Lincoln Aldermen reject 2019-20 Appropriations Ordinance with July 31st deadline

 

[July 25, 2019] 

LINCOLN 

This week on Tuesday, Lincoln aldermen participated in three council meetings.

The evening started at 7 p.m. with a Public Hearing to hear general comments concerning the 2019 - 2020 Appropriations Ordinance that must be passed and submitted to the county by the end of this month.

Following the hearing, the council was called to order for a special voting session, with the expected outcome that the ordinance would be passed as presented. Following that special voting meeting, the council was then to go into its regular fourth Tuesday Committee of the whole meeting to discuss other topics.

In years past, the first two meetings, which are typically held on the fourth Tuesday in July, have lasted less than 15 minutes combined. However, this year, the aldermen had many questions and concerns about the ordinance, and after more than an hour, they voted 5-2 to reject the ordinance as presented.

Those who voted against the ordinance were Kevin Bateman, Sam Downs, Ron Keller, Steve Parrot and Kathryn Schmidt. Those who voted in favor of the ordinance were Jeff Hoinacki and Kathy Horn. Tracy Welch was absent for the evening.

The Appropriations Ordinance must be filed with the Logan County Clerk no later than July 31st. Because the presented document failed to pass, a new document must be prepared and approved before next Wednesday. To meet this goal the city has scheduled two special meetings on Monday, July 29th, and Tuesday, July 30th, both starting at 6 p.m. If they come to the first meeting with a workable document they are able to approve, the second meeting on Tuesday evening may be canceled.

Appropriations vs. Budget

Each year the city approves two official documents, a Budget and an Appropriations Ordinance. The budget is the working document for the year and reflects the realistic expectations of city revenues for the year, and how those revenues will be spent.

The Appropriations Ordinance, by design, is a version of the budget that is bolstered to cover unforeseen revenues and/or unexpected expenses.

The late alderman Buzz Busby once offered up a simple definition. “The budget is what we have to live by, but the appropriations ordinance is our wish list (paraphrased).” Busby explained that the budget was the document the city would follow, but if there would be a windfall of cash come to the city, or if the city would be awarded a grant, having the extra buffer in the Appropriations Ordinance would permit the opportunity to disperse those extra funds quickly without going through a lot of effort to re-define the Appropriations document and do new filing.

The city can change the budget with a vote of approval from the aldermen. Changing the Appropriations Ordinance is much more complicated and not recommended.

Exceeding the budget in one particular area is not uncommon and it is an easy fix for the city. Often times the budget is adjusted for example if a large expense comes to the police or fire department and money is needed in the budget to cover it, money may be taken from another section of the department’s budget where it is available and put into the line where it is needed.

Exceeding the Appropriations document is a state violation and may come with consequences. In fiscal year 2018-19, the city did exceed the Appropriations in the area of building maintenance, specifically janitorial services for municipal buildings. This happened because the city had taken on janitorial services for the new police station, new municipal works building on Limit Street, and the Amtrak waiting station at the Lincoln Depot. City Treasurer Chuck Conzo at the time told the aldermen that the consequences were that the city would have to write a letter explaining the violation and that there would be a notation of the violation in the upcoming audit of the city’s books.

Even though the city exceeded the Appropriations, it did not exceed the budget in that matter because, the city had more money in other areas within the general fund.

So, the year ended with the city coming in about $300,000 below budget in the general fund and at the same time exceeded appropriations in one line item.

Aldermanic concerns

Tuesday evening, the issue of the elevated expense lines within the Appropriations Ordinance came to light during the public hearing when Kevin Bateman questioned the method used to come up with the exaggerated version of the budget. He noted that the total budget consisting of general funds and special funds, such as sewer, totaled about $22,000,000. However, he said that there was a 12 percent increase across the board in the Appropriations Ordinance. His issue was that there were lines that had been increased within the document unnecessarily. He noted that there were budget items that for the last several years the city has not spent what was budgeted, but at the same time the appropriations had been increased in that same line to a number that was probably never going to be needed.

Bateman said he understood the concept of appropriating funds, but he felt that if the city were to increase budget figures for the document it should do so more realistically and that if lines were to be “padded” they should be the lines where the city could actually do some good for its citizens such as streets and sidewalks.

Bateman said he planned to vote no on the current document.

Steve Parrott also spoke during the public hearing saying he had requested documents from the city administrator in order to do some comparisons. Parrott said he had not had sufficient time to really examine the documents, so for now, he also planned to vote no.

Conzo then said that because this was a public hearing, the aldermen should perhaps hold further discussion until the voting session was adjourned.

Mayor Seth Goodman, then following the recommendation of Conzo, called for the conclusion of the public hearing and the adjournment of the special voting session.

Voting session brings up even more concerns

When the voting session was called to order, there had to be a motion made before aldermen could continue on with discussion. Jeff Hoinacki made that motion and for several seconds it appeared that there would be no second. Finally Bateman said he would offer the second “for discussion purposes.”

Conzo was then called upon to introduce and comment on the Appropriations Ordinance. He began saying that he had provided some comparison documents that showed how the city had come out at the end of the last fiscal year budget. He noted that the city had ended the year under budget in the general fund by $330,000. It had ended the year under budget by more than $1,000,000 in the special funds. For the same time period the appropriations had come in right at $3,000,000 below the projections across the board.

Conzo said that the reason for coming in under budget and appropriations in the special funds area was because work that had been anticipated to be done in the last fiscal year had run late, so the money had not been dispersed for contract payments.

Moving on, Conzo said he wanted to dispel the theory of “padding” that had been discussed earlier pertaining to the appropriations. He said that showing increases in the appropriations was not padding, it was planning for contingencies. Conzo said that if the aldermen would examine the documents he had provided they would see that in almost every case, the city ended the year under budget as well as under appropriations. He noted the exception of the over expenditure in Buildings and Grounds.

He also noted that the budget was the city’s document to live by, and that all the department heads had done exactly that, with none of them trying to “squeeze out” more than they had.

Who wrote the Appropriations document?

Parrott asked Conzo who was responsible for creating the official documents?

Conzo said that the City Administrator Beth Kavelman first had consulted with the department heads, and he had assisted her in putting the document together. Kavelman said that actually she had sat at the computer and plugged in the numbers that Conzo told her to plug in, so he had done most of the work.

Conzo also reminded the city that the Appropriations Ordinance must be passed and filed with the county by July 31st, and if that doesn’t happen the city will not be permitted to do business until the problem is rectified.

More questions about the methodology

Bateman said he still couldn’t understand why the document would show increases in allowable spending in line items where historically that line comes in under budget.

Parrott asked about the revenue expectations for the coming year and why the expenditure budget for the year was exceeding expected revenues. Conzo said that was because of the loan program that would be implemented later as part of the mandated sewer upgrades.

Keller said that he would have to agree with Bateman that while he too understood the concept of appropriations, he feels that the document presented is “out of kilter.” He suggested that the city hold a special workshop session to get the problems fixed before the deadline.

Bateman brought up another line in the appropriations. He noted that the City Administrator line in the budget had been decreased for the new fiscal year by 20 percent, but that the appropriations document had been increased by 9.78 percent, an overall difference of right at 30 percent. He didn’t understand why.

Kavelman said that she had added $14,000 to her line to cover hiring a part time employee for the City Administrator. Parrott asked why that the new employee was not showing up in the budget. Kavelman said she has needed help for a long time. She had talked to Conzo about it and he wasn’t sure the city would agree, so they had plugged it into the appropriations to approach later with the council.

Parrott said if Kavelman needed help she could not have it until the figure was placed in the budget, so what good did it do to put it in appropriations? Conzo said that before the C.A. could have a new hire, the council would be approached to discuss the need and seek approval. If approved, then the city would have to make room in the budget for the expense. Those items could be done easily. Adding it to the appropriations now was covering the possibility of the added expense at a later date.

Bateman also noted a 330 percent increase in supplies for the C.A. in appropriations. Kavelman said that they had added money in appropriations to cover the cost of a new printer for her office. It isn’t in the budget, but if money should be available for the purchase, then it is in appropriations. Bateman said that was a good explanation that he would like to have had ahead of the question, not after. Parrott asked why a printer was listed in supplies instead of as equipment. Kavelman said her budget did not have an equipment line and that it should have been a new line.

Parrott said another concern for him would be what the city would have knowledge of next year in March when preparing a new budget. He said that by then the council wouldn’t necessarily know that the supply expenditure was actually a printer. Parrott also noted that putting equipment in the supplies line fogged up the transparency of the city. Bateman also talked about that because he said the printer was not an annual expense, so, maybe yes, this year the supply budget needs to go up substantially, but then next year it should go back down.

Conzo said that the city has not had an equipment line for the C.A. in the past because it had not been needed.

Hoinacki: Can we move on and do better next year?

Jeff Hoinacki noted that the city was putting a lot of pressure on the city administrator or treasurer to reconfigure the entire document in five working days. He said that he understood the concerns of the aldermen, but felt that it would be best to approve what is in front of the aldermen now, and work on doing it differently next year.

Conzo said he agreed that there was going to be a big push to make significant changes in less than a week. He reiterated that the city is facing a legal deadline of July 31st.

Conzo added that if the aldermen saw some singular significant changes that needed to be made, they could do that, but an entire re-write would be difficult.

Bateman said his problem there is that he has three different documents in front of him, and at the moment he’s not sure which one to change. He said five days or not, he didn’t care, he was still not going to vote his approval on a document he did not support.

Kathryn Schmidt brought up committee structure, and wondered if the city does go forward with a committee structure would that take some of the work load off of the city administrator. If so, then perhaps there would be no need for an extra employee. Parrott said that with a committee structure there was a possibility that there would be no need for a city administrator, not to mention a helper.

Keller spoke up saying that he felt that committee structure was a discussion for another time, and that there was a motion on the floor concerning appropriations. He called for the vote.

The vote was taken and the motion to approve the 2019/2020 Appropriations failed.

Now what?

After the vote failed, Conzo said that now the aldermen needed to decide their plan of action. They had originally thought that a meeting to be held on Tuesday July 30th would result in a new document and approval of said document. Then the document could be filed with the county on the following day. Conzo asked them what they would do if the city experienced a large storm and power failure or other emergencies and couldn’t meet on Tuesday night.

Keller said that the next step was going to be to go through the document line-by-line and make recommendations for changes. That could be done ahead of time. Kavelman said if she and Conzo were going to have to review the recommendations and make the changes, they had to have a deadline earlier than next Tuesday.

Parrott asked what the legal consequences would be if there were a catastrophic event that prevented the council from passing an ordinance. Conzo deferred to city attorney John Hoblit who said he would have to research that, he didn’t have an answer. Conzo said maybe there would be an emergency contingency in the law, but he really wasn’t sure. Later in the night, Hoblit would share that he had been doing research as quickly as possible during the meeting and was sending notes on the legal issues of appropriations to the aldermen via email.

Parrott said he had requested that the appropriations document be sent to him in an Excel spreadsheet format but that the C.A. had sent him a pdf instead. He wondered if there was a reason why he could not have the spreadsheet he requested. He said then he could quickly and easily adjust numbers and see the outcome, whereas with a PDF he had to do the math longhand.

Kavelman did not immediately answer that question, but instead asked if she and Conzo could do a “quick fix” such as reducing every line for example by four to five percent.

Parrott asked if the aldermen were not allowed to have a worksheet, was it not permitted that the C.A. send out a workable document for editing. Kavelman said that she had serious concerns about sending out an excel spreadsheet, but that she would do it if the aldermen told her to.

The final conclusion to that topic was that Kavelman was to send out an Excel spreadsheet of the appropriations document to all eight aldermen. Each alderman will then review the document and make changes to it as they see fit.

Then the question came up, how was the city administrator and treasurer to react to seven or eight different opinions? Whose opinion would they choose, how, and most of all why?

Mayor Goodman noted that what was happening now was going to be a huge undertaking. He said that he too wondered what the administrator and treasurer was to do with seven different opinions. Conzo again reminded the aldermen of the time constraints saying that he and Kavelman were looking at a great deal of work in a short amount of time if this were the route the aldermen were to take.

Keller said that the issue is with the percentage increases, and maybe Kavelman and Conzo could go through the document with the aldermen and explain the how and why of each increase.

Plan of action

To alleviate the pressure on Kavelman and Conzo the aldermen decided that each one will go through the appropriation document in Excel format and make recommended changes. Those spreadsheets will then be emailed to Keller and Sam Downs. Keller and Downs will meet and review the recommendations and put together a singular recommendation to go to Kavelman and Conzo. Those two will then prepare a new official draft for review by the full council.

Goodman said that if there were to be these additional steps, there had to be deadlines established. He said that he felt that the individual aldermen should have their recommendations to Keller and Downs by 9 a.m. Thursday morning. Those two aldermen will review the recommendations and then meet with Kavelman and Conzo on Friday morning to put together a new draft for council approval.

The council would then meet at 6 p.m. on Monday, July 29th with the intention of discussing the new ordinance and voting to approve it. If the council is unable to approve what is presented, further discussion may take place and new adjustments may be made to the draft and it will be presented again on Tuesday, July 30th in a second special council meeting, again to commence at 6 p.m.

If the council is not able to approve the Appropriations Ordinance on Tuesday night, it is unknown what the next step will be.

[Nila Smith]