FINANCE COMMITTEE OF COUNCIL

CITY HALL, 100 LOCKVILLE ROAD

                                                         TUESDAY, MAY 6, 2008

 

                                                    EXPENSE SUBCOMMITTEE

 

                                                                      8:48 P.M.

 

1.         Finance Committee of Council’s Subcommittee to review Expenses opened at 8:48 P.M., with Mr. Fix, Mr. Sabatino, and Mr. Sauer present.  Others present were Cristie Hammond, Tricia Sanders, Tim Hansley, Lynda Yartin, Linda Fersch, Chris Schornack, Jan Eichner, Von Smith, Peggy Portier, and others. 

 

2.         APPROVAL OF MINUTES OF April 16, 2008, Meeting.  Mr. Sabatino moved to approve; Mr. Sauer seconded the motion.  Roll call was taken with Mr. Fix, Mr. Sabatino, and Mr. Sauer voting “Yea.”  Motion passed, 3-0. 

 

Mr. Fix stated a representative from the Violet Township Bicentennial Committee was present this evening.  Mr. Fix stated Ms Peggy Portier was present this evening because this committee is working through the budget expenses and reviewing all expenses the City will have this year and try to determine if they are necessary or could be done more efficiently. 

 

Ms Portier stated she felt the Committee would be pleasantly surprised that the Bicentennial Committee is not asking for any additional money from the City’s budget.  She stated the City and the Township each donated $5,000 as seed money for the Committee and they have worked with City departments on different events and as far as she knew, they do not plan to ask for money that is not already a part of the budget.  She stated as an example, the Bike Rodeo they are cooperating on with DARE, DARE already has that planned and it is in their budget.  She stated the Bicentennial Committee will be bringing in some additional things to make it a bigger Bike Rodeo.  Ms Portier stated for Heritage Days they will be sharing costs on the electrician so the City will not be putting out any money they normally would not.  Mr. Fix stated one of the most significant the City incurs is the Police Department, and Ms Portier stated they will be having special duty officers, but they are paying for that and it is not coming out of the City’s budget.  Mr. Sabatino inquired if the police department would be involved in the Bicentennial Picnic in any way and Ms Portier stated she did not believe so.  Ms Portier distributed a copy of the Violet Township Bicentennial Events to the Committee.  Mr. Fix stated then that all of the events would be held without any incremental expense to the City and Ms Portier stated as far as she knew, that was correct.  Ms Portier stated the City departments have been very good about helping and trying to do cooperative/joint ventures.  Mr. Fix stated if there would be anything that Ms Portier saw in the planning process that would impact the City’s budget, he would request they come before the Committee so the City can plan appropriately.  Ms Portier stated she would be glad to do that and, again, they have tried to plan so that would not occur. 

3.         SCHEDULED MATTERS:

 

            A.        Review of Finance and Tax Department expenses.   Mrs. Fersch stated the Committee had received a handout showing the expenditures for the Finance Division and the Income Tax Division.  She stated all of the Finance Division expenses were not taken out of the General Fund, for example 30 percent of her expenses come from the Utility Funds because she does purchase orders, budgets, etc., for the utilities.  She stated 40 percent of the Deputy Finance Director and Finance Clerk’s expenses come from the General Fund.  Mrs. Fersch stated the miscellaneous expenses do come from the General fund.  She stated the Financial Advisor includes our consultant Mr. Cramer, and our investment advisor.  She stated miscellaneous professional services includes printing, advertising, memberships, etc.  Mr. Fix stated the expense of the Finance Division attributed to the General Fund is approximately $200,000, and it is probably safe to assume that by State law we cannot do without a Finance Director.  Mr. Hansley stated that is by the City Charter as well.  Mr. Fix stated further with the other duties of the Finance Director, we need the Deputy Finance Director, and the money spent on the Finance Clerk is money well spent.  He stated these jobs are necessary and outsourcing them is not really an option because of the depth of the duties.  Mrs. Fersch stated as indicated on the handout, we did check with ADP and to outsource payroll would be approximately $17,500 annually, and there would still be a lot of work to be done in-house.  Mr. Fix clarified that currently the Finance Division does the City’s payroll.  Mr. Sauer questioned if he could get an estimate of the amount of time that Mr. Schornack spends doing the payroll and related reports.  Mr. Sabatino  questioned if Mrs. Fersch uses Mr. Cramer on an on-going basis, and Mrs. Fersch stated Mr. Cramer helps us when we put our big note issue together.  She stated he has also done quite a bit of analyses such as when we were reviewing utility rates, and he has worked on the TIF issues and is currently working on putting together the figures on the Good TIF.  She stated he is based in Indiana and he does come here when we need him to.  Mr. Sabatino questioned why we were doing business with someone based in Indiana.  Mrs. Fersch stated Mr. Cramer used to be  Finance Director in Dayton and has a lot of expertise.  She stated the previous City Manager had worked with him and had a lot of confidence in him.  Mrs. Fersch stated she is not using him quite as much now, and perhaps we could negotiate to reduce the retainer.  Mr. Sabatino stated he felt it would be advantageous to use someone on an “as needed” basis rather than a retainer basis, and he felt there would be plenty of qualified people in the local area and we should look at supporting the local businesses first.  Mr. Fix inquired if we spend any more money on our financial consultant because he was in Indiana instead of in Pickerington.  Mrs. Fersch stated we pay a retainer and he does not charge us to come to the City.  Mr. Sabatino stated the cost of coming to the City may be included in that retainer.  Mr. Fix stated he would ask that the Committee defer to staff in hiring the consultants, especially at this level, that they are comfortable with them, they have a history with us and are aware of our financial situation.  He stated he would ask that Mrs. Fersch look at the retainer and see if that should be renegotiated.   Mr. Sauer questioned if we had a credit card policy and Mrs. Fersch stated we do have four credit cards with the bank and she closely monitors whoever has the card out.  She stated they are used so we do not have to reimburse employees for a hotel if they are at a conference, registration for a conference, etc.  She stated the bills are very closely scrutinized and the cards are only used for certain things, such as if we have to order something over the Internet.  Mr. Sauer stated his second question deals with the information Council gets every month.  He stated when he looks at the budget, it seems like the sees vehicles in many different places and this can be very frustrating.  He stated he would like to see if there was a way to have a more organized document where these things can be categorized under one particular area.  He stated, for example, we have a fleet, we know we have a fleet, and he would like to see that under one particular categorization.  Mr. Hansley stated part of how we show our accounts is mandated by statute.  Mr. Sauer stated he understood that, but it is currently very difficult for a council member to see where the expenditure is.  He stated further he would like to see information in terms of the life line of the vehicles in the City, are they nearing the end of their life, in the middle, or what?  He stated currently he does not know.  Mrs. Fersch stated that would be a custom report in Excel, but from CMI she can take all of the line items related to gasoline and to repair and put them in a custom report on the fleet.  She stated however, she cannot provide the age of the vehicle.  Mr. Schornack stated the problem would be that some of our vehicles are split, you will see the same vehicle listed in water and sewer if they share that vehicle.  Mr. Sauer stated the problem for a council member is trying to determine exactly what we do have, how much are we paying for it, why do we have it, etc.  He stated this makes it very difficult to go through a budget and try to figure out where we are overspending, where we are not overspending, etc.  Mr. Hansley stated if council would like any specific information we can provide it, we have the data, we would just have to produce it in the format you request.  Mr. Sauer stated he would like to see something along the lines of a list of the automobiles that are currently in the City, police department and anywhere else, where they are in terms of their lifeline, when they are anticipated to be replaced, what the anticipated cost is, and that way this Council can plan forward and anticipate and see coming down the road.  Mr. Hansley stated that would be a report that could be easily produced, but the most challenging would be the street department fleet that includes snowplows.  Mr. Sauer stated he felt for the comfort level of all of council in going to the citizens and potentially asking for additional revenues, if it comes to that, they need to be extremely comfortable in why they are asking for that.  He stated from his point of view, when it comes to payroll, there isn’t anything that he saw that could be seriously cut, but vehicles or extras are areas that would help.  Mrs. Fersch stated for example we just made a change in our cell phones and we have saved $700 a month, our cell phone bill went from $1100 to $400 per month because we now have a lot of people only using the walkie.  Mr. Sauer stated that is something he would like to see provided in a report to council.  Mr. Hansley stated any question like this that council may have, please ask for it because almost always we can do a report and provide you the information you want.  Mr. Fix ascertained there were no further questions on the Finance Division. 

 

                        Mr. Fix stated the next department to review would be the Income Tax Division.  Mr. Fix clarified that all the tax that the City collects is done by Ms Eichner and her department, consisting of the Tax Administrator, two full-time tax clerks, and one part-time tax clerk.  Mr. Schornack stated there is also a temporary employee.  Mr. Fix inquired if all the income tax collected, and looking for people who did not pay, was that done quarterly, April 15th, or how it worked.  Ms Eichner stated in January they start sending out returns and phone calls coming in.  She stated people start filing anytime from the end of January all the way through April 15th.  She stated this year all of the mail was opened and money was deposited before April 30th, although they are still auditing and posting returns.  Mr. Fix inquired if we had any idea what our collection rate would be, and Mr. Hansley stated he did not feel we would have that information.  Mr. Hansley stated the key is getting people who are working here for a short period of time and are not permanently attached to the City.  Mr. Hansley stated we like to think we get 95 percent or higher of what is actually owed to us because we are aggressive in our efforts. 

 

                        Mr. Sauer stated the Committee had received information regarding the Regional Income Tax Agency (RITA), and asked Mr. Schornack explain that information.  Mr. Schornack stated staff met with RITA and, based upon or collections in 2007, their representative, Lori, was able to give us an estimate of what our annual cost would be based on our transactions.  He stated she provided a low estimate, what our average could possibly be, and a high estimate.  He stated we would need to have a Tax Administrator and some supplies, and the chart on the handout shows the anticipated savings.  Mr. Sabatino stated in evaluating this, would we be receiving less of a service than if we continue with this in-house.  He questioned if RITA had a better system for filing on-line, and that type of thing.  Mr. Schornack stated RITA does have a strong product as they are able to utilize IRS data to do their auditing.  Mr. Sabatino stated from that perspective we would be taking advantage of the technology versus person power.  Mr. Sauer questioned how RITA would handle the fact that we have a school district tax, and people may get confused when looking at their W-2 and put that number in instead of what is owed to the City.  Ms Eichner stated if it is correctly labeled on the W-2 they have a cross-reference for that.  She stated, however, it has been her experience that many W-2s are mislabeled, it could say “Pickerington” and it is actually school district tax.  She stated she would know because she knows what accounts we have and she can check to see if we have an account for that company.  She stated if we do not have an account for that company then she would know it was school tax that was mislabeled.  She stated with RITA those would probably go on through.  Mr. Sauer questioned if RITA handles other communities similar to us, and Mr. Schornack stated they do have cross-checks and they have a large amount of clients so they do have a database of employers and they mentioned that they did use that to pick out employers that incorrectly put items on W-2s.  Mr. Sabatino inquired if we could provide them with the list of accounts we have so they would have that information, and Mr. Schornack stated they did state the more data we provided the better.  Mr. Sabatino stated Mrs. Fersch had mentioned we do 100 percent auditing and his question would be who benefited from that.  Ms Eichner stated she thought the majority of the time it would be the City because the filer did not figure the credit correctly or school district tax being claimed as City tax.  Mr. Sabatino stated both of those would be found through the RITA system as well.  Mr. Sauer questioned if RITA had a success rate that they pretty much guarantee they have, and Mrs. Fersch stated a lot of the cities RITA collects for do not have a school tax or are full credit cities.  Mr. Hansley stated the difference between the two is that currently by hand checking every return, we catch every mistake, and RITA will not catch every mistake on every return.  Mr. Hansley stated if you are looking at pure cost savings, the RITA proposal is something you should look at.  He stated, however, you would be giving up a little customer service and a little bit of getting the money in the right place.  Mr. Fix stated he understood that a lot of people coming in are confused, and the tax clerks explain things and get them straightened out.  He questioned how much time the tax department personnel spend helping people get through their tax concerns.  Ms Eichner stated every day they help people both on the phone and in person at the office, as there is mass confusion between the school tax and city tax.  Ms Eichner stated she feels they do a lot of PR work because no-one likes taxes, and her department provides a person they can vent to, but if they at least understand what they are dealing with and what they are paying it is much easier.  Mr. Fix stated there is certainly a value to being user friendly to the residents that pay the bills.  Ms Eichner stated that is her point in educating people, and when someone comes in very angry and confused, after talking to the people they tend to leave much happier.  Mr. Sabatino stated if we went with RITA it would save us $62,000 to $75,000, we would still have a Tax Administrator that would provide that service, and with some of the other tax duties done by RITA they would probably have a little more time to deal with the residents concerns.  Mr. Fix stated he knew council was very sensitive when talking about evaluating possible changes like this because the people that sit at these desks have worked for the City for some period of time, and making decisions on something like that that will impact those people, is not something that any council member takes lightly.  Mr. Hansley stated he, Mrs. Fersch, and Ms Eichner had met with the employees that would be affected to let them know this was being considered tonight.  He stated not knowing which direction Council might decide to go, the commitment he made to them was that if we went the route of employing RITA, due to the hiring freeze we have had, he believed these positions could be absorbed fairly easily.  He stated the further we go into the hiring freeze, we may have more positions become vacant, and we also have a pool of temps we use, so he felt council could make this decision without laying someone off.  Mr. Fix stated he was looking for a recommendation from staff because they deal with this every day, and on paper it looks like there is a lot of money to be saved with RITA.  Mr. Schornack stated he would like to add there has been talk of increasing the income tax and he had requested RITA to provide the figures that if we did increase our taxes how that would affect their figures.  He stated it appears they would charge about $10,000 more for each one-half percent increment increase.  He stated therefore the savings would be less if we had a tax increase.  Mr. Sabatino stated, however, the income would be more.  Mr. Fix stated the responsibility of this committee is to look at everything they can do to confidently go to the taxpayers and let them know we have done everything we possibly can to save money, and we still need more.  He stated that is what the Income Subcommittee is doing.  Mr. Sauer stated he would like to suggest we have someone from RITA come in to speak to the full Finance Committee because this is not a decision that this subcommittee will make for the City.  Mr. Fix stated he agreed, and any action would have to come through the full Finance Committee.  He stated it appeared that we could save not an insignificant amount of money by looking at this option, and if staff were sitting in these chairs they would have to look at it.  Mr. Schornack stated obviously you have to look at it based on the figures they gave us as an estimate.  Ms Eichner stated again you would lose the personal touch, even though you would have a Tax Administrator that would provide a certain amount of that.  Mrs. Fersch stated she also felt it would be a good idea to check with some of the communities that use RITA and find out how long they have been using them, see if they have had complaints from their residents, are their revenues stable, etc.  Mr. Fix stated he would ask Mrs. Fersch and Mr. Hansley to get together and so some reference checks with these communities.  Mr. Sabatino stated he has received comments from residents that they would like the ability to go on-line and complete and pay their Pickerington taxes on-line.  Mr. Schornack stated he felt it would be possible for us to do that, it would be a matter of getting CMI to come in and set it up and he did not know what the cost of that would be.   

 

                        Mr. Fix stated he would request staff arrange for RITA to have a representative at the next Finance Expense Subcommittee meeting on May 21st.  Mr. Sauer stated he would like to comment that Lori Gishel, the RITA representative, is his cousin and he would, therefore, be abstaining from voting on this issue.  Mr. Schornack stated she is our contact and would probably be the individual that would provide the briefing to Finance.  Mr. Fix stated he appreciated the work of staff on this issue, it is a painful decision, but something council must do. 

 

                        Mr. Schornack ascertained that the Expense Subcommittee would review the Parks and Recreation Department expenses at their next meeting. 

 

4.         ADJOURNMENT.  There being nothing further, Mr. Sauer moved to adjourn; Mr. Fix seconded the motion.  Mr. Fix, Mr. Sauer, and Mr. Sabatino voted "Aye."  Motion carried, 3-0.  The Expense Subcommittee adjourned at 10:00 P.M., May 6, 2008.

 

RESPECTFULLY SUBMITTED:

 

 

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Lynda D. Yartin, Municipal Clerk