FINANCE COMMITTEE MEETING
OCTOBER 6, 2015
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. Evers, Mr. Hoefle and Council President Mr. D’Ambrosio. Mrs. Quinn-Hopkins was absent and excused.
In attendance from the Administration were Mayor Morley, Finance Director Slocum, and Law Director Klammer.
Also in attendance were members of the public.
CITY ORDINANCE CHAPTER 184 “INCOME TAX (EFFECTIVE 01/01/16)
Ms. Vaughn: This Finance Committee is known for doing their homework and anyone who had questions from Council they got in touch with Mr. Slocum before this. I do not expect a long dissertation on this including one from Mr. Slocum. Anyone have any question for the reason on this change, the effect on this City of this change, or anything that you feel that you would like to discuss? Members of my committee can go first.
Mr. Licht: None at this time.
Ms. Vaughn: Ms. DePledge?
Ms. DePledge: If you wanted to put something on the record about how it was going to affect the City? Other than that I am fine with everything.
Mr. Slocum: We currently have Section 183 and that is for the Income Tax and we are not talking about abolishing it we are looking to keep that. We would still be collecting for the tax years of 2015 and back under the provisions there. This is what is required under the law that was passed by the State of Ohio. This complies with all respects with the new state law governing municipal income tax. It contains changes in some penalty calculations, along with changes in the transient worker. With the transient worker it used to be twelve days now it is going to be twenty days before they have to withhold and report. It is going to contain changes in the loss carry forward where we used to grant the one year loss carry forward and now the State is requiring it to be five years. In previous years that could of cost us a couple hundred thousand dollars in a couple of different years. We don’t have a choice with that. We started with RITA and with the recommendation we made some tailoring to match our program and what I have given you today…Randy I don’t know if you have had a chance to review it.
Mr. Klammer: Yes I did.
Mr. Slocum: It came from Ms. Riggy who is the Chief Corporate Council for RITA. This was her recommendations for changes to this. I have looked at it and I don’t believe that there is anything substantive in her changes. It is more technical and legally that I have no opposition to anything. If we don’t pass this we will not collect Income Taxes for next year. That’s a fact of life and this has to be passed.
Ms. Vaughn: Is it safe to say that this is another cut in our budget thanks to the State of Ohio?
Mr. Slocum: It will eventually be. The Loss Carry Forward is probably one of the biggest areas is being phased in so we will not have an immediate impact, but long term it will have a definite impact on the City.
Ms. Vaughn: That was my understanding. Are there any questions from any Committee or Council members? Mr. D’Ambrosio?
Mr. D’Ambrosio: Mr. Slocum this board of tax review is this something that we have to establish right away is it?
Mr. Slocum: No and basically if we have…the law or the requirement for the Board of Tax Review we already have under Section 183. In the event that someone wants to challenge and bring it to the board we have to create a standing board.
Mr. D’Ambrosio: I don’t see the reason to do it.
Mr. Slocum: There isn’t a real need to do it unless we start getting people to complain. It was a big thing with the state that these things should be required but we’ve already had the requirement and had the statutory requirement for it but we have never had anybody apply for it. How we’ve administered the taxes has been consistent under general practices. I don’t see it happening but if somebody wants to push it we would have to form it.
Mr. D’Ambrosio: I agree and I didn’t think that it was something that we needed to do right away. I just wanted to hear your opinion on it.
Mr. Slocum: That opinion went for the 183 as much as it went for the 184.
Mr. D’Ambrosio: Ok.
Ms. Vaughn: I believe that if I’m not mistaken that there was one complaint brought before that board long before you or Mayor Morley or anyone else but myself. Unfortunately I do recall because I was on that board for a while. That there was one discussion and one complaint and it was settled there was no cost involved and no liability or anything like that.
Mr. Slocum: In the event that something happens we have ninety days to re-appoint and find the people to form the board. There are specific requirements and I can’t really remember exactly what we wrote. What we wrote in here complies with the state law.
Ms. Vaughn: That’s right.
Mr. Slocum: I think that there are three from Council and one or two from the Mayor.
Ms. Vaughn: I think that we had to have a CPA in there also. We had a CPA in there.
Ms. Vaughn: Any other comments or questions Mr. Slocum, members of the Committee? If not what is your pleasure. You can’t vote?
Mr. Klammer: Is gambling back in?
Mr. Slocum: Yes gambling is in and in fact I added a section to ensure that gambling was covered where the people buy the tickets in Eastlake. I put a section in and Ms Riggy has indicated in her comments here and she said that it is not needed.
Ms. Vaughn: We think that it is.
Mr. Klammer: The deeds that Section D should cover it.
Mayor Morley: Right.
Mr. Klammer: So I guess that I can see that.
Mr. Slocum: Again is what happened with this is that this language was taken from the either the City or Village of Jefferson is that they had a pool of people that won the Mega Lottery and they had language like this and they were able to enforce it. Most R.I.T.A. communities do not have this language. I want to keep the language in here.
Ms. DePledge: I think that there is a difference between the two I mean Section D refers to professional gamblers and Section E is just anybody. I think that Section E has more protection for the City.
Mr. Klammer: Yeah in the second paragraph.
Mr. Slocum: In professional gambling you have to be a professional gambler before you can deduct losses. Most people are not professional gamblers.
Mr. Licht: Do you have to buy the ticket in the city? If you live in the city and you buy the ticket in Mentor can’t you still get tax on it?
Mr. Slocum: Yes, from the city.
Ms. DePledge: When you win you have to go to…if the winnings are over a certain amount. Like my mom won a thousand dollar ticket and I had to go up to Giant Eagle and fill out a form then I had to take the form over to the bank and they had to record the form and they had to take all of my information for tax purposes so they could report my winnings for my taxes. So that is just the way that it works. If you win a ten dollar ticket I don’t think that they are too worried about it but I can’t remember if it’s over….
Mr. Slocum: If it’s over six hundred dollars you get a 1099 form.
Ms. DePledge: I will get a 1099 form at the end of the year.
Mr. Hoefle: Even in bingo they do it.
Mr. Klammer: The issue that we used to have over the years is that about reciprocity for late filers and waiving that what was is?
Mr. Slocum: It was reciprocity for late….I have that in here and she didn’t object to it.
Mr. Klammer: That they don’t get the reciprocity?
Mr. Slocum: That they don’t get the reciprocity if we give the notice. I will find it in here.
Mr. Klammer: I made a note to ask but I didn’t….
Mr. Slocum: I did include that in here that was one of my…
Mayor Morley: That’s if they didn’t file but we can…
Mr. Klammer: Not give the reciprocity.
Mr. Slocum: We cannot give it…
Mr. Klammer: Our ordinances…
Mr. Slocum: Our ordinance said that if we notify them that you haven’t filed and if you don’t file…and it’s not just an oversight. We have a responsibility to notifiy them and if we do that and they still don’t we can make the reciprocity disappear.
Mr. Hoefle: Correct.
Mr. Klammer: I just wanted to make sure.
Mr. Slocum: That is still there. But again I don’t know if R.I.T.A. is going to actually enforce something like that I think that is different from the way they handle their day-to-day. You just have to recognize that they are a machine at what they do.
Mr. Klammer: That is all that I had.
Ms. Vaughn: Any other questions?
Mr. Slocum: You had no problems with the changes?
Mr. Klammer: No.
Ms. Vaughn: If not the Committee?
Mr. Licht: Move it forward.
Ms. DePledge: Move it forward.
Ms. Vaughn: Does the rest of council agree?
Mr. D’Ambrosio: Yes, I do not have a problem with it.
Ms. Vaughn: Thank you.
There were no questions or comments.
Mr. Klammer had nothing to report.
There were no further questions or comments.
Mr. Slocum has nothing else to report.
There were no further questions or comments.
Mayor Morley: Did you guys get the email that Mr. Slocum sent out about the salt refund?
Ms. Vaughn: Yes, thirteen thousand. That was is the paper too.
Mayor Morley: The other thing is that I talked with Mr. Rubertino and asked him to get some pricing today. We had a truck up on the rack that split in half and thank god that one of our mechanics wasn’t underneath when it split in half and fell. So we have lost seven trucks within the last three months. You guys are all well aware that we ended up scraping the other four. The trucks are 1989 and 1994 so we are having Mr. Rubertino get some pricing on three new trucks. All of them are going four wheel drive and they are going to be either fifteen hundred or twenty five hundreds. I just wanted to let you know that it will be coming and we talked about the money and where it would come from.
Ms. DePledge: Would we be able to use those for snow plowing?
Mayor Morley: We are going to use them for more of the sanitary and sewer things. I don’t believe that we are going to look at plow packages right now.
Ms. DePledge: Ok.
Mayor Morley: Eventually we can.
There were no further questions or comments.
ORDINANCE TO REAPPROPRIATE FOR THE EXPENSES OF THE CITY OF EASTLAKE, STATE OF OHIO, FOR THE PERIOD BEGINNING JANUARY 1, 2015 AND ENDING DECEMBER 31, 2015
Ms. Vaughn: I know that we have looked at it and Mr. Slocum wants to give an explanation as to why if would make it easier for everyone to understand.
Mr. Slocum: Number one the city income tax and from what we originally appropriate and we anticipate having salaries the entire year and we don’t have it. I’m taking that money and reallocating it. You would look at this and say “gee it is going up” and it is going up a bit but it really isn’t, because there are other items that you are not seeing in it. There is stuff like PERS and that.
Ms. Vaughn: Longevity.
Mr. Slocum: That is not included in the numbers. I’m taking the total appropriation and if you could just follow. It is going from three seventy two to three eighty one it is an increase of nine thousand, but really I am going to be saving that. If you really wanted me to the PERS side and lower that and lower some of these other items including stuff like the health and dental. I’m not going to be paying for one person’s health and dental. The municipal court our judge’s increase the charges and it was a significant increase from last year and I just need the money to pay the bill. We don’t really have much of a choice. On the seventeen thousand increases in the miscellaneous government expense we had a check fraud that we lost approximately five thousand dollars. The loss is split between us and the bank. We have instituted a positive pay system between us and Huntington that will prevent this from occurring with our major account. The positive pay costs us forty eight dollars a month to have. The other ten thousand of that is that we are getting back billed for about two years worth of bank charges. Last year we had about a thousand and this just hasn’t been properly billed. They are demanding the payment and they are due the payment and I need the money. Where we are taking the money from is….I do not have one thing on here that I need to have on here. I need to lower the special projects for the final for the salt bid. That is where I was getting the money from and I see that I don’t have it here and I apologize. It is hard to get good help.
Ms. Vaughn: So what would it be under? The salt bid.
Mr. Slocum: We came under the salt bid by about sixty thousand.
Ms. Vaughn: What line item would it have been under?
Mr. Slocum: Something under eight ten I don’t have it.
Ms. Vaughn: It’s out of general fund.
Mr. Slocum: It’s out of general fund.
Ms. Vaughn: Ok.
Mr. Slocum: Under costs that are under eight ten under the general fund. The effect on the general fund on the appropriation will not change.
Ms. Vaughn: Ok.
Mr. Slocum: I mean the taxes are going to go down a little bit. I will have that for the final piece of legislation and I will update this other sheet to show that. On the other funds the state grant we had a problem and what we had originally presented to Council we showed twenty thousand in personal services and sixty two thousand in other expenses. When we got to the final legislation we had eighty two thousand in other expenses. This is just reallocating and it is showing us the exact same thing. There is no change. If you look at the state grant we say eighty two thousand before and we are at eighty two thousand after. The federal grants are going to give me the ability to pay those firemen under the federal grant. I am increasing that to one hundred and fifty thousand which I believe will cover it for the remainder of this year. They will be paid out of this fund at the end of the day. The stormwater fund we are doing projects and going to be reimbursed by the….stormwater fund and at the end of day anything that we actually spend out of this fund for projects or personal we will get reimbursed.
Ms. Vaughn: We will get back. I understood that part.
Mayor Morley: It on the memo that I sent out last week just in case any of the residents.
Mr. Slocum: This will give me the ability to do.
Ms. Vaughn: It’s not like you will have to prepay them basically.
Mr. D’Ambrosio: That’s why we are seeing them on Sunday’s cleaning sewers and catch basins. Overtime and everything we are getting reimbursed.
Mayor Morley: We are actually charging back for the block and everything.
Mr. D’Ambrosio: Really, even the material? No kidding.
Ms. Vaughn: Any questions from the Committee?
Mr. Licht: Just one clarification on the revised appropriation for the general fund did I hear then that sixty thousand is going to show that there is ultimately going to be a decrease?
Mr. Slocum: It will be a decrease in the general fund.
Mr. Licht: Right now it is showing a forty thousand increase where you are saying at sixty thousand it is going to be about a twenty thousand dollar decrease is what you are saying?
Mr. Slocum: I have already received from the County a revised certificate of amended resources covering the federal grants so I can comply with them. Why I have no idea it’s your bureaucracy at its finest.
Ms. Vaughn: Any other questions? Ms. DePledge? Or rest of Council? Which is a Council Committee Meeting does the Mayor wish too..We have to keep the Mayor in line. Committee what would we like to do with this legislation once we get a new copy? Move forward?
Ms. DePledge: Move it forward.
Mr. Licht: Move it forward with the change.
Ms. Vaughn: With the change.
REGOGNITION OF PUBLIC
Jessica Luczywo, 34186 Waldmer Drive, Eastlake., Ohio
Ms. Luczywo: Once this Chapter 184 takes effect will Chapter 183 be revoked or revised at all will it still be in the books?
Mr. Slocum: Chapter 183 will on the book and it will be used for tax years for 2015 and prior. Chapter 184 will cover tax years for 2016 and forward.
Ms. Luczywo: For Chapter 184 it talks about a tax administrator but doesn’t have a way to choose a tax administrator but Chapter 183 does. So would you be referring to Chapter 183 on how to choose an administrator since Chapter 184 doesn’t have a method of choosing one?
Ms. Vaughn: We are not going to have one.
Mr. Licht: Our tax administrator is R.I.T.A. right?
Ms. Vaughn: Yes.
Mr. Evers: Chapter 184 is under R.I.T.A.
Mr. Slocum: We have a contract with R.I.T.A. It is not going to be covered by an ordinance.
Ms. Luczywo: In here is says that we have a tax administrator.
Ms. Vaughn: We did.
Mr. Slocum: It does.
Ms. Luczywo: Chapter 184 does though and it doesn’t specify that the tax administrator is R.I.T.A. So I think that this chapter is really vague on who the tax administrator is. And it is something conflicting in Chapter 183 I can see that being a bit messy.
Mr. Klammer: We have a contract with R.I.T.A. and I am comfortable with it.
Ms. Vaughn: There will come a time when the Mayor will have to determine a Charter Review Commission. There are many items in the ordinances that could be revised. Some are major and some are minor. You know that.
Mayor Morley: They are both well aware of that and I told them that we were looking into that and again good with your questions.
Mr. Klammer: I think that there are some larger cities that have tax administrators as well for customer services related things.
Ms. Vaughn: There are a lot of things in the ordinances that could be updated but normally in the past people have looked at the big ticket items not the smaller ones. The minuscule things do not impact the everyday operations of the city so much. Thank you Ms. Luczywo. Is there anybody else?
Angelo Trivisonno, 34186 Waldmer Drive, Eastlake, Ohio
Mr. Trivisonno: I guess on the reciprocity on the increase for R.I.T.A.?
Mr. Slocum: Right.
Mr. Trivisonno: Could you just explain?
Mr. Slocum: We knew that it was going to occur and it was fully envisioned. We are getting the appropriation consistent with what our anticipated….that is why we knew that the other wages and other items would be decreasing…..they will be billed by R.I.T.A.
Mr. Trivisonno: I just wasn’t sure of some things.
Mr. Slocum: It is nothing unanticipated.
Ms. Vaughn: No surprises?
Mr. Slocum: Nope.
There was no one else who wished to speak.
The meeting was adjourned at 6:22 p.m.