FINANCE COMMITTEE MEETING FEBRUARY 18, 2014
FINANCE COMMITTEE MEETING
FEBRUARY 18, 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, Mrs. Quinn-Hopkins, Mr. Evers and Council President D’Ambrosio.
In attendance from the Administration were Mayor Morley and Finance Director Slocum.
Also in attendance were members of the public.
BUDGET REVIEW
Ms. Vaughn: We will be discussing the 2014 budget. I had the Clerk send a memo asking everyone to pick up their packets and review the budget. Ms. DePledge, Mr. D’Ambrosio and I responded but unfortunately the other members of Council did not respond. Therefore, I will assume they have no questions and we will go from there – Mr. Slocum, if you could start with a general overview and then go into Mr. D’Ambrosio’s questions.
Mr. Slocum: From our general meeting today I did make two changes. I decreased the revenue budget by $37,500 and the income tax due to CEI’s announcement – that is roughly half of the last three months that they paid last year in October, November and December. I assume they will not just all walk off the job – there will be some wind up costs.
Ms. Vaughn: There will be some income from the contractors who are working there and that will be able to be figured in?
Mr. Slocum: Yes. That is all part of the increase we had thought of. I also had to increase the holiday pay for the Chief and the effect of that legislation added about $7,775 to the budget for this year which was not in your initial package.
Ms. Vaughn: If we had reacted on that when it was first brought to us it would have been in last year’s budget instead of this year’s.
Mr. Slocum: Half of it would have been last year and half what I anticipate will be paid out in December.
Mr. Licht: I thought it was presented that it would only be about $1,500.
Ms. DePledge: $2000 – $2,500 is what I thought.
Ms. Vaughn: That is what we were told.
Mr. Slocum: That is just the payroll cost – then we have the pension cost on top of that – and Medicare on top of that and workman’s comp on top of that. What you had over the weekend and last week was a budget I prepared on the 6th. There have been updates to that. What I gave you today is where it stands today and tracks with the payroll information I gave you last week.
Ms. Vaughn: The bottom line remains a deficit of?
Mr. Slocum: $368,695 as it stands right now. We need to come up with cuts.
Mayor Morley: I talked to Mr. Slocum about doing it this way so we can all take a look and have our priorities when we start making the cuts. If we take out the Economic Developer, the City Hall roof, part-time summer help and part-time building inspector we will get down to $165,000 deficit. My wish list was obviously the Economic Developer and the summer help.
Ms. Vaughn: It is my understanding that if there is any way possible you would like to keep some of the summer help.
Mayor Morley: Yes, that summer help number was for six – we cut it down to three but if we can’t do that then we can’t do it. Part of our reasoning is obvious – I would like the City to look presentable with the summer help cutting the grass while we are doing the roads. I need to sit down with Mr. Rubertino and talk about the road program – if we want to look at someone else possibly doing the paving and seeing the cost difference. The City Hall roof – we need to get some estimates and see if we can put it off for another year. I think they had one estimate and I told them I would like to get more.
Ms. DePledge: Is this the first draft of the budget – have all the Directors seen it? Are all their requests included?
Mayor Morley: All I told them was to look to see if there was more we could cut.
Mr. Slocum: I talked with Directors and they know how I engineered putting this together. I have not received any real feedback one way or the other since I put it out. It is grim picture. The one thing I will point out is – if you think this is grim wait until next year. Because this year we have an $800,000 carry-over that this budget will totally use – you will not have that carry-over so that is another $800,000 in cuts you will need to make next year. We have an extreme revenue issue in this City. If you look from one year to the next we have been decimated. We need more dollars in here or we cannot continue to operate the way we have operated. I cannot say it any plainer. You have limited options in front of you. You could look at putting another levy out there which we could put on the ballot in November. You could address the reciprocity. You could go for a vote to increase the income tax.
Ms. Vaughn: Or do all the above.
Mr. Slocum: But the bottom line is if nothing happens we are not going to operate this City next year the way we did this year or last year or any other year prior. It is an inevitable.
Ms. Vaughn: Is it important that we make sure our constituents are aware of this?
Mr. Slocum: In my mind – absolutely.
Ms. Vaughn: I don’t want us to be accused of threatening or telling people things to scare then into voting for something because that is not what our methodology is and never has been or never will be. I want to walk on tender hooks to make sure the way everyone presents it – to make sure we are all saying the same thing at the same time to the same people with the same goal to see how to get more revenue in the City.
Mr. Slocum: If you take a look at the actual revenue in the budget for this year compared to the actual last year and the actual in 2012 we actually collected almost $11.5 million. We are now down to almost $9.9 million. $1.5 million in lost revenue. You take $1.5 million out and you will take out a lot of activities. We cannot spend money we don’t have.
Ms. Vaughn: We don’t have a lot of activities left.
Mayor Morley: If we do something we just don’t present the doom and gloom part by saying if this does not pass we are going to eliminate. If it does not pass we will have to bite the bullet and do the eliminations. I do not want to threaten anyone. But, if we go for a levy and it fails once again then we have to do what we have to do.
Mr. Licht: But I think you need to paint that picture to the residents and tell them what they are going to lose. If you don’t I don’t think they will get the picture. You could break it down and say these are the services we are anticipating to cut if we do not pass a levy.
Mayor Morley: We have done that in the past and they say you are threatening us – you are not going to do it. We have done it but they don’t seem to notice any change right now.
Ms. Vaughn: It is my understanding in the past that Council increased the reciprocity temporarily. That is another option we can explore. I hate to do it because of the press in the Gazette that was given by someone whose name will never be mentioned again – to watch for the word reciprocity coming from Council. And then we are the bad guys again. That is unfortunate that someone would go that way.
Ms. DePledge: It would have come up no matter what. It did not matter how the election turned out reciprocity was going to be on the table.
Mayor Morley: These numbers here are without going through the Union contracts. If we do the Union contracts and go to conciliation and they award this number will sky rocket. We just started the negotiations. We have a meeting in the morning with Fire. We met with AFSCME.
Mr. D’Ambrosio: If we do try to put something on the ballot and it does not work I feel it is our responsibility to make sure this City runs. I would hate to see the State come in here and tell us how to do it.
Mr. Slocum: I don’t see the State stepping in. The State will step in if we overdraft and go into fiscal emergency. When they come in they will force you to balance the budget. I am telling you we will balance the budget without them coming in. They won’t come in and say here is some additional revenue – now you can have your Police Department and Fire Department or Service Department or whatever. They will come in and tell you to do it.
Mr. D’Ambrosio: We have to balance it this year – there is no doubt about it.
Mr. Slocum: And we have to balance it every year.
Mr. D’Ambrosio: Yes.
Ms. Vaughn: We are mandated by law.
Mr. D’Ambrosio: We have no cushion – what is here is here and we have to get it down to zero if not better than that.
Ms. DePledge: Even if we take out the Economic Developer, the roof and half the summer help and the part-time building inspector we still need another $170,000 worth of cuts just to break even. Do you have any idea from where that will come?
Ms. Vaughn: We have tossed some things around but they are only conceptual at this point in time.
Mr. Evers: How much can we depend on the Ambulance Trust Fund through 2014? I hate to say it but…
Mr. Slocum: Right now we have budgeted $445,000 to come out of the Ambulance Trust Fund and I do believe we should be in position to collect that. If Fire services dramatically drop – it is one of those catch 22’s that everything starts snowballing again. Right now I believe it is collectable and we can count on it. That is assuming we are able to operate in a relatively same manner as we have. But, I don’t think that is the case for next year as it stands today without any new revenues.
Ms. DePledge: How have overtime and the weather affected us?
Mr. Slocum: We usually pay that out of Fund 202 – it does not come out of the General Fund.
Ms. Vaughn: Do we pay any other expense out of that fund – personnel costs?
Mr. Slocum: Yes, we have three bodies being paid full time out of that fund plus we pick up the snow. Fund 202 is the Street Construction, Maintenance and Repair Fund.
Ms. Vaughn: We are picking up some costs for personnel, including workman’s comp, Medicare, medical and actual salaries out of the other funds other than the General Budget – like the Ambulance Trust Fund, the SCMR Fund and the Sewer Fund.
Mr. Slocum: We have several people being paid out of the sewer fund. The only thing we really have being paid out of the street fund is the reimbursement of the Administration of the Service Department – $75,000.
Ms. Vaughn: We could but it cuts the money to fix the streets.
Mr. Slocum: That fund is under severe attack and is down almost $200,000 in revenue from last year to this. We will be able to do less and less with that fund.
Mr. Licht: What is the cost for the repairs to the Police Department building?
Mr. Slocum: That was the bay doors in the back – they were falling down.
Ms. Vaughn: It was budgeted last year and was not done.
Mr. Slocum: That was probably the most major carry-over expense from last year.
Ms. Vaughn: That and the computers. And there were things in the budget like ADA repairs to the pool – this was taken out and used for playground equipment.
Mrs. Quinn-Hopkins: Is that the playground equipment by the Community Center?
Ms. Vaughn: Yes, but it was under $12,500 so we could not say anything.
Mayor Morley: There was $20,000 from never putting on a Zoning Inspector.
Mr. Slocum: If you want to go down Mr. D’Ambrosio’s list?
Mr. Licht: Can you explain the overtime one more time to me. I see it was zero last year in here under Firefighters and now…
Mr. Slocum: When you look at the Firefighters you will see a lot of zeros in paid categories last year that I have money in this year. What we ended up doing last year was anything like longevity and overtime got paid to them in comp time. So, when they redeemed the comp time we did not have to pay the Police and Fire Pension at 24%. They are going back to their regular rate they got paid in 2011 and 2012 and we are back to paying 24% to Police and Fire instead of us paying 90% of that and picking up all 34% of that.
Mr. Licht: Where do we see the decrease from the 90% to the 34%?
Mr. Slocum: Some of it you see when you look at #101.370.5133 – there is $30,000 in there. However, you have a decrease coming out of Fund 210 Police and Fire Pension that they are picking up less money this year. So, they are picking up less money and it is costing the General Fund more money this year. Some of it sounds like a shell game and I apologize. But, there is another $15,000 in there. Last year out of the Fire Pension Fund we were able to pay for Fire Pension in the total of $134,000 and this year we project we can only pay $119,500. Any shortage the money in this fund is not enough to pay the entire bill. Any shortage in this fund is picked up by the General Fund. The same thing happens with the Police Pension – there is a $27,000 shortage – $27,500 from last year. Last year we were able to pay $143,000 in pension out of that fund and this year we are projecting $115,500. Why is that happening? You can thank the Governor. He did away with the electric deregulation which we were still due and he did away with the CAT Tax reimbursement which we were still due and then we had the loss of the CEI valuation – the $27,000+ which really cost a drop in our property tax – when you add the property tax, homestead reimbursement and State rollback reimbursement together – when you look at that it dropped about $14,000 from about $130,000. That is a significant drop. This is not a revaluation year either. That same type of thing you will see in the Police Pension Fund, the Fire Pension Fund, the Debt Service Fund, the Road Fund and the Fire Levy Fund. The same type of thing happened across the board with the exception in Fund 301 Debt Service. They did not do away with the property tax reimbursement for this year – that goes for a couple of more years. That is $16,000.
Mr. Licht: Mayor Morley, does the part time summer help – $34,500 – include all part time summer help or a few?
Mayor Morley: $34,500 would be eliminating all six of them. If we get three it would be $17,000.
Mr. Slocum: It is about $6,000 per person.
Ms. Vaughn: We are picking up the entire salary for the Senior Center Co-coordinator – last year it was paid out of their Trust Fund. My question has always been – we are throwing more and more money into the Nike site – the old JFK and we are more and more money into the Community Center. We are getting some revenue but not enough to cover the expenses. Why do we still have them? Why not board them up and shut them down?
Mr. Slocum: The only thing I would caution is we are under contract with both locations. We are renting to the church at the old Nike site and we are renting the Community Center.
Ms. Vaughn: When the leases are up.
Mr. Slocum: Most of them run this year.
Ms. Vaughn: Put them in the back of your heads for next year.
Mrs. Quinn-Hopkins: Could we not just put them in a different building. The Community Center or something like it that is not being used at the same time?
Mayor Morley: The Community is used all the time.
Ms. Vaughn: But we are not making any money and it is costing us to run it.
Mayor Morley: We are getting paid.
Mr. Slocum: I think the last time I looked at it – and I can do an analysis for you- I think we are close to break even in the Community Center.
Ms. Vaughn: Including the personnel costs?
Mr. Slocum: Yes.
Ms. Vaughn: I know they are both in poor repair and will soon cost us a bundle to fix them.
Mr. Slocum: We would have to look at the leases to see if we have early outs if we want to take them.
Mayor Morley: Our goal for the Nike site was to try to sell it and have a developer build something there.
Ms. Vaughn: You don’t really need the building.
Mr. Slocum: We receive about $55,000 a year from the Willoughby/Eastlake Schools for their bus dept. All the bus drivers get paid in Eastlake. The trouble with trying to build that area is if you combine our lot with the Willoughby/Eastlake lot you have something that can be developed but you would also look at losing the $55,000 a year in income tax we collect from that area.
Ms. Vaughn: So there is no light at the end of the tunnel no matter what we do.
Mr. Morley: I talked with the Treasurer at Willoughby/Eastlake Schools about the closing of Washington School. He told me when that closes they envision increasing the payroll at the remaining elementary schools in Eastlake and that affect on the income tax here will be close to negligible. He does not think it will have any significant impact on the amount of dollars we collect.
Mayor Morley: Those teachers are supposed to go to the other two schools.
Mr. Slocum: I knew they were moving the Zenith program to Willoughby Hills and asked about those teachers. He said even with those teachers moving they would be moving other teachers into Eastlake to make up for it. I pressed him on it and can only tell you what he told me.
Ms. Vaughn: I asked the School Board President what they were going to do with Washington. They are going to rent it out, tear it down or sell it. Whatever comes up first and fastest – they want no part of it. We are not in position to buy it.
Mr. Slocum: In response to Mr. D’Ambrosio’s questions (see attached):
#101.110.5100- The reduction amount is from the Mayor taking a pay decrease as Safety Director. The increase from the actual $13,000 – there was $1,100 or something last year that we actually had budgeted. This is increasing it for the $12,000 decrease in the Safety Director. The decrease in the Mayor’s pay to $72,000 is just washed through the entire budget. It is not looked to be picked up anywhere else. The incidental expense was to be picked up with the Safety Director’s cut.
Mr. D’Ambrosio: Mayor, I know you took the deduction and $13,000 of that was put into incidental expense. Is this money you were going to use for activities like the Easter Egg Hunt and things like that?
Mayor Morley: Safety Town and anything else – Christmas. I may not use any of that money because the Easter Egg Hunt will be a split cost between the Captains, the City and EPal. I have been working out the Safety Town with the Chiefs and I think they already have about $2,500 in donations but we have to rebuild the town at the school and purchase cars at a special price of $30 each. Any fee we would charge our residents would be for their kid to get a T-shirt. Willowick charges $50 for Safety Town. We have been talking about $20. That $13,000 depending on costs – those were my plans when I took the pay cut – to try to do some small things in the City.
Mr. Slocum: Last year we budgeted $1,100 – this year we are at $13,100. The increase in the budget is the $12,000. Mayor Andrzejewski did not spend much last year out of this line item even though he had the ability to do it. The fact is the Mayor’s office has its expenses. If he is going to operate as a Mayor he needs the money.
Mr. D’Ambrosio: I have no problem leaving that in there. I would ask if you are going to do the Easter Egg Hunt to let us know – though not everyone is in the same financial situation some of us may want to donate towards some of that stuff so we don’t spend it. I am always willing to donate. Let ask now when the events come up and maybe we can help out.
Mr. Hoefle: What about all the ice skates – are they still over by the Captains’ stadium?
We have a ton of ice skates inside that room. Maybe we can check with Mentor or someone to see if we can unload those and use some of that money.
Mr. Evers: I have been in touch with the General Manager of WalMart about the Easter Egg Hunt sponsored by the Captains, the City and EPal. She is getting in touch with the District Manager and will let us know something after March 6th.
Mayor Morley: I put in my Gazette article that we are having it and more details will be provided.
Ms. Vaughn: Some people may not have the extra money to donate but they will donate time. If you spread the word about your activities I think you will find some volunteers to defray some of the physical costs.
Mayor Morley: We are getting 10,000 eggs. That is basically the only cost. The Captains will pick up the people we have at the gate – we will ask for City resident ID’s.
Ms. Vaughn: I am not saying that only – but other activities you may want some assistance with.
Mayor Morley: Residents are coming in Thursday to meet with me and discuss it.
Mr. D’Ambrosio: Economic Development position – I see the Mayor has it on the list to eliminate this position. I think having an economic developer would be great but at this time to start a new position would be difficult.
Mayor Morley: Ms. Vaughn gave me a contact today. I am going to call tomorrow to the County – they may be able to provide us with a part-time economic developer for free.
Mr. Licht: What we don’t see and I know it is difficult to quantify –but, the kickback in having an economic developer. It is an intangible that you don’t see but could pay for it in a few years.
Mayor Morley: I have a meeting with Congressman Joyce on Monday. I was going to talk to him to see if there are any programs through his office.
Mr. Slocum: Special Legal – we have included $75,000 for Union negotiations. In the event we are able to settle without having to go to fact finding or conciliation or both that amount will be reduced. But, if we have to we are contractually responsible to negotiate with the Unions.
Ms. Vaughn: Building Repairs – what repair is this for at City Hall? We talked about the roof but there are other things too.
Mr. Slocum: The big increase is the roof.
Mr. D’Ambrosio: That was $85,000.
Mayor Morley: We are going to get some estimates to see if we really have to do it this year or a quarter or spot repair.
Mr. Slocum: There was some talk about a class action suit that may give us some ability to have it done without us picking up that cost. I have not seen anything but was told that Mr. Klammer had some information.
Mayor Morley: I will check with Chief Whittington. There was a certain brand of shingles and I know they were looking at that when they put on the Fire Department roof.
Mr. Hoefle: Is this the original roof?
Ms. Vaughn: Yes, it is 20 years old.
Mr. Licht: Should it not have been a 30 year roof?
Ms. Vaughn: Yes.
Ms. Vaughn: Transfer Debt Service – can you please explain?
Mr. Slocum: We have Fund 421 which is the Stadium Fund. This is where we start the whole process to determine how much I need to transfer out of the General Fund. I look at Fund 421 and take all the projected revenue – we have some expense being paid out of there – and at the end of the day how much can I transfer out of there and leave about $25,000 left in the fund for next year’s expenses. This year I can transfer out of Fund 421 $455,000. That is compared to $533,000 last year for a decrease of $78,000. I am going to take that $455,000 and that will go into my Bond Retirement Fund 301. We have the $455,000 transferred from other funds. Forget the revenue side of that but concentrate on the expenses. With the expenses I know I have this year $990,000 of principal due and $432,000 of interest and with auditor and treasurer’s fees a total expense of about $1,425,000. Taking the revenues with the majority of revenues in this account outside of the transfers is the little bit we are getting from the tax collections. And, that is having the same negative items that we talked about in the other funds. I then have to keep the fund balance in the $1,000 to $2,000 range so if any expenses run over I will have money – so, how much money do I need from the General Fund? To fund the hole I need $775,000 to pay the debt – we have no option. We have to pay the debt.
Ms. Vaughn: Why does it go up every year – it has gone up every year since 2012? 2012 was $617,000, 2013 was $628,000 and last year was $698,000. Now we are going to $775,000.
Mr. Slocum: Last year we lost $90,000 – $100,000 from the Visitor’s Bureau plus we did not make any real collections off the bed tax – the Radisson.
Ms. Vaughn: Are we looking to get money from Radisson this year?
Mr. Slocum: Yes, I have been in contact this week – we are initiating criminal action against the General Manager. All of a sudden they are starting to get interested in bringing this thing current. I am looking at actually coming up with something a little bit different on the bed tax for the penalty because right now it a flat 10% penalty if you miss a payment. I want more of an ongoing penalty. Now they have no incentive to pay.
Ms. Vaughn: Don’t they have to pay 10% every month?
Mr. Slocum: No, it is a onetime 10% penalty. I will be proposing something to you to actually make that have a little more teeth. If you look at it we are at about $1.4 million debt service in 2012, $1.4 million last year and $1.4 million this year. The amount of debt service really has not changed but the amount that is coming off the stadium fund is changing. We have lost the grant entirely and I am projecting this year we will collect additional monies from the bed tax that we did not collect last year but next year when that goes back to normal the grant still stays at zero so the number will go up again next year. That will be another $40,000 – $50,000 hit to the General Fund.
Ms. Vaughn: So, the actual stadium is costing us $1.4 million a year.
Mr. Slocum: That also includes City Hall.
Ms. Vaughn: City Hall is a small percentage – it cost $3 million.
Mr. Slocum: There is a City Hall component but everything else is…
Ms. Vaughn: So we can say $1 million for the stadium and $500,000 for City Hall.
Mr. Slocum: It may be $250,000 for City Hall.
Ms. Vaughn: When people ask about the cost of the stadium I quote the General Fund figure – not the total cost.
Mr. Slocum: If you did not have the stadium thing you would probably be pretty close to covering the City Hall debt with what is going into the Bond Retirement Fund. I still think an accurate quote is $775,000.
Mrs. Quinn-Hopkins: Have we been able to do anything about recruiting a new tenant to replace the Visitors’ Bureau?
Mr. Morley: I have been working on that. We are going to repaint it. I had someone give me a ballpark figure of what we could lease it for. One person was interested but they have another lease for six more months so they wanted a really reduced rate for the first six months. That won’t work. We have to see all the numbers and what someone else would charge to look for a tenant. I met with the Chamber and perhaps we can start listing more things on the Chambers website.
Mrs. Quinn-Hopkins: Or even on our City website.
Mr. Slocum: PERS increase. The major component of this increase is the economic developer, the part-time person in Building Department and the part-time employees. The other is just some general increases that are occurring. I gave you the payroll list – all those increases that are not Police and Fire also increase the PERS side of things.
Mr. D’Ambrosio: The information of the economic developer actually includes the PERS?
Mr. Slocum: Yes. The number includes the salary, PERS, Medicare, workers comp, an estimate on the health care, dental and life insurance.
Ms. Vaughn: What is the employee benefit package – it used to be 35%. Has it gone down or what?
Mr. Slocum: It is all driven by what we are paying the person. If you are a family person and we are paying you $20 per hour it is 50% because the medical is so high.
Ms. Vaughn: Is it realistic that are benefit package is costing 35%?
Mr. Slocum: Somewhere in that ballpark.
Mr. D’Ambrosio: The Building Repair at the Police Department was for the overhead doors – we already discussed that.
Mr. D’Ambrosio: The concession the Fire Department gave is over with – this account for the total of $201,000.00 for Fund 320.
Mr. Slocum: A fireman working through the steps will bump this a little bit – maybe $3,000 or so.
Mayor Morley: All the changes from the steps and the schedule changes from the contracts are included in the information on the employee wages.
Mr. Slocum: The only change you do not have is in the Building Department. One of the inspector’s positions was not listed correctly and paid. We are in agreement with the Union and will be increasing the wage from $23.12 to $24.04 on February 23rd. That is a figure that is baked into the budget numbers but is not show here. It is less than $1 so it is less than $2,000 per year. But $2,000 is $280 in PERS. It does not sound like a lot. One change like that is $280.
Ms. Vaughn: And PERS is 14% – Police Department’s is 19.5% and Fire Department’s is 24%. It is a sale with PERS.
Mr. Hoefle: Has the CBO’s increase gone into effect?
Ms. Vaughn: That is the next question – #101.610.
Mr. Slocum: The CBO’s went into effect on February 5. I have the date of the pay change included as to when they are occurring.\\
Mr. D’Ambrosio: Just to clarify – #101.555.5100 – for the Senior Center. We were paying this out of the bequeathment fund. Now that is gone and we have to pay it out of the General Fund.
Mr. Slocum: We were paying $5,000 – $6,000 out of the General Fund – the rest was coming from the bequeathal. We depleted that fund so it is now coming out of the General Fund. For some of the new Council people we once paid for a part-time secretary there.
Ms. Vaughn: We had a full time secretary for a while.
Mr. Slocum: Now the only employee we have there is the Co-coordinator. The Seniors do a lot to run it.
Mr. Licht: So, this salary is for one person?
Mr. Slocum: Yes. And, she is a Union person. I believe her rate will go to the top rate $24.13.
Mr. D’Ambrosio: The next one was #610.5100 – $22,000 for the part-time building inspector. The Mayor said this would be removed. It is a total savings of almost $24,000.
Mr. Slocum: The one thing I have built into this budget is for the Service Director. I moved the rate for Mr. Semik’s replacement from $31.37 to $38.46 which takes it to about $80,000 per year at the top rate. Who knows what we will end up offering but you have to start paying for the people you are hiring. There is an increase there of about $15,000 from last year with Mr. Semik’s position. If it comes in a little bit higher and we hire at $70,000 there will be a little savings.
Ms. Vaughn: There is an increase in solid waste from last year.
Mr. Slocum: #101.000.4480 Republic Audit Collection – I have budgeted and received $75,000 from the County for Republic bills that we have certified. #101.730.5921 Republic Auditor Collections – I budgeted to receive $75,000 and to pay the $75,000. This will have no impact on the General Fund with the exception that I did apply the $25 delinquency that Council authorized and any that are collected to go to the City so I will collect some money in there.
Ms. Vaughn: It looks like it went up almost $27,000.
Mr. Slocum: Yes, it has gone up. If you remember last year when we certified they only had two quarters because we started in April, 2012 with the new contract. Last year they had a whole year so the certification was significantly more.
Mr. D’Ambrosio: Mr. Slocum, you answered my questions. Mayor, I see you and Mr. Slocum came up with the reductions but there is $165,000 more. Do you have anything you are going to try to look into to and let us know?
Mayor Morley: Yes, I am meeting next week with the Departments and the Commissioners next week also on a couple of things. Once I talk to them about a couple of things maybe we can forward it.
Ms. Vaughn: Per Mr. Slocum’s statements to us – if you look at last year’s budget he anticipated “x” amount and many of them did not get to “x” amount. He always errors on the side of caution which is what we need. We do not need to have things underestimated and then find out we have to come up with more money.
Mr. Slocum: Just like the Council Contingency. We budgeted $150 last year. I am putting $150 in again this year and if you don’t spend it that will be $150 we will have. But if you need it… Last year we budgeted $1,000 in the Clerk of Council for office equipment but we did not spend anything but I cannot budget nothing. I have another thousand this year – if we need the money we have it.
Ms. Vaughn: We will be meeting two weeks from now with Department Heads. Does Council wish the Mayor to let them know we are looking for reductions in their spending? I am not comfortable with us mandating that they have to take “x” amount out of their budget. I would rather them tell us how they are going to help us.
Mayor Morley: Now that we are down to $165,000 from $368,000 – let me see how our meetings go on a couple of things next week. I will bring this up at Monday’s staff meeting.
We need equipment in Service and we did not put in a lot of money for it.
Ms. DePledge: Are wage negotiations with the Unions for 2014 or 2015?
Mayor Morley: The Police have opened it for 2013 – then it would be for 2014, 2015 and 2016 for Police, Fire would be for 2014, 2015 and 2016 and AFSME would be for 2014, 2015 and 2016 and the Civilian would be 2014-, 2015, and 3016. There are about five Unions we are negotiating with.
Ms. DePledge: So, basically the deficit we have here that we are trying to cover would grow if there were raises.
Mrs. Quinn-Hopkins: In our negotiations do they consider the fact that the City is in the whole?
Mayor Morley: They do but they also have not had a raise in three years and neighboring cities just got raises as well as the County. Whether you agree or not that is what they look at when it goes to arbitration. If we have to go to conciliation we will hand in our budget and let the arbitrator look but it is still his decision.
Mr. Licht: I suggest – and it sounds like you are going to do this – challenge your Directors to see where some of this – I look at printing, office supplies – the things that may not seem like a lot of money but could add up. Maybe combining them to one central location so you can see…
Mr. Slocum: We do have one central place for supplies.
Mr. Licht: But I see them all in separate budgets.
Mr. Slocum: Building supplies, yes. Office supplies are centralized.
Mayor Morley: The difficult time I am having is we honestly have no more bodies to get rid of. If we start getting rid of bodies hopefully you are not the third ambulance call or the one who needs the Police when we do not have enough cars. I have been racking my head to see – unfortunately even in the private sector if you need more money you just get rid of bodies because that is the easiest – get rid of two bodies and the $160,000 is gone. But I honestly do not believe that we have any more bodies to get rid of. We are skeleton everywhere.
Mr. Slocum: I think we made all those cuts two years ago.
Ms. Vaughn: The Fire Department made concessions to keep that one person. Now they have their one person and do not do concessions anymore. The Police Department did nothing.
Mayor Morley: I had Mr. Slocum keep it in because they made concessions for two years. If it would come down to it we would talk about it but to lay a person off after they made concessions for two years is another slap in the face.
Ms. Vaughn: I am not suggesting that – it was just a point I brought forward.
Mayor Morley: I think with the manning we cannot get rid of anyone else.
Ms. DePledge: I do not think anyone here wants anyone to lose their job but if we are forced into a position to avoid fiscal emergency – if we don’t make the cuts the State will come in and do it anyway.
Mayor Morley: I think we will be fine and we can get down to zero for 2014 and we will then have to look at 2015. Obviously I thought we would do it this way and show where we are and if we can reduce things – if there is anything you see that we can reduce let me know. I took out my wish list and as Mr. Licht said – the economic developer is $60,000 but what if we had an economic developer who brought in $150,000. We can’t base that because we have never had anyone. Unfortunately we do not have the luxury of being able to test the waters.
Mr. Licht: I know different cities have incentives for new businesses. What are our incentives for new business?
Ms. Vaughn: We have an income tax incentive.
Mr. Slocum: The major incentive we have is a program based on the amount of your salary that you bring in. The max we will pay out is 50% of the income tax collected and depending on how much you actually project to bring into this City will determine how many years we …
Comments could not understand due to paper shuffling.
Mr. Licht: Is that comparable to other cities?
Mr. Slocum: I believe so.
Ms. Vaughn: We are not in a position to do land grants.
Mayor Morley: Mentor has a million dollars they can provide loans to bring in business.
Ms. Vaughn: We have never done anything with the Lake County Port Authority because we have our own Port Authority.
Mayor Morley: I have sat down with the Economic Development and Port Authority Committee once and plan on meeting with them again.
Mr. Licht: We are talking about decrease in expenses and that is the immediate need but we also talked about increase in revenue and the income tax. If for some reason there were to be an increase that would not go into effect until 2015 – correct?
Mr. Slocum: Not necessarily but the fact is a mid-year increase would not experience all the collection for this year until next year when things are filed. Those are generally not heavily fined if they don’t pay the estimates for the midyear part of it. The majority of the money I don’t believe would actually be collected this year.
Mr. Licht: Then we need to look at the fees we charge people – whether it is building permits – look at all the fees we charge and see about raising them. I don’t envy the position the City is in but at some point in time you either raise your revenues or cut your expenses. I think we need to look at both. While I know the immediate is making cuts in expenses I think we need to look to the future to see where we can increase our revenues.
Mr. Hoefle: Do you know of any businesses on the fore front that you know are planning on coming into the City? I know we have Enpress.
Mayor Morley: Their final review is Thursday so they should be coming in. We have one spot that is moving locations on Lakeland. I spoke with the person who is the broker for the WalMart building and the only thing that has looked at it so far is a storage unit but there will be no revenue there. I have asked them to look into some other places – Menards, Kohls. There was a rumor about Home Depot because they are closing Euclid but that will not happen. Actually Home Depot is looking at closing some of their locations in our area. The good thing about closing Home Depot is maybe Menards would come here. The closest one is near Massillon. They are like a Lowes and Home Depot.
Mr. Licht: Did not one get approved in Mentor?
Mayor Morley: They backed out. My first 49 days have been meeting with a lot of people and I plan on continuing to do so to open up those avenues to see if there is anything we can do. I spoke with the City Manager in Mentor and there is a Mayors’ and Mangers’ meeting Monday. People see Mentor and Willoughby and they just go there because everyone wants to be there. We have to find out what we need to do to entice these businesses to come to Eastlake.
Ms. Vaughn: Do you want me to schedule a Finance Committee meeting two weeks ago to include the Department Heads?
There were no objections.
MISCELLANEOUS
TAX INCENTIVE
Mr. Slocum: We gave a tax plan to one of the businesses. They were to bring in about $3 million in payroll last year and be eligible for 50% – $3.5 million this year and $4 million through 2022. Well, they did not hit their target. They were slow in bringing the operations up last year and only had a payroll of $1.77 million. We now have the ability to negate the entire agreement which would not be my recommendation. But, in fairness to the Mayor I plopped this on him today and the Administration does not have a position with it. Should we make a rebate if anything this year? They realize it is all in our hands but whatever we do – whatever the Administration recommends Council has to be on board. I am letting you know there is an issue coming to you that we may have for you in two weeks.
Mayor Morley: I will look at it. This year they were supposed to only get $3.5 and they are predicting $3.8. We can look at the number and drop it from 50 to 30 and bring it to Council. Obviously we don’t want to penalize them all – we want them to stay here and build.
Mr. Slocum: Plus you want to have a good reputation. In January their payroll was running at the rate of $3.8 million which exceeded their estimate and it had been growing. You don’t want to sour it with other businesses you want to attract. I don’t think it makes good business sense to back out.
Ms. Vaughn: We will wait until you bring it forward.
Mrs. Quinn-Hopkins: What if we brought in an economic developer and paid them in a different way – on a commission – they would have a minimum pay and if they brought in business their salary would be a commission based on what they brought in.
Mayor Morley: That is something we can look at. I don’t know how we would get around PERS. When I meet with the County maybe they can shed some light on it. I will talk to the Mayor of Wickliffe to see what they do.
There were no further questions or comments.
RECOGNITION OF PUBLIC
There was no one who wished to speak.
The meeting was adjourned at 7:13 p.m.
dac
APPROVED:___________________________
DATE: ________________________________