City spending cuts laid out

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Committee sends proposed water rate hike to full council

By Rich Bauer, Managing Editor

A Vandalia City Council committee last week supported revisions to this fiscal year’s budget, and agreed to pass on to the full council a recommendation for a second water rate increase in three months.

However, the council ­– after meeting in closed session for about an hour – ­voted not to endorse a suggestion for furlough days for city employees.

The council’s insurance, personnel and finance committee met for about three hours last Tuesday, hearing City Administrator Jimmy Morani’s recommendations for spending cutbacks in the current fiscal year, which ends on April 30 of next year.

The committee meeting was held a week after Morani presented financial information to the city council in suggesting that the city make revisions to its current budget, the documentt used to guide city spending.

In addition to hearing from Morani on the budget issues, committee members Larry Bennett (chairman) and Larry Cable received input from about a dozen city employees and department heads who were present. Jerry Swarm, the third member of the committee, was not present, but Alderman Chad Feldpouch was on hand to participate in the discussions.

Morani told aldermen at their Nov. 16 meeting that the revisions are needed in light of decreasing revenues, increasing expenses and the spending down of fund surpluses. The decreasing revenues, Morani said, include declining revenues in general sales taxes and capital improvement (infrastructure) taxes.

Also hurting the city’s financial picture is a large amount of money owed for water service provided to Vandalia Correctional Center and an unforeseen allotment for the downtown streetscape and infrastructure project.

Morani said the state currently owes a little more than $170,000 for water provided to VCC, with about $120,000 of the total being considered a past due amount.

As for the downtown project, Morani said that HMG Engineers had estimated that the total cost for the downtown project would come in about $110,000 below the contract price of $3.88 million.

However, he said, the city just learned of a $93,000 bill for patching in various areas of the downtown. That bill is an accumulation of work being done over several months, with the city not being continually notified of the spending for the patching, Morani said.

The payment owed for water provided to VCC, he said, is a major issue, “but even with the VCC money, in six months, we would probably have to look at some spending cuts.

“Right now, the city is OK, since it’s a full fiscal year we’re talking about. But we have to look ahead,” Morani said, noting that he has taken into account trends and the status of the economy.

“We’re doing the same thing that being done in other communities,” he said. “We’ve just been fortunate that we didn’t have to do it before now.”

At this point, Morani said, he is not recommending any employee layoffs, though the city’s public works department will not be replacing its mechanic when he retires in the near future.

Mayor Rick Gottman said he would not support layoffs. “The last resort is to lay off employees.”

Morani said one way of cutting expenditures would be to have employees take one furlough day each month.

That was one recommendation that was not well received by the city employees in the audience.

For example, one of those employees, police officer Judd Newcomb, pointed out that the city would be saving on his salary in the near future when he serves four months of military duty.

A number of those city employees present charged that the city might not have to consider furlough days if the council watched its spending more closely and worked to see that the city received the money it is owed.

Several times during the meeting, the employees referred to the council’s decision in October to not accept the low bid on a sewer extension project, and its vote to approve an extension for a developer who owes the city more than $50,000.

“That equals a lot of furlough days,” said police Sgt. Jeff Ray.

In October, the council approved the $250,006 bid of Precise Construction for the extension of sanitary sewer on West Main Street. That bid was the third lowest received by the city; Haire Plumbing and Heating of Okawville bid $190,193.60 and Furlong Construction of Kell bid $246,821.60.

That project was mentioned several times before Feldpouch, one of the aldermen voting for Precise’s bid, gave reasons for not going with the low bid.

There was such a wide spread in the bids, Feldpouch said, that some aldermen felt unsure whether Haire had included dewatering work in its bid and might up its payment by submitting change orders.

The three lowest bidders were all asked to confirm that their prices included dewatering, Feldpouch said, and Precise Construction was the only one of the three willing to give such confirmation.

That confirmation was requested by the city even though the dewatering issue was addressed as part of the bidding process. At a pre-bid meeting on Sept. 22, one of the bidding contractors asked the project engineer, Hurst-Roche Engineers, whether the city would OK additional payments for unforeseen issues.

In response, an engineer with the firm clarified that the city would not approve additional payments for dewatering and trench shoring.

Feldpouch said he and other aldermen felt that if the city chose Haire, it would not be able to hold that firm to its bid price and would eventually pay that firm about the same amount as Precise’s bid amount.

“It was a gamble,” Feldpouch conceded, further explaining that the council skipped over Furlong and chose Precise because it is a local firm, and there was a difference of only $4,000 in the two bids.

In November, the council approved a request from Chuck Keller for an 18-month extension on a 2005 agreement related to the construction of the Holiday Inn Express. In that agreement, the city agreed to fund infrastructure extensions to Keller’s property, and Keller agreed to develop a restaurant at that site.

If he was unable to meet the terms of the contract, Keller would be assessed a daily penalty of $50. By November of this year, the amount owed in penalties equaled the amount paid by the city for the infrastructure extensions.

“So, people (the state and Keller) owe the city money, (and it comes back on the employees)?” Newcomb asked.

Morani’s recommendations to the committee included an 8.57-percent increase in water rates, saying that the increase is needed to help a financially tight water and sewer fund.

This increase, he said, would generate about $33,000.

City Clerk Peggy Bowen said it doesn’t seem right that city residents be asked to pay more for water service when the city’s water and sewer fund is having problems due to the state’s failure to pay its bills.

Morani said, “Even if the state paid us, we still could be looking at a deficit going into next year.”

The committee voted to send Morani’s increase, which would be the second increase since September, onto the full council for a vote next Monday night.

The council in September approved rate increases of 7.19 percent for water and 2.19 percent for sewer. Those increases mirrored increases in production costs for the previous 12 months.

Public Works Director John Moyer pointed out that when he was an alderman, the council approved an ordinance that allowed increases recommended by the city auditor to automatically go into effect. The council, however, does have the authority to alter those recommendations, and Moyer said he doesn’t feel that’s the right thing to do.

Two years ago, when the city’s auditor recommended a 12.54-percent increase in water rates, the council chose to drop the increase to 5 percent.

“When I was an alderman, if there were increased costs, we passed those on to the consumer,” Moyer said. “You’re not going to make everybody happy.”

Bennett agreed. “That’s why we have an auditor give recommendations.”

In addition to voting on the water rate increase recommendation, the council may choose to vote on budget revisions supported by the personnel, finance and insurance committee. It, however, is not required, as state law allows the revisions to be made by city administration.

The revisions include a $141,396.70 reduction in the budget for the city clerk’s office. That total includes the $100,000 construction of a new cemetery building.

While the economic development funds are expected to increase by $141,225, due to a surplus in TIF funds from the last fiscal year and an increase in revenue in this fiscal year, Morani is recommending that the funding for Vandalia Main Street for the balance of this fiscal year ($7,500) be eliminated. Expenses for travel and meetings, land acquisition and surveying/engineering fees “have been significantly decreased,” Morani said.

The revised budget for the sewer portion of the public works budget shows a decrease of 25.3 percent, with a decrease in capital improvements due to Gallatin Street work that was completed during the last fiscal year.