WATERVILLE — The city’s finance director on Tuesday issued a memorandum to city councilors and Mayor Nick Isgro, regarding Isgro’s veto last week of the council’s approval of a $41.9 million municipal and school budget for 2018-19 and addressing Isgro’s suggestions for cutting the budget.
Finance Director Heather Rowden on Friday sent the memo to City Manager Michael Roy in advance of next Tuesday’s council meeting, at which councilors will consider overriding Isgro’s veto. An override requires five council votes, according to City Clerk Patti Dubois.
In her memo dated Friday, Rowden notes that Isgro’s veto message recommends cutting five items to decrease the 8.3 percent tax increase represented in the approved budget to 3 percent.
“Since we will not be able to meet prior to the City Council meeting on July 3rd, I wanted to address each item, as well as provide my understanding of the financial state of the city,” Rowden’s memo says.
Isgro recommends cutting several new positions in the school budget for a total of $365,589, decreasing negotiated teacher pay raises from 6 percent to 3 percent, cutting the Fire Department budget by $20,000 and the paving budget by $30,000 and moving $274,000 from a designated city pool account to the general fund and not repairing the municipal pool.
Rowden’s memo says the raises in the school budget are mandated by contract, and most school and city employees are part of a union.
“Union contracts are negotiated ahead of the budget process and approved by the School Board or City Council prior to being included in the budget,” her memo says. “Not honoring those agreements could cost the city in both administrative time and legal fees.”
The School Department would have to address Isgro’s recommendation to eliminate funding for all new positions in the school budget, but a number of the positions are federally funded, according to Rowden. The city charter mandates that the school board — and not the mayor or council — has the right and responsibility to direct expenditures of all school money, she said.
“While the City Council has the power to raise money for the support of the schools, they cannot direct how those funds are spent,” she said.
Rowden maintains that while it is possible for most councilors to transfer $274,000 from the pool to the general fund and eliminate or downgrade a new pool slide, the money was set aside specifically to be used for pool renovations.
“In its current condition, the slide area is a safety hazard that needs to be addressed,” she said. “While the city has not fully prepared for the renovations and replacement of the pool, reserving these funds for this purpose showed planning and changing the use would discourage planning for other projects in the future. As with all assets, equipment and structures will need to be replaced eventually. If the City does not want to bond for these expenses, money should be set aside, like it was for this purpose, for future spending.”
As for cutting $30,000 from the paving budget, Rowden says the paving expense line is directly related to the tax increment financing revenue line and if paving funds are decreased, the city must also reduce the amount it transfers from the city’s Gas Pipeline TIF for that purpose. The Gas Pipeline TIF generates about $300,000 a year, according to Rowden. She said that in fiscal year 2018-19, the city proposes to use $250,000 for paving and $50,000 for plowing and other associated public works costs directly related to road conditions.
“TIF funds may only be used for specific expenses,” she said. “The use of Gas Pipeline TIF revenues are outlined in the TIF agreement. Revenues are dedicated to be ‘used to pay directly (or reimburse the city) for the costs of the Municipal TIF Improvements.’ Municipal TIF Improvements are defined as road and sidewalk repair and maintenance, public safety training facility and equipment purchases, and purchasing and replacing public works equipment.”
Responding to Isgro’s suggestion that the Fire Department’s part-time/temporary funds be reduced by $20,000, Rowden says Roy and councilors reduced the department’s original request for 2018-19 by $20,000 to maintain flat funding. For 2017-18, the part time/temporary line for the Fire Department is overspent by nearly $2,000, she said. Part-time firefighter wages have increased because the minimum wage has increased and there have been several structure fires. Also, firefighters must be trained to ensure both their own safety as well as that of the public, according to Rowden.
“If the line was further reduced, the city would be in the position of sending untrained firefighters to emergencies, reducing the number of firefighters called to emergencies, or overspending the budget line.”
In her memo, Rowden also addressed road repairs and capital improvements as they relate to the budget.
“While it has been pointed out that the City was only able to decrease its budget because the 2018-19 budget does not include any funding for capital improvements, it is not unrealistic to assume that a city the size of Waterville should be spending $700,000 to $1,000,000 per year on capital improvements,” she said. “In addition, the City should still plan to bond for longer term, larger expenses.”
The city for the past several years has put off major road repairs and equipment purchases to keep budget increases down, according to Rowden.
“We have replaced equipment that is in total disrepair, but not equipment that is in very poor condition and inefficient,” she said. “As a result, routine maintenance lines have been increased and still routinely overspent. We have had equipment fail during critical times (plows in the winter) because it has exceeded their useful life. As a result, service to the public has suffered. Continuing to neglect capital purchases will only put the City further behind, and reduce the ability to provide essential services timely and efficiently.”
In his veto message, Isgro discussed changing the way budgets are developed and setting a limit as to how much can be spent and sticking to that limit.
Rowden says the city offers residents several services, and each comes at a cost.
It is the city manager and finance director’s job to present what those costs are, and the council determines whether those services are worth those costs, she says.
“To arbitrarily restrict available funds would mean existing services would suffer or the city manager would need to make the decision regarding what services are no longer offered,” she said.
Department heads work hard to keep costs down, but many of those costs are out of the city’s control, according to Rowden.
“The city’s largest line items include health insurance, county taxes, fire hydrant rentals, catch basins and storm drains, street lights, motor fuels, salt and sand and equipment parts and maintenance. These costs have been increasing year over year due to market forces. While it is understood that many households must continue on a fixed or stagnant income when prices increase, they understand that there are things they will do without. If the mayor and City Council wish to maintain or reduce the tax rate while the city’s expenses increase, they must also decide what they are willing to do without.”
Since Roy is on vacation this week and Rowden will be on vacation next week, she wrote the memo to Roy about Isgro’s veto message and Roy recommended she send it to City Council Chairman Steve Soule, D-Ward 1. Soule and Roy suggested Rowden also send it to other councilors.
Dubois said Tuesday that if the council votes to override Isgro’s veto, the budget stands. If councilors do not override, they must reconsider a budget. They could make amendments or postpone the matter and consider a resolution declaring an emergency and order for use of emergency funds to run the city. That money would come from surplus.
Amy Calder — 861-9247
Twitter: @AmyCalder17
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