Tribune calls for budget reform

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shell-gameThis editorial below appeared in today’s Tribune and is reprinted with their permission:

End Warren’s shell game and cut spending

June 24, 2016
Tribune Chronicle        

A transfer of public money from Warren’s utility accounts to cover shortfalls in Warren’s general fund is little more than a shell game that ultimately will trigger shortages in city enterprise accounts and lead to additional user fees or worse financial struggles down the road.

Under Ohio law, money generated in enterprise accounts – like Warren’s water, sanitary sewer, storm water and environmental services accounts – may not be intermingled with one another nor with the city’s general fund. However, city officials have found loopholes that will allow transfer of some funds between departments. That came based largely on legislation council passed in 1986 authorizing administrative fees to be charged by the general fund to the city’s enterprise accounts.

Mayor Doug Franklin last month authorized transferring $233,748 as “administrative fees” from utility funds to pay salaries for Community Development Department workers.

The CD Department’s annual payroll in wages and benefits is $452,335, but the department is short $170,000 needed to get through the end of the year.

This week, Franklin acknowledged he knew since February about impending Community Development budget shortfalls, but did not share this knowledge openly with council. Then, a few weeks ago Franklin authorized the fund transfer – without council’s knowledge.

In a similar act, Franklin and his Safety-Service Director Enzo Cantalamessa also recently authorized paying former city Auditor David Griffing’s company $5,000 to examine ways in which enterprise funds could be used to pay charges incurred in general fund accounts. That $5,000 contract also was done quietly and without council’s knowledge.

The study by Griffing’s company was being done around the same time that city Law Director Greg Hicks was advising Franklin and Cantalamessa that, in fact, 1986 legislation already existed that allowed the transfer of these funds from enterprise accounts to the general fund.

That legal advice came at no additional cost to the city, leaving us to speculate on why Franklin and Cantalamessa needed to pay their former elected colleague $5,000 for similar advice.

Ultimately, the transfer may be technically legal – according to the opinion by city Law Director Greg Hicks – but still, we dispute that it’s the right thing to do.

Simply put, if Warren’s Community Development Department doesn’t have enough money to pay its bills, then a logical thing to do would be cut spending. Further, if there is excess funds available in city enterprise accounts, then most users and taxpayers would argue the city should reduce utility rates.

Of course, we know that’s not going to sit well with government officials. In fact, it’s likely that city residents soon will be looking at increased utility rates triggered by upcoming obligations to upgrade the city’s Water Pollution Control plant, to the tune of at least $30 million.

The controversial $233,000 transfer was followed by another transfer this week, this time of $106,000 from the city’s storm water fund to pay for road salt.

Several members of council have rightfully firmly objected to these transfers.

Councilwoman Helen Rucker called it a “Band-Aid to a much larger problem.”

Councilman Eddie Colbert demanded answers on why Community Development needs more money.

Councilman Dan Sferra pointed out, “The enterprise funds currently are healthy, but we can’t keep hitting them when the problem is the general fund.”

Sferra and Councilman John Brown voted against the road salt fund transfer.

We agree with these vehement objections.

The administration is calling this transfer “administrative fees,” but we call it robbing Peter to pay Paul. The best way to overcome shortages in Warren’s general fund is simply cut spending.

editorial@tribtoday.com

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How about a little salt on your wounds?

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SaltLast night City Council passed legislation #3599 which authorized the administration to transfer $106,000 from the Waste Water department to the General Fund, for the purpose of paying for salt to use on city streets next winter. This was another transfer from an Enterprise Fund to the General Fund, over and above the $233,000 transfer from Enterprise Funds to Community Development, written about here previously.

This move is a strong confirmation that the budget is springing leaks at an increased rate. Not only is the cat out of the bag, no one — including Enzo and Doug — is disputing it any longer.

The legislation was sponsored by Eddie Colbert (at-Large) who said this:

“Our General Fund is in trouble. I hate voting for this, but it is an effort to stave off the inevitable — either lay-offs or tax increases.”

Vince Flask (W-5) added:

“It is time to look at the staffing level in all city departments.”

Vince also said the situation that made this necessary was not created by “carelessness.” Many would certainly argue that point, but here we are. You may remember from a recent post that the Waste Water Department has very serious capital needs of its own (to the tune of $25 million), so the administration’s continued policy of robbing Peter to pay Paul has real consequences. Things that need to be done at the waste water treatment plant will not be done now because Enzo and Doug have chosen to take money from the plant in order to subsidize Community Development, and to pay for salt.

Last night’s vote was 8-2 in favor of the transfer, which does not bode well for the likelihood of reversing the transfer of $233,000 to CD. Only Dan Sferra (at-Large) and John Brown (W-3) vote against the salt money transfer.

But all is not lost. Council also passed Ohio’s first anti-beastiality statute last night, so we’ve got that going for us. Which is nice.

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Oh, now you tell us

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35246-the-lady-jaz-live-shoLast night’s City Council Community Development committee meeting couldn’t be adequately explained in 100 pages, but I’ll do my best to boil it down to the essentials.

It was very contentious. Several council people forcefully expressed their objections to the transfer of $233,000 from Enterprise Funds to Community Development.

The meeting began with CD committee Chairwoman Cheryl Saffold (W6) asking Mike Keys, the CD Director, who earns over $83,000 per year, if he would consider taking a pay cut to help fund his department.

Keys replied that this was not a question for him but should be directed to his union.

Councilman-at-Large Dan Sferra then launched a blistering attack focussed on the fact that CD and Mayor Franklin waited until June to reveal their financial problems, essentially putting council in the position of either playing ball with what Sferra called a “dangerous plan,” or being the bad guys who imposed financial discipline at the cost of people’s jobs. He stated:

“No one came to Eddie Colbert, Al Novak or me, the three members of the finance committee to say a word about it until June.” 

At this point Mike Keys laughed out loud, which did not improve Sferra’s mood. Keys replied that Sferra isn’t his boss — the Mayor is. The Mayor stayed quiet during this exchange.

[View Josh Nativio’s rather entertaining video from the meeting here.]

John Brown (W-3) reminded everyone that when the SAFER grant expired the firemen were laid off, not bailed out by the Water Department. The same rule applied to the dispatchers who were moved to the county payroll last year.

Brown reminded the group that the Waste Water head, Ed Haller, has sent council a long memo outlining $25 million in capital improvements needed at that plant. “How can we drain an essential service of these much needed funds for this purpose now?” Brown asked.

The accounting issue that puts CD in trouble is impossible to understand for a variety of reasons. I am convinced that there isn’t a single person in the city of Warren who understands the budget, which is a monument to obfuscation and stealth. At least three council people I spoke with feel that former auditor Dave Griffing is at fault for the confusion, and yet he is the very man the Mayor and Enzo turned to for a solution — for a $5000 fee, of course.

The most vocal was Councilwoman- at-Large Helen Rucker who said:

“Mr. Griffing failed to show up at many meetings council had requested he attend to explain various aspects of the budget, because he was always using up his vacation days in Florida the last year before he retired.

He should be helping us through this for free. Why are we paying him again? I wouldn’t hire Dave Griffing to do anything for the city. We should find someone else.”

There was a brief discussion of what CD actually does for the Enterprise Funds, to justify the transfer payments, prompted by a question from Ms. Saffold. Keys replied with a very non-specific few minutes of banter on activities that included handing out pamphlets urging businesses to use Warren’s sanitation services.

Janet Hazlette, a former city employee and community activist, said the State Auditor is going to want much more detailed and specific information than Keys provided, and Sferra told the room he will be calling the State Auditor himself to make sure they look into it.

The transfer of funds is justified by Doug and Enzo based on a piece of 1986 legislation that allows the administration to allocate funds from the Enterprises to the General Fund based on a formula. Several council people are clearly skeptical of the validity of that ordnance, but more importantly, some feel the formula itself is based on a far too rosie scenario, which could lead to the $233k actually coming out of the GF at a later date. This is money we clearly do not have.

Doug’s only defense of his plan was to say, “We had a problem, and found a solution. If you don’t like it, find your own.” But he went on to threaten council that blocking his idea would lead to losing the HUD funds that provide grant money to 35 local non-profit organizations, since CD would not be around to administer the HUD grant.

However, Youngstown uses a third party — a non-profit organization — to do the same administrative work, and at a lower cost. I hope to learn more about their program this week.

The bottom line is that the Warren City budget is broken. Leaks are springing up in multiple places, Doug and Enzo are doing their best to jerry-rig solutions by robbing Peter to pay Paul, because it’s now too late to fix it properly, as should have been done when they took office.

That wasn’t done because it would have required a plan — and they don’t do planning; and it would have required creating a sustainable city budget that places a higher priority on maintaining essential services over keeping the city payroll as large as possible.

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Tim Ryan and the NRA

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th-2It’s amazing how a relatively small organization like the National Rifle Association is able to have such a complete stranglehold on national policy concerning gun regulation.

The secret to their success is, of course, money. Just a few days after the Orlando shootings I received a direct mail solicitation from the NRA telling me that “my personal freedom has never been at greater risk,” and asking me to join their ranks and send them some money.

Much of the money they receive is then sent off to Washington — nearly $4 million to current members of Congress over the past 18 years, according to a recent article in the Washington Post.

NRA-logoCurrent Ohio Congressmen received over $235,000. Of the 13 House members on the list, 12 are Republicans. The lone Democrat? Tim Ryan, who has received nearly $20,000 from the NRA, making him #5 on the list.

Ryan’s web site does not list his financial donors, nor is “gun control” one of the issues for which he provides a written position.

It’s beginning to look like Congress may actually vote on the question of whether or not to prohibit persons on the FBI’s terrorism list to purchase assault-style weapons. It will be interesting to see how Ryan votes on this issue, one that Democrats can be expected to support strongly.

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Sferra and Colbert take action

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three-card-monteWarren City Councilmen-at-large Dan Sferra and Eddie Colbert have requested legislation to reverse Enzo and Doug’s raid on the city’s enterprise funds of more than $233,000, which they  transferred to the Community Development department. In an article in today’s Tribune by Raymond Smith, Sferra said the city is already having problems with the general fund, and further stated:

“We have three healthy departments and I don’t believe you raid those funds to booster the financially weak fund,” Sferra said. “Every department has to be able to stand on its own.”

“You don’t prop up a department,” he said. “If you do that everyone is going to suffer. It will end up in chaos.”

Councilman Colbert also expressed serious concerns:

“We never have been told why they need the money,” he said. “We want proof why they need it. What happened in its budget that CD needs to increase their budget more than it requested at the beginning of the year? They need to show me the legal justification for us to use the enterprise fund money in this way.”

Community Development Director Mike Keys claims that if he does not get these funds “he will have to shut down the department sometime in July because he would not have the income to pay his staff members,” and will have to “reduce programming,” according to the Tribune article.

This is both a revelation and a mystery to everyone, and begs the question, why did Doug, Enzo and Mike wait until June to tell us that CD will be broke in July and shutting down?

There have been monthly council budget meetings all year and this was never mentioned by Enzo or Doug; Keys did not attend any of the meetings. According to the budget, CD has spent only 40% of its budget through May 2016. Of course, there is a big difference between the budget and actual money. So if Enzo and Doug spent the money originally intended for CD on something else, then CD may be running out of time.

This is what happens when you treat the budget like a game of three-card monte, as is done in Warren by the Mayor and his SSD.

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