City Council Work Session, Dec. 3, 2018

December 24th, 2018  |  Published in Observer Reports

City Council Work Session
Dec. 3, 2018

(Meeting agenda, minutes and presentations are available online at the City of Shaker Heights website.)

Present: Mayor David Weiss; Council members Sean Malone, Nancy Moore, Tres Roeder, Julianna Johnston Senturia, Anne Williams, Earl Williams, and Robert Zimmerman; Finance Committee citizen members Martin Kolb and Anthony Moore
Others present: Chief Administrative Officer Jeri Chaikin, Finance Director Robert Baker, Law Director William Gruber, NOPEC Executive Director Chuck Keiper, NOPEC Relationship Manager Nicole Sweet, NOPEC Marketing Director Dave Jankowski

The meeting was called to order by Mayor Weiss at 7 p.m.

Agenda

  1. NOPEC (Northeast Ohio Public Energy Council, the nonprofit that negotiates electricity rates for Shaker Heights residents) gave a presentation to Council on its 100 percent Green Energy Rate. Mr. Keiper told Council that NOPEC was looking to conduct a two-year pilot program on electric car sharing in Shaker Heights. NOPEC will provide the vehicles for what was described as a “cutting edge” plan. Shaker is one of five sites throughout Cuyahoga County selected for this pilot program.

The new 100 percent Green Energy Rate was discussed. Mr. Malone wanted to know how much per year the price differential between the plans amounted to. Council was having a difficult time figuring out the costs from the hand-outs NOPEC distributed at the meeting. Mr. Keiper noted that everyone wants 100 percent green energy until they look at the cost. NOPEC is offering five new products with a 100 percent renewable content option.

Public comment regarding the NOPEC presentation was given by Norman Robbins, who found in the past that the default (you have to opt-out) option is what 99 percent of people choose. He mentioned that the former mayor, Earl Leiken, let people know about the green option and few people chose it. He asked that the 100 percent green energy rate be made the default opt-out option. He noted that the cost of the 50 percent green energy option and the 100 percent green energy option were essentially the same, but whereas the 50 percent option offers a default opt-out option, the 100 percent does not. He asked NOPEC to consider making the 100 percent green energy option the default opt-out option.

  1. Proposed Revised 2019 General Fund Operating Budget and General Capital Budget: Mayor Weiss remarked that it has been an “interesting process” trying to project a budget with imperfect information. He said the revised budget was the best guess in light of current volatility and uncertainty and it’s unlikely that there will be any resolution to this uncertainty until well into 2019. The revised budget was described as an “unofficial temporary” budget. All of this volatility stems from the daily variability in RITA collections. At the macro level, collections are down substantially, and at the micro level there is constant fluctuation on a day-to-day basis. The budget will get modified in the second quarter of 2019.

Mr. Baker then began discussing his portion of the Revised 2019 General Fund Operating Budget Presentation (available on the city’s website). He reiterated the significant change in revenues and said the city was significantly behind in revenues this late into the year. Similar cities have had similar issues (Rocky River’s revenues were described as “dropping like a rock”), whereas other cities such as Bay Village have seen no drop off. Solon’s revenues are down, but they are cushioned by business and commercial taxes. Mr. Baker wasn’t sure if revenues were being impacted by the change in the new federal tax law (the Tax Cuts and Jobs Act of 2017), which limits the deductibility of state and local taxes, among other things. Mr. Zimmerman asked if the decrease in revenues was similar to the drop in 2007-08. Mayor Weiss said that we won’t know if the SALT (State and Local Taxes) reduction is the culprit until April-May. Mr. Baker said that there aren’t any big changes in Shaker. People aren’t leaving. But RITA isn’t giving any explanation, much to the finance director’s consternation. If it is SALT, the revenues will come in April-May, but it could be delayed another month.

The only way to make up for the decreased revenues this late in the planning process is to reduce expenditures and transfers. The proposed revised budget includes expenditure reductions and asks that Council “hold tight” as the scenario plays out. The following reductions were proposed: no COLA increase (the original budget called for a 2 percent cost-of-living increase), elimination of a consultant, a cut in researching tax relief and in a pilot project for a Lee Road streetscape plan. There are also reductions in transfers to the General Capital Fund.

 The next steps involve continual monitoring of income tax revenues, reconsidering changing to part-time to full-time positions; a delay in filling vacant positions; and the preparation of a revised 2019 Budget effective July 1, 2019, based on January-June revenues.

Ms. Senturia remarked on the challenge the decrease in tax revenue represents in deciding what to choose to eliminate or pare back. She suggested that the city may need to borrow more for pressing capital needs and to make more room for debt service in the capital budget. She said not offering COLA didn’t feel right to her and that the tax relief research project and videotaping Council meetings would be better cuts. Ms. Williams was troubled by the COLA recommendation as well. Mr. Malone suggested exploring options for delaying capital projects rather than decreasing COLA. “The situation is unprecedented and it is hard to move the needle on the operating budget at this point,” Mayor Weiss said. He added that the city can go back and restore the spending cuts as revenues increase.

The revised budget will be presented for adoption at the Dec. 17, 2018, City Council meeting. The meeting adjourned at 9:08 p.m.
Audrey Morris, Observer

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