SPECIAL MEETING OF THE PORT HURON CITY COUNCIL - BUDGET PART 2

May 18, 2009 - Special Meeting of the Port Huron City Council concerning the 2009-2010 Budget.

The Port Huron City Council met in room 408 of the Municipal Office Center to conclude discussions of the budget for the next fiscal year of the city.

Mayor Brian Moeller asked to put agenda items 1 - 10 together as a consent agenda item and vote on them all at the same time, making it easier to get through the rest of the agenda. All council members agreed on this.

It was stated that 5 positions have been eliminated from the city budget this time. Those positions are the City Attorney, City Treasurer, a Recreation Specialist and two large equipment operators (1 from the parks department and 1 from the cemetery). It was also stated for the record that there will be no increase in property or income taxes, water/sewer rates. There is also a hiring freeze.

The first item the council discussed was a 2% salary increase for non-union employees. This was a difficult issue for the council to discuss as department heads were sitting in the room.

Council member Byrne objected to the pay increases because at this time the private sector is being beat up with the economy being what it is.

Council member McCullogh felt that these employees had not received a pay raise in a couple years now and thought that it was time for them to get a raise.

It was stated that non-union employees are 1/3 of the city work force (which adds up to about 90 people).

Council member Byrne wanted to know if these increases will include benefit increases. John Ogden (city finance director) stated that it is mostly salary increases but when salaries go up, pension contributions go up as well.

Mayor Pro-tem Fisher pointed out that the department heads have not had a raise in 4 years. Non-union employees had not received a raise in awhile either, yet union employees had a 2% increase not too long ago. Mr. Fisher felt that there was no problem with a pay raise as long as it paralleled the union employees raises.

Council member Stevens pointed out that raises should not be given because it's relative to job lose. The union gave up 2 positions so that their employees could get a raise.

Council member Doorn is wrestling with this because of the perception of the public. He has been in contact with several people who live in the community and they do not think that city employees should receive pay raises in a horrible economy like this. He felt that the perception of the public would be that the council is not sensitive to how they are struggling in their daily lives. He kept stating that this was not a personal thing towards the city employees and he agreed they probably do deserve raises, but the people they serve are either unemployed or having their hours cut and it would be hard to justify this to the people that pay the taxes in this city.

Council member McCullogh wanted to clarify that this $125,000 budgeted for pay raises in this part of the budget was not for department heads. It was for the non-union employees.

Mayor Moeller stated that as a person who works for the state of Michigan, he will take a $14,000 loss this year from layoffs that he faces at different times of the year.

Council member Stevens wanted to know if the council said no to this would the jobs be guaranteed and those people could consider themselves safe from layoff. The answer was yes.

Council member Lewandowski warned that if these people don't get their raises, they may decide to unionize.

Council member Stevens said she would not run from unions. She likes unions and have worked with them over the years. She felt that if it was explained to the employees that if they don't take a pay raise no one will be laid off, she felt they might understand.

Council member Byrne pointed out that he works at a business where there are union and non-union employees. The union employees have reduced their hours to 3 days a week in order for everyone to keep their jobs. He also pointed out that this $125,000 goes on forever each year. It adds up after time and can the city sustain that.

Council member Doorn stated again that no member of the public he's been in contact with supports raises at this time. He said the city is asking citizens to sacrifice for the city. He pointed out that the city income tax is down 1/3 of its revenue. If the council were to approve these raises and then have to come back and tell the citizens they have to raise rates on services, the citizens would have a real hard time swallowing that.

At this point the comments ended on this subject and Sue Child (city clerk) took the role. It was voted down 4 to 3 (Council members McCullogh, Lewandowski and Mayor Pro-tem Fisher were for the raises).

Next up 2% raises for department heads.

Mayor Pro-tem Fisher wanted to know what the bottom line would be if department heads got raises. John Ogden answered it was $13,500. It has also been 3 years since the department heads had raises.

Council member Byrne stated again that this was not about the people in these positions or the quality of work they do. It's just the fact that the economy is so bad.

That ended the comments on this and roll was taken. Again is was voted down with Council members McCullogh, Lewandowski and Mayor Pro-tem Fisher voting in favor.

They began discussion on the DDA budget. Part of this would ask that the DDA contribute $100,000 to McMorran's capitol improvement.

City Manager, Bruce Brown, felt that the DDA board would vote in favor of this.

Council member Byrne was concerned about voting on this before the DDA did. He was fearful about being burned like the council was when they voted to approve the KMG deal with McMorran and the McMorran Authority voted it down after.

Mayor Pro-tem Fisher said that basically they were voting on the concept of supporting this. If the DDA were to vote no on this, the council could call a special meeting with the DDA and find out what they were thinking and try to work out some sort of deal.

Elimination of double pensions was next on the agenda. These double pensions would be eliminated from contracts going forward.

Council member Stevens asked how they can vote on this if they are agreements and felt that they would be voting to break legal contracts.

Mayor Moeller felt that this was not breaking the contract. Contracts would have to be re-negotiated but all the council was doing was voting to eliminate this from the budget.

The council then went over a list of items the public had stated at the Public Hearing from the last regular city council meeting. Those items were:
Fund mandated services only.
Eliminate membership in the EDA (which has been done already).
Keep the animal control officer.
Eliminate leaf pick-up (which can't be done until the current contract with Waste Management is up on June 30, 2011).

Council member Byrne felt that if the city doesn't eliminate the leaf pick-up, there will be further cuts needed next year.

City Engineer Bob Clegg said that he had received a bid from Waste Management at this time. The bid was $30,000 which works out to be $2.54 per household annually. He also stated that a truly competitive bid could not happen unless the city bid it out to several different vendors.

Mayor Pro-tem Fisher wanted to be clear that a special millage covers the cost of this.

Council member Doorn felt that the citizens get a better deal by banding together and doing it this way, instead of everyone paying for it on their own.

Mr. Clegg pointed out that the money from that millage can only be used for solid waste removal so it's not like the city can use it in other areas.

Mayor Pro-tem Fisher pointed out that it will not actually be a cost savings to the city if it's cut, as the leaves will not all be picked up and will blow around. They potentially can plug up the sewers and other things the city would have to unplug and fix.

Council member Lewandowski said that when he lived in Kalamazoo, they didn't have city pick up. It did cost more to deal with it when it was done individually.

Council member Byrne expressed that he would like to see it quoted the next time the contract comes due for renewal.

Council member Stevens said she doesn't rake her leaves at all. She said she mulches her leaves up and uses them as a way to fertilize her grass. She mentioned that this could be a program to eliminate eventually but first the public could be educated about how this works and how this is a green way to get rid of the leaves.

The Museum Subsidy was next on the agenda.

Council member Byrne does not want the subsidy to be paid to the museum and said that the public spoke loudly about this at the round table sessions.

Mayor Pro-tem Fisher said that the city owns most of the museum pieces, anything sitting on the ground like the Carnegy Building and the Huron Lighthouse Boat, etc. He's not sure that eliminating the subsidy would save anything as upkeep on these properties would still have to continue.

Council member McCullogh was disappointed that after everything the city has done for the museum over the years, how the museum officials beat up the city manager, city employees and city council over the Lighthouse issue. He wanted to make it clear that the city has been very supportive of the museum over the years.

Mayor Pro-tem Fisher stated that he was on the radio that very morning, addressing this issue. He felt that the museum officials had no solid business plan when they approached the city about this. They have spent 6 years raising funds and it's only a fraction of the cost of restoring the museum.

Council member Lewandowski felt they needed to sit down with Museum officials to talk, because the Times Herald continually takes things out of context and maybe this is not exactly what those people said.

Council member Stevens has always had an issue with the round table discussions. She feels that, at that time, the citizens were lead to believe the city was going broke and they aren't. She felt the reports that came out of those discussions were skewed because the information given to the people involved was not exactly the truth.

Mayor Moeller said he went to one of the round table sessions and he felt the administration, at that time, went into those sessions with an agenda. He said that there was not a free flow of ideas and he felt that the information given to the people actually directed the conversation.

Council member Byrne (getting back to the subsidy) felt the museum should fund itself by memberships.

Council member Doorn likes Mr. Brown's idea to meet with the different groups (like the museum) and talk to them about their plan.

Mayor Moeller defended Mr. Zimbala of the museum. At one time the city gave the museum $4,800 for some awnings. When Mayor Moeller was elected he asked for that money back. Mr. Zimbala showed up with a check and gave most of the money back.

Council member Byrne moved to eliminate the entire $98,000 budgeted for the museum. The roll was taken and the motion failed.

The council discussed the elimination of the city attorney. Council member Stevens worried that this might not be as cost effective as one might think. She suggested that the city track the expenses and compare them to the expenses of having an in-house attorny.

They moved on to the next subject of keeping the city police at full force. Mayor Moeller would like to see one more fire fighter hired for public safety. He pointed out that if they only have 2 fire fighters on a shift, if it's not a rescue emergency, they can't enter the home until there is at least one more fire fighter on the scene.

Council member Stevens wants the police to be ready to deal with the issues the city has been facing, like shootings and fights.

Mayor Moeller asked if police, under the stimulus package, can hire more officers. And if so, does that include fire fighters?

Chief Eike said that up front those grants look good. However, they only last 3 to 5 years and if the city can't sustain those positions, they have to lay them off.

Next up . . . elimination of the city income tax. Council member Stevens said that people are not paying their income tax because someone has told them they don't have to as nothing will be done if they don't. She feels that these people are just criminal if they aren't paying their tax. She also fervently pointed out that if people don't pay their income tax, at some point the city will come looking for those people. These taxes have to be paid.

She asked John Ogden if the city was collecting on the federal governmental employees (those that work at the post office and other government agencies located in the city limits). Mr. Ogden said that they had done well collecting when it was noticed that the governmental employees weren't paying city income tax. At some point they were told that they didn't have to, which was not true. He said they could file an FOIA to find those federal employees that aren't paying right now.

Other Budget questions covered TIFAs. Mr. Ogden stated that there are 3 TIFs that no longer capture funds even though they are still shown on the budget. They do this because if a project comes up within the area the TIF covers, they can begin capturing funds again to pay for the project.

The question was asked if the TIF was killed what happens to the money. Mr. Ogden said that he didn't think you could kill one. However, the money would be refunded to those authorities that they came from.

He then listed the TIFs (Tax Increment Financing) that are still active.

The Industrial Park has a balance of $600,000. This would be used for industrial development. Also, Mr. Clegg has a street project on Dove that he would like to do and the money could be used for that as well.

Krafft/Holland has $60,000. There is storm drain work to be done there.

The Paper Company has $180,000. The money has been used to improve the canal and now is used to dredge the mouth of the canal each year.

The question was asked that if the fund balance dries up, what happens to the TIF? Must the area still be there?

Mr. Ogden explained that when the balance is down to zero, they need to continue to show them.

He explained a little about the Harrington TIF. He said it was complicated because it has 2 plans. The DDA and Brownfield, so there are two different taxes and other things included there. The DDA plan has helped with new streets and sewers. There is $150,000 left in the Harrington TIF. This could help fund the commercial development position.

Council member Byrne motioned to instruct the city manager to deplete these funds to make things simpler. No one seconded the motion so it failed.

Council member Lewandowski wanted to know if cities are allowed to set up TIFs any longer. Mr. Ogden thought that DDA plans could be but not TIFs. He said that Brownfield has opened up a little bit if you are a poor city. Port Huron qualifies and can capture school taxes. These funds can be spent on site preparation/demolishion. He said there has to be a plan in place for the state to approve it, however. He pointed out that TIFs have helped fund several projects.

Council member Doorn wanted to learn the process of how the administration moves the funds should they see a project where TIF funds can be used. It was explained that the plan must be amended and the council would then vote on it.

Mayor Moeller asked if there were any more comments to discuss before adjourning. He had one thing he wanted to say. It's more like a pet peeves of his, but he's upset that the banks are charging $1000, $800 or $600 to count the cities change. He said it was ridiculous to pay banks to count our change when the city puts over $1,000,000 in those same banks. He felt that they might wave that fee or maybe the city should look into using banks that don't charge for this service.

Council member Doorn wanted to commend the city administration for presenting the council with a balanced budget to work with. It made the process so much easier.

Mr. Ogden did state that expenditures may exceed revenue at the end of this year (June 30, 2009). He couldn't say for sure because he hasn't seen the 4th quarter numbers. He also felt that the budget for the coming year might have the revenue projected too high. He said when the state has money problems, they start cutting revenue sharing with the local municipalities. He was hoping the city could keep general fund expenditures as low as possible this coming year.

Council member Doorn asked if there was a contingency plan should that happen, and Mr. Ogden said they would have to re-adjust the budget.

The meeting was adjourned.

    Comments:

Trina 05/18/2009
Thanks Ann. It's not easy to get all the facts because things move so fast at these meetings. I think it is really important to try to get as many facts as possible so people can read and see for themselves what goes on at these meetings. It's hard for people to make it there, yet it's so important.

Ann Schultz 05/18/2009
Good job reporting, Trina! Very informative!

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