Surprise, disappointment, frustration describe city budget work session

By Karen Cornelius

Vermilion City Council held a public hearing on farmland applications and an executive session on personnel on Monday night, February 26. Following, there was a special Vermilion City Council Finance Work Session on the 2018 general fund budget expenditures. The session took a difficult turn when there were no actual numbers available. The 2017 year was not closed as yet, and the revenue side was unknown.

 

There also appeared to be a problem explaining how expenditures in the general fund in 2017 were over $6 million from a fairly consistent $5.4 million over 2015 and 2016. Since the 2018 budget has to be prepared using the Certificate of Estimated Resources issued in August, 2017, the budget has to balance at $5,497,615. That’s about $500,000 less to spend than 2017. That spelled cuts and challenges ahead for city council and very little money for any new projects such as road repaving and storm water improvements.

 

Finance Committee chairman Brian Holmes asked council members for their questions, comments, and concerns after looking at the finance director’s information provided that night. Councilman John Gabriel said it was obvious they had to work through 2017 first and arrive at some actual numbers so they could focus on the general fund expenditures for 2018. He said there was a big jump in 2017 and now they are back down. He saw some of their challenges centering on health care and contract negotiations. As an example, he said water distribution shows spending $55,000 on health care and spending less on waterline repairs, $50,000. He projected the storm water fund could end up with a zero balance to start for 2018 due to the projects underway or previous project debt. “We’ll have to take time off to get our ducks in a row,” said Gabriel. He added the water fund looks like a weak $62,000 but the sewer fund is healthier. He didn’t see anywhere they could pull from this tight budget. “It will take time to get our finances in order.” He commented he still personally wanted to keep $17,000 in the water fund rather than transfer it to the general fund. Paramount was doing something about the health care costs for employees which is climbing dramatically. “Our income cannot keep up.” The road fund did not look healthy to Gabriel either with perhaps $100,000 to start. He advised they need to get the city’s ongoing projects off the books first, pay the bills, and avoid any borrowing for new projects.

 

Councilman Steve Holovacs agreed with Gabriel that they have to get the actual numbers first. He said according to the figures they have now the two percent raises are not in there, the council and mayor’s expenditures are not updated. He said the last 2017 payroll was rolled into 2018 and payroll was not showing that. “We have to get actual numbers to see what to trim,” said Holovacs. “We have to stay within our limits.” Councilwoman Barb Brady said what hurts her most is the Street M&R is lower for 2018. While it is evident they can’t pave any streets for a couple of years, they have to have funds to fix potholes. She said while there are so many numbers council has no control over, the Street M&R affects all the residents. Councilman Frank Loucka agreed that health care costs are out of sight jumping from $892,000 to $1.4 million plus. “It’s unsustainable.” As far as Street M&R money, Loucka said the city has to find more effective ways to patch streets and make the most of the dollars they do have. He said Ward II streets are crumbling after this winter. Council president Steve Herron expressed his frustration and agreed they need specific numbers before they can act. He said they do have an obligation to the employees and union contracts, and every city is dealing with these issues. He said he did go line by line and there are cuts he didn’t know if they could cut. He said every budget is fluid and they could make changes later in the year.

 

Councilman Gabriel emphasized, “Council, the mayor, and the finance director are in a position where they have to start over. We’re a new council and administration.” He said they don’t understand why 2015 and 2016 were consistent in expenses and where additional income came from in 2017 to jump so high. It was the same with the Port Authority having a big jump and then asking where it went. “We have to come back down, endure some hardships.” He said there is an element of surprise and disappointment, but the money that was spent is not missing, it went into the ground and projects. It was spent on big projects (bridge on Highbridge-Traffic Signal Project).” Now we have to get our financial house in order. As a group, we will be discussing cuts, that’s for sure.”

 

Councilwoman Brady stated that council last year never saw these $6.1 million expenditures. “We didn’t approve them. I don’t think council was aware of the numbers that were so high. We didn’t realize we were at $6.1 million for expenditures.” Councilman Holovacs stated that he was in the audience last year and remembered the former finance director indicating this amount and Brady remarking that it was higher than ever. Brady was the only one on council at that time questioning the number. Finance director Amy Hendricks added that she didn’t know about 2017 and she could not comment only starting her job this February. She said one-half million dollars more was available in 2017 and it was spent. “You can only spend this once. It’s gone this year.” Mayor Jim Forthofer said he hopes they can avoid any more surprises and he can’t comment on why it happened, but they now can get upfront and do regular reporting and get on top of the new financials. Councilman Holovacs advised they should now do appropriations as they come, not wait for the end of the year to make adjustments. “We can do this with the new administration.”

 

Councilman Gabriel said there were all these anomalies and now they have to come back down. Now they can receive monthly cash and revenue statements and they can keep track of the balances. He said they do have to look at health care insurance. It has nothing to do with the employees. He said this is management’s job to provide a balance between what the city can afford to give the employees based on their salaries. “Our income is not growing as fast as our expenses. Something has to change.”

 

Finance chairman Holmes brought the meeting to a close, reviewed all the concerns, and said the budget would go back on the March 12 committee agenda for further discussion. Finance director Henricks said she is working on the actual numbers. Holmes told her they understand what she has to deal with and are patient. There will be further opportunities in March to continue the budget discussions with this work session a preliminary overview and perhaps a rude awakening.

 

Other council business conducted on Monday, February 26, was the approval of renewal applications for placement of farmland in an agricultural district in the city of Vermilion for tax purposes. The applicants were Nancy Gould, trustee, Sunnyside Road, 31.66 acres; Dorothy Northeim, trustee, Nancy Mayer, trustee, Sunnyside Road, 125.29 acres; and Nancy Mayer, trustee, Sunnyside Road, 48.10 acres. Councilwoman Brady asked if it were normal not to have an applicants in the audience. Clerk of Council Gwen Fisher pointed out they were just renewals and is was usual not to appear.

 

Council also moved to go into executive session to discuss personnel matters including hiring, firing, and compensation. The mayor and law director were invited to join them.

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