End Warren’s shell game and cut spending
June 24, 2016
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.