The Finance Committee voted to approve the following (see Report and watch NewTV video):
- Request to transfer $50,000 from Water Services Connections – Full Time Wages to settle a Worker’s Compensation claim. According to the report, a motion was made to amend the item to reflect the Workers Compensation Water – Claims and Settlements which was approved unanimously. The Committee entered into Executive session to discuss the item as it to strategy related to litigation matters and voted to approve the item 8-0.
The Finance Committee voted to deny the following:
- Request to establish an “Operations Booster Stabilization Fund” to pay for a portion of the annual general fund appropriations for the City’s pension system; appropriate the sum of $20,500,000 Overlay Surplus as declared by the City’s Board of Assessors to the Operations Booster Stabilization Fund; and transfer the sum of $5,513,000 from the Appellate Tax Board Interest and Penalties Fund to the Operations Booster Stabilization Fund. The Finance Committee previously denied this item in Committee on September 11. The Full Council recommitted the item back to the Finance Committee on September 18. The Finance Committee discussed and held the item on September 28.
According to the report, CFO Maureen Lemieux responded to questions previously proposed by Councilor Kalis as well as questions raised by Councilor Humphrey. She made it clear that the Administration was not proposing any changes to the original plan. She said it would take a 2/3 vote from the Council to change the purpose of these dollars and to approve spending and a simple majority vote from the Council to put more money into a stabilization fund.
Regarding interest, the creation of stabilization or trust fund is the only way an account can keep the interest that it earns though the Council could create a reserve fund and calculate the interest it believes has been earned and make yearly requests to move the interest out of the general fund and into the reserve fund.
Interest earned cannot be moved to free cash during the year while the fund is earning interest – it would have to wait for the following year. The City can earn interest and spend money on the schools and allocate more free cash into next year’s if the Mayor chose to do so. She said that because the City has almost $28 million in Free Cash and it is more than they anticipated, the City can use it for one-time items but knowing that it will have to increase pension funding over the next 8 years with difficult fiscal years projected, setting up this fund will help provide relief.
Councilor concerns included:
- Restricting future administrations and Councils to move this funding in future years and in different proportions
- Whether the plan will lead to financial progress over the next 8 years for NPS
- Preference to establish a reserve fund that could be used for City operations and capital expenditures
- Question the amount of money schools are requesting, and why this fund needs to be tied to schools given declining enrollment projections
- Whether if rejected, the council will be rejecting a funding source for NPS for the next 8 years
A motion was made to deny the request, which was approved 5-3, Councilors Grossman, Norton and Kalis opposed.