FINANCE COMMITTEE OF COUNCIL

CITY HALL, 100 LOCKVILL ROAD

MONDAY, MAY 5, 2008

INCOME SUBCOMMITTEE

1. Finance Committee of Council's Subcommittee to review Income opened at 8:15 p.m., with roll call as follows: Mrs. Sanders, Mr. Smith and Mr. Wisniewski were present. There were no members absent. Others present were Cristie Hammond, Jeff Fix, Mike Sabatino, Linda Fersch, Dennis Schwallie and Stacey Bashore.

2. A. APPROVAL OF MINUTES of Minutes from March 19, 2008 Meeting- Mr. Smith moved to approve; Mr. Wisniewski seconded the motion. Roll call was taken with Mrs. Hammond, Mrs. Sanders, Mr. Smith and Mr. Wisniewski voting "Yea." Motion passed, 4-0.

B. APPROVAL OF MINUTES of Minutes from April 16, 2008 meeting- Mr. Smith moved to approve; Mrs. Sanders seconded the motion. Roll call was taken with Mr. Wisniewski, Mr. Smith, Mrs. Sanders and Mrs. Hammond voting "Yea." Motion passed, 4-0.

3. SCHEDULE MATTERS

A. Review and discussion of possible ballot issues

Mrs. Fersch stated that at the May 6th Expense subcommittee meeting there was a presentation from Ed Laramie on property tax and if we would bring the tax up to the 5.5% it would bring in another $760,000 based on the current valuation. She stated that valuations are assessed every three years. Mrs. Fersch stated she put together what the revenues would be with the different scenarios of income tax withholdings. She stated that the credit that we gave to residents who work outside the City last year was around $1,000,000. Mrs. Sanders asked what the City needs to survive and Mrs. Fersch stated that we need at least a $1,000,000 increase because of the Diley Road payments. Mr. Smith asked if the Expense Subcomittee would be coming up with a number that we are going to need to meet our revenue needs and Mr. Fix stated that the Expense subcommittee is reviewing where we are today to see if there are cuts we can make or opportunities we can outsource. Mr. Smith stated that every dollar we are able to cut is one less dollar in revenue of the future to bring in. Mr. Sabatino stated that it wasn't necessarily on a going forward basis. Mr. Smith stated that he understands that Diley Road is an incremental expense item that we have not had in the past. Mrs. Fersch stated that we have taken our current debt and divided it by the number of years left on it to pay a level debt payment each year. She stated there was also a projection for the interest rate because you can only pay on notes for twenty years and if we want to go to bonds we need to do so shortly. Mrs. Fersch stated that then we will be disciplined as to how much of the principal and interest we are going to pay. Mrs. Hammond asked if the million dollars would be enough to help us over the next ten years and are we building maintenance and long term costs into it. Mrs. Fersch stated we have been able to stretch the Diley Road payments with the impact fees and our loan payment came in a little bit less than what we originally planned. She stated that if there are any cost overruns once the project is complete we have to come up with the money for that. Mr. Sabatino further clarified that the Expense Subcommittee has been looking at processes and procedures of how we do things and we are evaluating whether it is the most cost efficient way or whether there are ongoing future savings. Mr. Hansley stated that we also need to remember that the 2008 budget is a very lean budget because we have not been paving and maintaining so we need to be careful if that is the benchmark year. He stated that we are still growing and the community is still getting larger and the basic things like paving that should have been in the budget are not even there to be cut out. Mr. Sabatino stated that the only way to even consider any appreciable changes is to change some of the processes that we are doing. Mrs. Sanders stated that her initial thought was hoping not to raise the taxes at all and is there any way to get through one more year to look at those processes and re-structuring. Mr. Wisniewski stated that we have been cutting the budget for the last four years and have cut everything out of the CIP, but the reality is we are not going to find $500,000 in the budget and go forward with the CIP items. He further stated that you will have to keep cutting services. Mr. Sabatino stated that there is not enough enhancement on the expense side to help at this point. Mr. Smith clarified that on the 1.5% tax rate for additional revenues it assumes that citizens living in the City but working in another taxing district would still get credit for all but 1/2 percent. Mrs. Fersch stated that it would not be a change for them or for the two percent scenario as well. Mrs. Hammond stated that we need to think about how much money we would generate if we raise the people who live here by a quarter of a percent. Mr. Wisniewski asked what other cities are not giving a credit to their residents and Mrs. Fersch stated that most of the other communities give a credit. Mr. Sabatino stated that it still costs the same to provide services to people who work outside the City as it does to those who work in the City and most of the other cities have a higher rate. Mr. Wisniewski stated that it moves us from relying on residential to relying on commercial, so it focuses our intention on getting the largest income generator. Mr. Smith stated that his basic questions was that the Expense Committee is not coming up with a significant reduction on incremental revenue. Mr. Wisniewski asked if the Expense committee would be coming up with a scenario if the tax issue fails and Mr. Fix stated that right now we are only focused on looking at all of the processes and whether they are necessary or if there is a way to outsource. He further stated that if a tax issue fails then Council will have to work on a whole new budget, so we are not making projections for 2009. Mrs. Hammond stated that while you are doing that you need to be looking at what to do if it fails. Mayor O'Brien stated that the Expense committee has a strategic mission with long term cost reduction and efficiencies and Income committee has a tactical mission which is to decide what to do now. He further stated that somewhere in between the two there needs to be a plan B. Mr. Fix clarified that the tax credit is a council action. Mr. Sabatino stated that he was on the Meals on Wheels Board and they have come up with several scenarios of what to do if their levy doesn't pass. He stated that would help all of us to know what our options are. Mrs. Sanders stated we have to be careful not to make it a threat to anyone. Mrs. Hammond stated that it doesn't have to be a threat and if it doesn't pass then we will formulate a plan and turn around and do it. Mrs. Sanders stated that we know it is not a threat but they may still see it as one. Mr. Sabatino stated we need to present it well and have some professional help on how to present it. Mr. Wisniewski stated that for us to be more like other communities the safest way is to have a credit. Mrs. Fersch stated that before we put this on the ballot we could pass a piece of legislation saying that if our tax rate went up it would show what the credit would be so that all they would be voting for is the tax increase. Mrs. Hammond stated that would then give us the ability in an emergency to take away the credit. Mayor O'Brien stated that you can keep plan B by pre-legislating for it if it doesn't pass. Mrs. Sanders stated that Pickerington has gone from a farm community to a City and we have never raised our income tax. Mrs. Hammond stated we are not asking for that much and we got stuck with doing this because nobody had the courage to do it before. She further stated that we are responsible for paying the City bills so we need to decide which method is going to most effectively generate the money we need. Mr. Sabatino stated that it would be a great value to see which consultants the schools used to help find areas where we can increase support. Mrs. Hammond stated that is not the decision before us tonight and we need to decide what we need to do. Mr. Smith stated that the majority of our tax base works in Columbus so there is already a disperancy and if we go to a two percent tax rate it almost equalizes everyone. Mr. Wisniewski stated that 13 percent of the community does not pay what everyone else pays that lives here. Mayor O'Brien clarified that it will only affect income tax payers. Mr. Smith stated that those that work in Columbus don't get a vote in City of Columbus but they still have to pay 2 percent. Mr. Smith stated that the City needs to continue providing a certain level of services. Mr. Wisniewski stated that we are continuing to decrease the level of services that was provided. Mrs. Hammond stated that being said why shouldn't all the people who live here help pay for those services and Mr. Wisniewski stated that we are. Mayor O'Brien stated that most of our residents are subjected to taxation without representation so at least here they have both so we are offering them a choice. Mr. Smith moved to recommend an Income Tax increase to a total of 2% and leaving the credit where it is to Finance Committee; Mr. Wisniewski seconded the motion. Dennis Schwallie stated that his thought if there was to be a credit contingent upon having the passage of the increase that it be done ahead of time in the form of a separate piece of legislation. Mr. Smith stated he would like to get the law director's opinion on that as well. Roll call was taken with Mrs. Hammond voting Nay and Mrs. Sanders, Mr. Wisniewski and Mr. Smith voting "Yea.' Motion passed, 3-1.

Mrs. Hammond asked what projections would we be using for our expenses and Mrs. Fersch stated that it varies depending on what projects need to be completed. Mr. Smith stated that we need to make it clear to our unions to not expect a 5 percent increase in wages. Mr. Hansley stated that the reality is you don't have much control over labor costs. Mr. Sabatino stated that we do have control over the number of employees. Mr. Hansley stated that at least with income tax you will have a tax base that does grow. Mrs. Sanders stated that we will still have the ability to play with the credit if there is an emergency. Mrs. Fersch stated that our refunds are up this year so we are looking at over $200,000 in refunds and that some employers will not withhold the City tax and will only do what the employee tells them so it is hard to get an exact figure. Mrs. Hammond stated that assuming the economy doesn't turn around will that money cover any increase in expenses and Mr. Wisniewski stated that we will still be collecting enough to pay for Diley Road. Mr. Wisniewski stated that we also need to look at annexation expenses.

Mrs. Hammond asked that annexations be put on for the next Finance Committee meeting. Mr. Wisniewski asked if there was any reason for the Income Subcommittee to continue meeting and Mrs. Sanders stated we should keep it together and call meetings as needed.

There being nothing further the Income Subcommittee adjourned at 9:00 p.m. on Monday, May 5, 2008.

RESPECTFULLY SUBMITTED:

Stacey L. Bashore, Deputy Municipal Clerk