MINUTES OF THE SPECIAL CUMBERLAND TOWN COUNCIL MEETING

WEDNESDAY, APRIL 23, 2008

EVERETT “MOE” BONNER, JR. COUNCIL CHAMBERS

45 BROAD STREET, CUMBERLAND

 

The meeting was called to order at 7:07 p.m. by Vice Chair Mutter and convened the meeting until the arrival of Council President Higgins at 7:15p.m.   

 

The meeting opened with the pledge of allegiance to the flag.   

 

MEMBERS PRESENT:

 

Council President Higgins, Councilors Mutter, Ackerman, Lemois, Albuquerque, Morris, and Kirkpatrick    

 

Also present Mayor Daniel J. McKee, Thomas E. Hefner, Town Solicitor, Thomas E. Bruce, Finance Director and Sandra M. Giovanelli, Town Clerk 

 

Councilor Higgins arrived at 7:15pm

 

Councilor Albuquerque arrived at 7:30pm

 

MEMBERS ABSENT:   

 

OLD BUSINESS

 

A.  RESOLUTIONS:

 

1.  R-08-55 – A Resolution Related to the Tax Assessment Levy for Fiscal Year 2007-2008

 

Councilor Mutter stated that Council President Higgins is on his way but he said it would be alright to begin without him.  He also stated that Councilor Albuquerque had a previous commitment but will be in attendance later in the evening.

 

Thomas Bruce stated that they should have received an email from the Town Clerk earlier in the day with a resolution that changed two dates on the second page of the resolution from 2008 to 2009.  He also stated that the worksheets that are offered tonight are parallel and represent the numbers that they worked on Monday evening at the Finance Sub-Committee meeting involving projected revenues, projected expenses and tax levy so to that extent he revised the worksheet with that adjustment in mind.  He explained that option one represents a rate increase of 4 percent, in line with the existing ordinance relating to rate increases; in order to execute this particular resolution with this worksheet there is no change to any particular ordinance mainly the tax ordinance from 2004 which limits their rate for each year, 4 percent for this particular tax year.  For Option 2, he further developed a 5.25 levy increase, which is in line with the State Law produces a $12.56 real estate rate and same thing with option 3.  He points out that they will note in this worksheet that a method that he had to employ in regards to the maximum 5.25 legal levy increase which is $51,348,444 that they can see at the top of the option 2 worksheet, the actual total taxes needed at the 43.34 percent collection rate had to be decreased to go down to that limit and the question maybe that if they go down, how are they going to reach their revenue goal especially for this year.  He explained that the $305,000 cut in State aid this year that is approximately $140,000 material wise and significant wise in this whole problem situation he found that was fine to do, but they have to absolutely have to bring it down to the maximum value in order for it to be approved by the Council in a legal manner.  He continued to explain that Option 3 really relates to the current year cuts that were made by the state government, which were ratified last evening by the general assembly house finance committee.   

 

Council President Higgins arrived at 7:15 p.m.

 

Councilor Morris pointed out that at the last meeting it was mentioned that there needed to be two corrections to the resolution that would change the dates on the second page from February 2008 to February 2009, but the amendment presented tonight still reads February 2008.

 

Mr. Bruce agreed that line one needs to be amended to read February 2009.  He continued explaining option 3 and why the Administration is recommending option 3.  He explained that the shortfall that they currently have in terms of option 3 that is measured versus option 2 at 5.25 which is approximately $254,000 for this year and when they set these figures yesterday they were still hopeful that the State would not go through with the cuts that would affect the Town’s General Fund by $311,000; but nevertheless the $.19 difference between option 2, $12.56 rate and option 3, $12.40, is correlated with that $311,000 and the manageability of that amount at the moment is a negative, which is to say that it leaves less money for next year’s levy, that this is more difficult to manage, exposing them more to the risk of a deficit ,but they feel that at that $254,000 the $.19 to the taxpayers is a big deal, which they took into account.  He added that they also took into account that there is another approach that they have implemented and will be proposing to the Council Monday evening in the form of a resolution for a judgment bond related to Pawtucket Supply Board payment of $1 million in December and they would issue a judgment bond and administer the debt service over 15 years.  Mr. Bruce claimed that the overriding objective of that is that it brings the fund balance up to a more healthy level and Moody’s Investment Service recognizes it as a good move to bolster the fund balance and overcoming the problem of depleting their reserves for this issue last year.  He mentioned that they should have received a copy of Moody’s Report reaffirming their A-3 rating.  He stated that in neither option 2 or 3 in the line entitled projected revenue excluding fiscal year 2008 levy have an amount that include judgment bonds because if it were to do that it would create a hole that would be more prudent to avoid in next year’s budget.  He stressed that that has ensured that they have a surplus this year with that judgment bond occurring; at the same time it is easier to accept the risk of exposure of option 3 being more of a challenge than option 2.  He explained that he would like to go in with a 43.34 percent rate and personally as a Finance Director he would want option 2 with the larger number that would have less tightness and risk but option 3 calls for the recognition of the taxpayer who during these economic times does not need the $.19 increase.  He pointed out that both option 2 and 3 have the same timetable, which he would like to discuss further during the discussion on the amendment of the tax cap ordinance.    

 

Council President Higgins explained to Mr. Bruce that the ordinance is only on for presentation.

 

Councilor Mutter acknowledged that the ordinance in amendment of the tax cap is only on for presentation but certainly discussing this resolution with either option 2 or 3 is going to require an amendment to ordinance, and part of the question is whether or not by the local rules and charter if they are able to act on the amendment presented tonight, #08-14 at a meeting that is not a regularly scheduled Town Council meeting. 

 

Council President Higgins stated that he thinks that this would be an appropriate discussion under the resolution.  He explained that the Solicitor has advised him that under the provision of the Charter as it pertains to emergencies that they could act on it this evening; however he does not know if it is necessary to do this without giving the public at least a little more notice.  He added that they have to speak to the nature of the emergency and it is his personal opinion that it would be better for them to put that out to the public at least in the form of an advertisement explaining what they intend to do hopefully on Monday, but he is willing to abide by the decision of the body.  He asked the Solicitor to respond to Councilor Mutter’s question as to whether or not they are able to act on the amendment presented tonight, #08-14, at meeting that is not a regularly scheduled Town Council meeting. 

 

Mr. Hefner explained that the Charter requires that once an ordinance is introduced, it has to be continued to the next regularly scheduled meeting; but in this particular case he has weighted the facts and laid out an argument based upon Section 2 of the ordinance where at least four Councilors would have to agree, it is his opinion that it is paramount that this ordinance be acted on as quickly as possible because it amounts to an emergency that can be contemplated within the provisions of Section 409g of the Charter, spelling out that due to the reduction of State Aid, the fact that the taxable net assessed value this year was less than it was last year, which is not contemplated in the tax cap ordinance, coupled with the fact that it is important that the bills get out on time.  He stressed that looking at it as a taxpayer it would constitute an emergency, allowing the Council to vote on this tonight.  He further explained that if the Council were to vote that this was an emergency and approve the ordinance, at that point it would be continued to the regular Council meeting of May 7^th when in fact the Council could look at it again. 

 

Mayor McKee stated that if they looked at the Moody’s report one of the reasons the Town got in trouble in the 1990s were because the bills went out late and that caused a collection issue.  He also stated that a lot of things got us boxed into this situation--not only the current ordinance, the way the Governor is backing off on committed dollars and he not recognizing that an amendment should have been made to the tax ordinance a few weeks back.  He stressed that it is his position that those tax bills need to go out by May 1^st which if they do not it will impact the collection rate as well as impact the ability to manage this budget.  He pointed out that he would be comfortable with both suggestions in terms of acting on the ordinance tonight under the emergency requirement, or waiting until there has been advertisement to the public with a hearing on Monday, but he would be more comfortable moving ahead tonight, but stressed that they cannot go past Monday. 

 

Councilor Morris stated that she does not have any problem in terms of the emergency issue but she wants to clarify that the Charter does not list or define emergency so they have to take it on a case-by-case basis. 

 

Mr. Hefner added that the Charter does speak to the public’s welfare, health, peace, safety and comfort of the inhabitants of the Town and for protection of persons and property, which is rather general.

 

Councilor Lemois asked the Finance Director if they were to met on Monday would it be possible to get the bills out on May 1^st.

 

Mr. Bruce replied that it would not be possible to get the bills out on time because the window to get them out is seven business days.  He explained that if they have a firm decision tonight on a rate the work can begin tomorrow because they are not going to the printe,r they are going to do the work internally which is two business days with our own systems.  He added that if the ordinance is passed next Monday the bills would be mailed May 8^th and delivered to homes on May 9^th, May 9^th versus May 3^rd is a six day difference; that is a risk because of the cash flow.  He mentioned that the resolution has the cash flow attached and it shows that although the May 9^th payroll is covered with cash they currently have and some for accounts payable, what is not projectable is May 23^rd payroll--whether the May 9^th delivery to the taxpayer yields enough money for May 23^rd payroll.  He stated that he had a back up plan that he tried to develop today with another TAN but First Southwest has indicated that it is not feasible.  He added that when they borrowed the $3 million TANS last month for cash flow, that were approved by bond council rating agency based on the premise that the tax bills would go out May 1^st. 

 

Council President Higgins asked Mr. Bruce to explain where he is getting the six day difference.

 

Mr. Bruce explained that the six day difference is from May 3^rd versus May 9^th which are the possible delivery dates depending on if the Council votes on the ordinance and resolution tonight or next Monday.  He further explained that the process takes seven days, 2 days in house and 5 days for Document Technology, the bill printing company.

 

Council President Higgins asked if it is true that the vast majority of the tax bills get paid by mortgage companies.            

 

Mr. Bruce replied that they will receive more than $2.5 million from First American, which is a clearing house for all banks and mortgage companies.  He mentioned that they are the firm that had caused them a situation with letters that were mailed to homeowners who were not delinquent but the letters read that they were so they have gotten to know them very well and they have stated that in the future they will do anything they can to make the Town happy.  He stated that he is meeting with that firm tomorrow to get that money within 10 days after receiving the bills as opposed to the normal 20 days.    

 

Councilor Albuquerque arrived at 7:30 pm and was given a brief summary of where they were in the explanation. 

 

Council President Higgins asked what the fiscal impact of the bills going out later is and does it have any impact on the upcoming fiscal year. 

 

Mr. Bruce replied that the ability to pay their liabilities including payroll on May 23^rd is potentially compromised and yes it is his opinion that it will impact the upcoming fiscal year.  He explained that since he started working in Cumberland in 2001 he has no experience in a late tax bill so he does not know what the result would be, but he does know that the six day difference will impact them on that 43.34 percent rate.

 

Mayor McKee stated that the last time he recalls the tax bills going out late might have been 14 to 15 days late it came around 32 percent compared to the 43.34 percent.  He explained that at that time there were a lot of system problems that were attached to that situation but they have a much better system now. 

 

Mr. Bruce stated that they cannot say for sure but it could result in a deficit situation for the year.  

 

Councilor Lemois recalled that someone has mentioned that there was the option on extending the collection date and he would like someone to explain that in more detail.

 

Mayor McKee explained that it has been his experience that it would improve the situation but when they get off track it is going to have consequences down the line so historically they know what is going to happen if they do not keep that May 1^st to May 3^rd range.  He added that currently the property tax collections is not their problem in terms of obstacles they are facing--the residents are doing their job paying their taxes which they believe is going to continue, but their problem is the revenue side due to the State’s cutting back on aid while controlling the assessed values. 

 

Council President Higgins asked Councilor Mutter in terms of the levy sheet being in the Finance Sub-Committee, what is the position on that because they need that before they can act.

 

Councilor Mutter stated that there is legislation that says the tax levy needs a recommendation from the Finance Sub-Committee to the Council prior to passage which would not happen if they act on the emergency element, but he believes that if they are working on an emergency situation it should allow them to discuss the amendment of #08-14. 

 

Mayor McKee argued that process has happened inside the Finance Sub-Committee with all the work they have already done on this issue and it is not a situation they have not looked at it; instead they have seriously looked at several times.

 

Council President Higgins asked Councilor Mutter, the Chair of the Finance Sub-Committee, if he is familiar with these three options before tonight’s meeting.

 

Councilor Mutter replied that he had not seen option three or one but he personally he has no interest in option on--that would keep their numbers the same, as he explained at Monday’s Finance Sub-Committee meeting, but would use the proceeds from Judgment Bonds to fill the hole which is a long time revenue source that they would not have for next year.  He asked for confirmation again that they can act on resolution R-08-55 prior to amendment #08-14 based on the emergency nature and that they would have to advertise prior to placing it on a subsequent Council meeting where they would take a vote after a public hearing.  He concluded that they first need to know if a majority of the Council is comfortable with that action.

 

Council President Higgins believed that Mr. Hefner stated that they have to enact ordinance #08-14 and then ratify it a subsequent meeting.

 

Councilor Morris stated that they have to weigh the public coming in to discuss this versus the Moody’s threat of losing our bond rating, and she believes that the public would be happy if they did not risk the bond rating.

 

Council President Higgins stated that he believes that it would be helpful for the press that are present this evening to go over the nature of the amendment to section 136-42 and the reasons why they feel they need to amendment.

 

Mayor McKee asked if it is possible that the Council could vote on the rate tonight subject to an amendment to that ordinance Monday nigh--they could start the internal process on that rate but not send out those bills until the ordinance is voted on, and then of the Council decided that they were not going follow through on what they said tonight, they would just have to do all that work again.

 

Councilor Morris stated that she would not feel comfortable with the Mayor’s suggestion because they are basically promising to do something while inviting the public to a hearing and they are just going to have to ignore their comments.  She understands what the Administration is trying to do but she thinks that they have to take responsibility for what they are going to do tonight, if they are going to do it.  She continued to say that if they are going to give the public a chance to speak, then we have to acknowledge them and we cannot; she believes the reason is because Moody’s has given us reasons why our bond rating would go down in the future--one being the collection issue--so they need to tell the public that they as the Council are taking the responsibility and we cannot give the opportunity to speak because this is such an emergency ,and she is willing to do that.

 

Council President Higgins added to Councilor Morris’ comments that there is also the fact that they might not be able to make payroll which would cause a huge fiscal crisis.

 

Mr. Hefner stated that he also agreed with Councilor Morris’ comments that the Council has to take a stand that it is either an emergency or it is not an emergency, and the public has to accept the fact that it is being done in the best interest of the taxpayer.

 

Councilor Lemois stated that he also agreed but asked if they could have another meeting on Monday after they advertise it because he thinks this Administration and Council has a great reputation for openness and great skill in communicating what is going on.  He believed that doing this could fall under poor communication but if they could have a meeting Monday to ratify it and allow them the opportunity to explain it to the public. 

 

Councilor Morris appreciated Councilor Lemois’ comments but she thinks that would be asking people to weigh in on a decision they have already made.

 

Council President Higgins clarified that the reason for the filing of the emergency is to pass 08-14; it has nothing to do with the levy and asked Mr. Hefner to read that language and explain how the ordinance currently did not anticipate this type of situation.

 

Mr. Hefner stated that the language that was added to Section 36-142 was “In the case when the certified total taxable net assessed value is less than the certified total taxable net assessed value of the prior year, the tax rate increase shall be greater than the rates listed below subject to RIGL §44-5-2”.  He explained that he did not write that but he does recommend changing the word “shall” to “may.”  He also stated that section 2 on page 2 is new and it reads, “The Town Council hereby declares that there exists a state of emergency which affects the public welfare of the Town of Cumberland residents resulting from a reduction of state aid to the Town in the present fiscal year the recently certified total taxable net assessed value of property being less than the taxable net assessed value of the prior year and the necessity of mailing the 2008 property tax bills on or before May 1, 2008.  Failure to mail said bills will have an adverse impact on the Town’s bond rating and will otherwise be injurious to the short and long term well being of the Town and its residents and, therefore, requires earlier consideration of this ordinance prior to the next regularly scheduled Town Council meeting on May 7, 2008.”

 

Council President Higgins clarified that it is a very limited set of circumstances that let them override the original intent.

 

Mr. Hefner replied that was correct, there has to be a declaration and it has to be by four or more of the Councilors and the finding of an emergency is itself self-sustaining, deemed to be proof of the emergency without anything further.

 

Councilor Kirkpatrick stated that he respectfully does not agree that if they make this decision today or not that come Monday public opinion may or may not sway at least one person on this Council.  He also stated that they are considering this an emergency and assuming that there is going to be a reduction of state aid, which the General Assembly has not voted on this yet.  He pointed out that he is very conflicted; he can understand both sides of this argument but he thinks that they have been entrusted to service at the pleasure of the public in this capacity and to not allow them to voice an opinion he does not feel comfortable with.

 

Councilor Mutter stated that the Finance Sub-Committee has no problem meeting on Monday to discuss anything that has to do with the levy or any legislation that accompanies that passage.  He added that in a perfect world they will all like more time but right now it is not a perfect world and they are having to do a couple of things that they are not comfortable with; that if they do not act quickly it could turn into a $2 million deficit; there will be a lot more people angry because we will cost them money. 

 

Councilor Lemois stated that he would certainly support the emergency but as far as Councilor Kirkpatrick’s comments regarding the ordinance’s reference to an assumed reduction in state aid in relation to the emergency nature, he believes that if that was or was not an issue they would still be in an emergency situation.  He recommended removing that statement from the ordinance.       

 

Councilor Mutter stressed that choosing either option two or three is going to require an amendment to #08-14 and the reason it is being amended is not because their bill is going up anymore than it was projected to go up, the rate is going higher, but there total bill was projected to go up 4 percent.  He added that for the majority of it, it will be closer to 3 to 3.5 percent.  He reiterated that the rate is going higher but their assessment went down and the budget was lowered $900,000 since its ratification in June so this is not a case of government over spending.  He explained that the only scenario that would not require an amendment to ordinance #08-14 is if they chose option one, but that option would mean that they would need to fill somewhere between $1 million and $1.5 million because the assessments went down and they have clung to the rate.  He further explained that that in itself is going to give them a situation where they are going to have a $1.5 million hole to plug next year, a year when they already know that they are going to start paying down the voter approved $30 million dollar school bond. 

 

Councilor Albuquerque believed that it seems that they are all in agreement that this is an emergency and they were all elected by the people of Cumberland and sometimes they do have to make decisions when they are not present.  He believed that today was one of those days and sometimes they might have to decide to do something that is not popular.

 

Council President Higgins stated that he does not believe that it is going to prove to be an unpopular thing to do but rather the responsible thing to do.  He believed that what the Council is concerned with is acting without public input because it has been this Council’s prime achievement to open up the process.  He explained that the Charter allows for these situations but they are skipping a step that they are not comfortable. 

 

Councilor Morris stated that she agrees with Mr. Hefner’s early suggestion that the language in the amendment does need to be amended to read “may” instead of “shall” because they certainly do not want to require subsequent Councils to increase rates where they do not need to be.

 

Council President Higgins reiterated that they are currently working on Resolution R-08-55.

 

Councilor Mutter stated that he was in favor of Councilor Morris’ request to further amend ordinance #08-14 and would also like to remove the language referring to the reduction in State aid because he believes that reduction has nothing to do with this being an emergency.  He added that the reduction may make it more difficult for them on the worksheet, but it does not make it an emergency.

 

Council President Higgins stated that if there is no objection he requests permission of the Council to act on the agenda out of order by taking New Business, Ordinances for presentation and permission to advertise, ordinance #08-14.  Hearing no objection they proceed to ordinance #08-14.     

 

Council President Higgins stated that the Council approved ordinance #08-14 with a 6 to 1 vote, legalizing the adoption of the levy as approves.  He clarified that they now can go back to resolution R-08-55.

 

Councilor Mutter stated that they have had a lengthy discussion on option one at an earlier meeting but would like to know how taxes needed from fiscal year 2008 levy is the same under option three with a different total revenue number.

 

Mr. Bruce explained the differences between options two and three.

 

Councilor Morris stated that the numbers that they reviewed at Monday’s meeting were different and questioned which numbers were correct. 

 

Councilor Mutter stated that Councilor Morris was correct and he would like to see those numbers correct and how they previously discussed them if they are going to approve option two.

 

Council President Higgins asked Mr. Bruce if he could amend this worksheet this evening. 

 

Mr. Bruce stated that he could run down to his office quickly and amend the numbers.  He also stated that he agrees that regarding option three’s  projected revenue and expenses, there is no basis to make any change to those as of this evening.  He explained that when they were looking at this yesterday they were a little more hopeful that the state aid cuts would be reversed.  He also that it seems that option three would present a $254,000 hole to fill between now and June.

 

Council President Higgins requested a five minute recess. 

 

Council President Higgins reconvened the meeting at 9:04 pm.  He explained that they have a new version of option 2 before them that they will be working from.

 

MOTION BY COUNCILOR MUTTER, SECONDED BY COUNCILOR MORRIS AND IT IS UNANIMOUSLY VOTED TO AMEND PAGE 2, LINE 1 AND 5 BY STRIKING “2008” TO “2009” BY A ROLL CALL VOTE.  VOTE 7/0. 

 

MOTION BY COUNCILOR MUTTER, SECONDED BY COUNCILOR ALBUQUERQUE AND IT IS UNANIMOUSLY VOTED BY A ROLL CALL VOTE TO APPROVE AS AMENDED WITH OPTION 2 WORKSHEET.  VOTE 7/0.                      

 

2.   R-08-56 – A Resolution Authorizing the Issuance of General Obligation Refunding Bonds

 

Councilor Morris recused herself.

 

Councilor Mutter explained that the Finance Sub-Committee met on this Monday evening and unanimously recommends passage to the full Council. 

 

Mr. Bruce explained that they are refunding three historical issues with a $560,000 savings.   

 

MOTION BY COUNCILOR MUTTER, SECONDED BY COUNCILOR ALBUQUERQUE AND IT IS UNANIMOUSLY VOTED TO APPROVE.  VOTE 7/0.                      

 

 

NEW BUSINESS

 

A.  ORDINANCES-FOR PRESENTATION AND PERMISSION TO ADVERTISE:

 

1.  #08-14 – An Ordinance Amending the Ordinance Relating to the Tax Rate (Presented by Council President Higgins on behalf of the Administration)

 

Councilor Kirkpatrick stated for the record that while he agrees that this is an emergency they have been given another option. 

 

MOTION BY COUNCILOR MORRIS, SECONDED BY COUNCILOR LEMOIS AND IT IS UNANIMOUSLY VOTED TO AMEND LINE 24 BY DELETING THE WORD “SHALL” AND REPLACING IT WITH THE WORD “MAY” BY A ROLL CALL VOTE.  VOTE 7/0.

 

MOTION BY COUNCILOR MUTTER, SECONDED BY COUNCILOR ACKERMAN AND IT IS UNANIMOUSLY VOTED TO AMEND PAGE 2, LINE 6 BY DELETING THE WORDS “A REDUCTION OF STATE AID TO THE TOWN IN THE PRESENT FISCAL YEAR,” AND REPLACING IT WITH THE WORD “MAY” BY A ROLL CALL VOTE.  VOTE 7/0.

 

Councilor Kirkpatrick reiterates for the record that while he agrees that this is an emergency they have been given another option. 

 

MOTION BY COUNCILOR MUTTER, SECONDED BY COUNCILOR ALBUQUERQUE AND MORRIS IT IS VOTED BY A ROLL CALL VOTE TO APPROVE AS AMENDED.  VOTE 6/1. 

Nay:  Councilor Kirkpatrick

 

ADJOURNMENT

 

MOTION BY COUNCILOR ALBUQUERQUE, SECONDED BY COUNCILOR KIRKPATRICK AND IT IS UNANIMOUSLY VOTED TO ADJOURN AT 9:10PM. 

 

 

 

                                                                                    __________________________________________

Sandra M. Giovanelli, Town Clerk