MINUTES OF THE SPECIAL CUMBERLAND TOWN COUNCIL MEETING

MONDAY, APRIL 28, 2008

EVERETT “MOE” BONNER, JR. COUNCIL CHAMBERS

45 BROAD STREET, CUMBERLAND

 

The meeting was called to order at 6:42p.m. by Council President Higgins.  

 

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

 

MEMBERS PRESENT:

 

Council President Higgins, Councilors Mutter, Lemois, 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 

 

MEMBERS ABSENT:

 

Councilor Albuquerque and Ackerman

 

NEW BUSINESS

 

A.  RESOLUTIONS:

 

1.  R-08-57 – A Resolution Authorizing the Issuance of General Obligation Judgment Bonds

 

Councilor Morris recused herself.

 

Councilor Lemois asked if this was to help with the Moody’s rating and outlook but not change the rating.

 

Mr. Bruce replied that the outlook would not change.  He added that the next time they will be up for a rate review, which will be when the audit is released next year, he believes they will look a lot better in the fund balance at which point they are going to ask for a rate change but typically it could be two years before they see a change in outlook.

 

Councilor Lemois asked if that outlook would have a negative affect on any interest rates or is it just the rating itself that is affected.

 

Mr. Bruce replied that it will not affect the bonds they are doing at the High School because they are in a group of 6 communities with a blended rating but the refunding and judgment bonds he can’t see it affecting them but would could hurt them is if next year they come back with a disastrous looking audit report they will take away the A3 rating.     

 

Councilor Mutter asked if Mr. Bruce has an idea as to what the overall debt service is going to be affected next year.

 

Mr. Bruce replied that they have a structure where they are making an interest only payment on the first year which is a strategy he has discussed with the Mayor so that instead of having a $2.5 million dollar payment the first year it would be a $1,655 million payment.  He continued to say that they also have the $250,000 on this judgment bond, with the refunding they have a savings and the way he has been thinking that the savings for the refunding gets knocked out by the judgment bond in terms of debt service savings at least for next year. 

 

MOTION BY COUNCILOR MUTTER, SECONDED BY COUNCILOR LEMOIS AND IT IS UNANIMOUSLY VOTED TO APPROVE.  VOTE 4/0.

 

B.  ORDINANCES-FOR PRESENTATION AND PERMISSION TO ADVERTISE:

 

1.  #08-15 – An Ordinance Amending the Ordinance Relating to the Tax Rate (Presented by Council President Higgins on behalf of the Administration)

 

Referred to the Finance Sub-Committee

 

C.  COMMUNICATIONS:

 

1.   A Request from Council President Higgins to discuss the passage of Resolution, R-08-55 and Ordinance #08-14  

 

Councilor Lemois asked if this issue was going to be back on the agenda of the next full Council meeting.

 

Council President Higgins replied that the setting of the tax rate, R-08-55 will not be on the agenda and #08-14 was an emergency measure to amend the tax cap ordinance and because it was enacted as an emergency it is a temporary amendment so the ordinance presented tonight, #08-15 will be a proposal to permanently amend the tax cap ordinance.

 

Councilor Lemois asked for clarification whether they will have the opportunity to discuss this at a regular Council meeting.

 

Council President Higgins replied that #08-15 would require full public hearing at a regular meeting.  He explained the purpose of putting this on the agenda tonight was because it was an emergency action taken by the Council last Wednesday it didn’t require a public hearing and the Council felt that they needed to give the public an opportunity to comment or ask questions.      

 

Councilor Mutter stated that he would like to make some comments regarding resolution R-08-55 based on the remarks from the press.  He stressed that he felt that option 2 that was not deliberated much that evening but certainly was deliberated quite a bit on Monday evening’s meeting that was properly posted and at which the press nor anyone from the public was not in attendance.  He also stated that option 2 is not his option, it was his choice; they vote on the options, they don’t come up with options.   He did not recall similar headlines when the tax rate was decreased.  Higher valuations are the goal; we want higher valuations.  Your tax is the rate times your assessed value, that is your bill.  In past years, if your assessment stayed the same, when there was a 3% tax increase, you paid 3% more than the previous year.  If there is a re-evaluation, some go up, some go down, some stay the same.  We could have chosen another option – we could have amended another ordinance #04-29, which we would strike out a line in Section 3 dealing with worksheet estimate of 1^st quarter tax collection rate; no one would have understood what was being done, and the tax sheet would bring just a 4% increase; but the deficit of $2 million would not show until there was an audit.  

 

Councilman Mutter read from the last Moody’s report:  “Moody’s expects the town’s financial position to remain challenged to restore structural balance, given 2 consecutive years of operating deficit in the General Fund.”  This current Council was not in office during those two years (2006, 2007).  Councilman Mutter chose the method that was best for the town. 

 

He continued reading from Moody’s:  “..with prudent expenditure controls by a new management team (McKee’s first term), the General Fund balance steadily increased to $7.9 million.”   The budget initially passed called for a 4% tax increase; but that expected an increase in assessments.  However, assessments have gone down.  The Council chose an unpopular method, amending the tax rate ordinance.  With assessments going down, taxpayers may be paying less than previously.  The Town cut $900,000 in expenditures, but we also found out we will be getting $310,000 less coming in.  The Council did the responsible thing – this amendment received a lot of consideration Monday evening.  The press did not attend, so they were not aware of it.  Option 2 was the only option on the table that did not forecast a deficit.  He asked the press to print the whole story, not just part.  

 

President Higgins stated that deliberations on this matter took over an hour; he considered it one of the single-most important pieces of legislation; it was not done lightly. It was not envisioned that the assessed values in the town would go down so that the cap would not generate the revenue to sustain the prior year’s budget.  It was treated on an emergency basis because the bills needed to go out on time. 

 

President Higgins opened the floor to public opinion. No one wished to speak.  

 

ADJOURNMENT

 

MOTION BY COUNCILOR MUTTER, SECONDED BY COUNCILOR LEMOIS AND IT IS UNANIMOUSLY VOTED TO ADJOURN AT 7:16 P.M.  VOTE 5/0.

 

           

                                                _______________________________________

                                                Sandra M. Giovanelli, Town Clerk