gives us. So, the budget does not represent me sitting down with my staff and looking at the future of the Fire Department and saying these are the things we want to accomplish. I am given these numbers and pretty much told to work in them. I am not complaining about that but I wanted it to be said on the public record that this does not represent me or what I think is fair.
Ms. Vaughn: We are well aware of that. Have you sat down with your staff and asked for any ideas on how to raise revenue?
Chief Whittington: We have applied for a grant for 3 firefighters for two years. There is no obligation to the City to pay anything and once those two years are up it would be up to us to decide what we wanted to do. There are items – and the Mayor and Mr. Slocum have been briefed – on what our obligations are. We could not lay off anyone in the Fire Department if we got the grant. If anyone would actually leave we would have to replace them unless we can show some kind of catastrophic condition. They both worked with us on it. Josh Saperstein and Bobby Lloyd do all the work. We have contacted the International Association of Firefighters and FEMA and they have been very gracious in working with us. The things that have hurt us in the past is concessions – we made a concession last time to save one guy and it hurt us. This time we were able to show the layoffs. We do the ambulance billing internally and had a year-end meeting with the billing company and last year we collected on 95.8% of our submissions which is one of the highest in the State. There is a tremendous amount of effort on my behalf to do that. That used to be my Administrative Assistant’s job – now it is my job. To get to that 95.8% it takes a lot of my time to do that. As your Fire Chief that is what I am doing to keep the revenues up. Some things in my budget that are somewhat troublesome – we have two revenue streams – the fire levy and the ambulance billing. As far as the fire levy goes it has lost some of its flare over the years because of property values and was originally a .5-mill levy but now we collect .3-mill on the levy itself because it is renewal. With the situation of the City we did not feel comfortable trying to change the levy and went with what we have. When I took over as Chief I saw these two revenue streams and felt compelled to try to do things. In August, 2011 the fire levy account was $666,000. We started this year with $183,000. That levy buys equipment, maintains the fire station that was built in 1957 and takes any burden off the General Fund for those things. When that money runs out you have another building to maintain. I also look at the fire ambulance billing. We all know we are using it for what it was not set up to do. We are using it for salaries. The ordinance was pretty clear on what we could use it for. I am not complaining about that but we most certainly are not using it for what we are supposed to use it for. In 2011 that account was under $66,000 and this year when we started off it was $9.65. That is a global picture of the Fire Department. It is not just what the General Fund was. Those accounts free up General Fund money.
Ms. Vaughn: We realize that.
Chief Whittington: As we are draining those accounts eventually when we sit around this table that will not be an option for us. Those are some troublesome things I see down the road. How much longer can we maintain those accounts and keep using them as we are I do not know. I will manage and do the best we can. We will continue to put the effort forward and try to continue to use the levy money wisely but I am up for equipment now. I need a rescue squad and right now I cannot buy a rescue squad. I would have to lease it or borrow for it and you all know that our borrowing power is nothing. So, I think this crisis is starting to filter down into areas where the impact on the whole General Fund will be significant. As I look at it and I work with Mr. Slocum those are my concerns. Mr. Slocum has been very fair with me and I am not complaining about what the numbers are. Mr. Slocum is in a very difficult situation and I feel I am treated fairly and given an opportunity to talk about things. I do not want to make this a Mr. Slocum issue because he does what he needs to do. It is more or less me trying to relate to you my concerns as the Chief as I deal with this mess.
Ms. Vaughn: The Chiefs and Directors should know that we have always complimented you on how you run your Departments on what you have. This is not saying do better. We are saying thank you for what you are doing but do you have any ideas to help us.
Chief Whittington: I understand that. But, I wanted to get this on record. I do not come in with a sign. I do not protest. I am not making a big spectacle at a meeting. I just did not want anyone to feel comfortable. I wanted to point this out because I get flack from other people – last year we returned about $19,000 in comp time and about $22,000 in overtime to the budget. I know that former elected officials are very easy to point out and try to characterize us as draining the City with overtime and things like that. And, I know there have been some years where I have struggled with overtime. I wanted to say in 2014 I used little over one half of both those accounts and that was dealing with everything we deal with. I am not saying I will be that successful in 2015 but the successes we have needs to be put on the table. I read in the newspapers a lot about police and fire departments overtime and how that is the biggest problem in this Community and I think for me that everyone knows I do not believe that is the truth.
There were no further questions or comments.
Mr. Klammer: Revenue wise I do not know what we can do. There is this negligible extra $2,100 in special legal services. I am not even sure I need the whole $8,500 this year – we do not have any contracts out – right?
Mr. Slocum: We pay for Mr. Sharb for annual filings.
Mr. Klammer: That comes out of that account. And there are the salaries for the Prosecutor and myself. We took a $17,000 - $18,000 reduction last year in that. If you have to try to find the money in salaries we will see what we can make work.
Mr. Slocum: It will not be hit this year.
Ms. Vaughn: We realize that and appreciate it. You talk to other cities and people. If you hear anything – if there is anything in the County.
Mr. Klammer: I never thought of grants for the Legal Department but I will give that some attention.
Ms. Vaughn: There may be something out there – it would be appreciated.
There were no further questions or comments.
Mr. Rubertino: This is only my second year going into this budget process. Along with Chief Whittington, I try to work within the budget I am presented and I am well aware of what goes on. My only concern this year is it will be like it was last year – equipment. I showed you the list of vehicles we are using – truck wise. That is my only concern. Will we be able to maintain those vehicles we have within that budget process. That is my dilemma.
Ms. Vaughn: Since we are so short of employees in the Service Department do we have extra equipment? It seems like a lot of trucks for the number of people.
Mr. Rubertino: There are a lot of trucks – they just don’t work. We have two 5-ton trucks that are minimum… we have quite a few pickup trucks that are not even serviceable and are rotted out completely. We cannot put salt boxes in them or plow anymore. We are down to one 4-wheel drive pickup to do cul-de-sacs and dead ends. That was our biggest problem this past winter – not being able to get to dead ends and cul-de-sacs. My only concern is where will I go for equipment this year. I worked well within the budget last year and I comfortable with where it is at because that is where it is. Would I like more – absolutely.
Ms. Vaughn: This is no complaint about the job you did – we just want to pick you minds to see if there is something we forgot and you could help us with.
Mayor Morley: Mr. Rubertino and I are going to start scraping vehicles that do not run or cannot be used for spare parts and using some toward the purchase of a new vehicle if possible. If you remember we just purchased a backhoe and ended up trading one in that we knew was worthless and got $6,000 for it. We are looking to find a way to get one of the dumps with a plow that Mr. Rubertino is looking for next year. People want us to get rid of the leaf boxes. I am not ready to do that yet. But I told him to get with the mechanics regarding the other vehicles out there and if we can’t use them to scrap them.
Ms. Vaughn: The previous Administration purchased front wheel drive trucks – that was a mistake.
Ms. DePledge: I do think we need to get rid of that equipment dump. The residents think we have plenty of stuff and do not realize they are inoperable.
Mr. Rubertino: Some of the trucks the guys are using are 15-20 years old and we bought them used. There are only two new trucks and they are 2-wheel drive trucks and are not practical.
Mr. D’Ambrosio: Have we ever listed anything on GovDeals?
Mr. Rubertino: We have not during my tenure – we have done the auctions but you do not get anything out of auctions. I don’t know if we will get anything realistically out of the ones that are out there. Scrap is probably where we are at with most of them.
There were no further questions or comments.
Mr. Menn: One idea of how to raise revenue would be the vacant hope ordinance chapter we just approved. I think just being more proactive with the permits that have expired to make sure we stay on top of it and money gets forfeited if they do not call for inspections and the time has expired on the permit. We tried to go through a lot of files this year to recoup money and I think we did a pretty good job. That is about it. It is what it is.
Ms. Vaughn: As I drive around through my Ward and others I see vacant houses. Do you want me to write down the addresses and give them to you?
Mr. Menn: You are more than willing to do so – the more eyes out there the better. We have already started and will probably send out 40 since it was passed last week. I made the application a very simple form. They may have been mailed today.
Ms. Vaughn: Some of our trouble houses are rental but they are not vacant. I do not know how we will handle that. Maybe increase the fines.
Mr. Menn: Rentals are a big concern and is a whole other topic to go after somewhere down the road. Other than that just try to be more proactive on getting the fines and fees in a timely fashion.
There were no further questions or comments.
Mr. Slocum: I am not going to talk about my budget. I will handle what I need to. But I did want to share some comments. I am pretty proud to work with these guys right here. I have given them the numbers they have to live with and they work within it – how I don’t know. I would not go to bed comfortable – and, I do not mean this against you guys because I believe you guys with the exception of one Council person who is not here actually get this picture. The fact is – am I comfortable this year? No. Is this Police Station going to fall down? I don’t know. We got lucky this year and found someone to take the Community Center – thank you, Mr. Evers. There are deferred things and how long are we going to be able to operate with a Police force of 22 and a Fire force of 21 and 13 in Service? It is ridiculous. How they do it – God, they do a damn nice job. I am very proud to work with them. No one should go to sleep in this City thinking that we are covering things because we don’t. How much do we have for police cars in the budget – nothing. How much do we have for replacing fire vehicles – nothing. It is going to come and bite us. The one thing that is not in this budget is the tax refund we have pending with CEI – that is $250,000. I have not included that in this budget because I think we will be able to push it off. If nothing else I just pay the interest on it because we cannot afford to pay it and I don’t think we can afford to cut operations any further than what we have. I don’t think we can afford to cut operations to begin with.
Ms. Vaughn: Does anyone have an idea of how we can make people realize what is going on?
Mr. Slocum: The Moody’s report will help. If they actually read the report and see what is there – it is an inditement on the citizenry of this City. They have not stepped up and provided us with the money we need. This is not me saying it. The people who judge cities across the board and across the State and across the Country all say we are not adequately funded and our rating shows it and our rating will go down again. We are not at the bottom yet. Fortunately, we still have some borrowing ability. We are hoping to refinance the City Hall bonds which we hoped would save us $20,000 but is looking more like $15,000 since the Moody’s report. At least we can still refinance it. The debt is at 4.5% right now and I think we can get that down to 2%. But, it is not free but we are working on it. I do not sleep well at night. I was up at 3:30 a.m. this morning. Don’t be comfortable with it. I think we can eke out a year provided nothing dastardly happens to us but that is a big if around this place.
There were no further questions or comments.
Mayor Morley: Obviously my staff knows – and I tell them – what they have done to help me in the past year and three months - every one of them has a tough job and they have had a tough job – even when I was a Councilman. They have done a good job over the years and continue to do so. The Chief mentioned the word “comfortable” that I talked about at the staff meeting this week. All the residents on West Island just look at it that we are there and they see we continue to do good – I told the one resident on Sunday when I was in the harbor who asked me if I was going to hold anything back – I told him no – there is no it did not pass so let’s give bad service. There were guys out every day from every Department working as hard as they can work. The Chief conned me into going home for an hour on Friday night – every one of these guys I can vent to and they can vent to me. This is a difficult budget. None of us are happy. We are all trying to think of ways to get money. You ask what might wake up our residents – I keep telling Mayor Margalis of Wickliffe and Mayor Bonde of Willowick that I do not want them to get where we are but in the next year and one half they will catch up to us and they will start having layoffs and start having to go for levies. I don’t want it to happen to them but it will and our residents will see it is not just Eastlake but everywhere. They all had big surpluses that are gone because they have used all their surplus money due to the State cuts. We never had the luxury of having a surplus to catch up. We have the $800,000 a year cost with the stadium that other cities do not have.
I look at it that we are doing an awesome job. We did an awesome job through the winter and continue to do an awesome job. Every fire I am called to - Chief Whittington and I talk about the things that his Department is doing. Mr. Rubertino’s Department is the one people see the most and as such complain about that Department the most. It is not about him or his guys – we are all aware that we are in the service industry. When people call us it is because of a service issue like potholes or snowplowing. We have done a great job with snowplowing this year no matter what anyone says. One person who talked to me at the harbor said this was the best the harbor was done and she said she knows it is a two edged sword because people will say we just laid off 5 more in the Department and they still got their streets plowed. That is the issue – every time they call the Fire Department is there, or the Police Department or the Service Department. Mr. Klammer took another $20,000 cut and he took a $10,000 cut a couple of years ago. We are all doing our job - I tell Mr. Slocum every day when I see we will have $4,043 to start 2016 if we are lucky. There will be a couple of changes that may change in the budget but it will not be the magnitude of a half million dollars – we may have $40,000 at the end of the year. Every one of these guys are the lowest paid in the area for their jobs. I have been meeting more with the surrounding Mayors and we are looking at ways to work together to save money. Obviously the fire truck is one of them. We have talked about some other things and I will be open because everyone is aware of it – we have been talking about doing a dispatch/jail combination on our end of the County. So far nothing seems to be feasible but we are having those discussions. I met with the school superintendant and may be looking at working with them next year on health care so we can get better rates. We are down to 85 employees. Maybe if we go with the school district we can get discounts. Superintendant Thompson is open to that. The five Mayors are meeting more and more to try to figure out what we can do to help each other. Our people have done a great job and continue to do a great job and I am glad they work for us.
Ms. Vaughn: I think we all agree with your statements.
There were no further questions or comments.
STATE CONTRACT: SALT: 2015 SUMMER/WINTER
Mr. Slocum: This is not a definite that we will go into the summer. My guess is we probably will not. It says and/or the winter and gives us authorization to enter into either contract.
There were no questions. Upon review the Committee agreed to move this item forward to the next regular Council meeting.
RE-APPROPRIATION: 2015 BUDGET
Ms. Vaughn: Does the Committee agree with approving the budget as presented?
Mr. Slocum: One of the last sections authorizes me to make the transfers you have appropriated so I do not have to come back to Council each time.
Ms. Vaughn: We would appreciate if you would share with us whatever you do.
Mr. Slocum: We transfer some funds into the federal grants to cover the expenses for the victims’ advocates – about $14,000. The big transfers cover the debt service payments. We have two that occur during the year in December and June. That is the only transfer activity that is in these appropriations.
The Committee agreed to approve the budget as presented and move it forward to the next regular Council meeting.
REGOGNITION OF PUBLIC
Michelle Wittreich, 601 Waverly Road, Eastlake
Ms. Wittreich: This is overwhelming me. I am startled to hear exactly – it is scary. You don’t hear it unless you come here. Mr. Rubertino is doing a good job – Willowick Blvd. comments could not be understood. The Police are doing a good job. The Fire Chief is out there. I appreciate everything you guys are doing. We are ready to go – thank you Mr. Klammer and Ms. DePledge. Thanks for the help and support and we will get out there and try to help. That is what I am here for. You will be hearing from residents because they need to hear this but they are not going to read those reports. I would like to get a copy of your report and put it on our web page. I think people need to see this but they are not going to just go and look at it. Maybe if I can try to get it in front of them as well – the rating and what that means.
Mr. Slocum: The one reason I have not put anything out is that I have gone back to Moody’s and want them to provide me with a list of everyone who is rating BAA or less in the State. It will give people a comparison – East Cleveland, Maple Heights. Just like I told you about the 650 fico score for a City is not very good.
Mrs. Wittreich: We have a meeting coming up if you can help support us. That would be great and would go a long way. We are trying to be the liaison between the distrust in government and citizens of Eastlake and I think we can do that. Our Save our Services meetings on the 31st at 6: 30 p.m. at Surfside Towers. I know you are all associated with Eastlake voters. If you can give me 10 names of voters in the City so we can get the yes people out of our way and start focusing on the nos. I need to get their signatures on my petition fast. If you want signatures I will get them for you but help me out. Give me 10-20 and I will come pick them up. Give me the information so I can get these signatures and get this on the ballot.
Mr. D’Ambrosio: We have a Committee meeting here on the 31st.
Chief Whittington: I am willing to help but in fairness go through the Mayor so he can direct us. I appreciate what you are doing and want to do whatever I can but I am more comfortable with my boss’s direction.
Ms. Vaughn: The whole point of this effort is citizens working for the City – not officials or employees. It is the day to day people who live here banding together to help save the City.
Mr. Hoefle: We are still looking at putting something on the ballot in November?
Mrs. Wittreich: Absolutley.
Mr. Hoefle: Are the schools doing anything?
Mayor Morley: Yes.
Mr. Evers: $137 million bond issue on the ballot.
Mayor Morley: To build schools. This is not for sure but Willowick may be putting on a levy. It could be a full house.
Ms. Vaughn: Could the school push it back?
Ms. DePledge: They would have to have a special election.
Ms. Vaughn: They can afford a special election – we can’t.
Ms. DePledge: I think again it will be us targeting our yes voters and driving them to the polls. We have to identify those people who will support us and make sure on Election Day they are the ones going to the polls.
Mr. Hoefle: Is there any way we can have a presentation at North High School to get this information out to the students who are registering to vote – to educate them? Maybe if the high school seniors understand it they will go home and talk to their parents.
Ms. DePledge: Maybe in May for the new graduates and then in the fall for those returning.
Chief Reik: They may let you talk about the process.
Ms. Vaughn: Not to tell them what to do but how the City is funded.
There was no one else who wished to speak.
The meeting was adjourned at 6:55 p.m.