The city of Shelby’s Finance and Personnel Committee presented a troubling account of the city’s financial status at the March 17 City Council meeting, but were able to offer some temporary solutions to help stabilize funds.
At the committee’s March 17 meeting prior to the City Council meeting, Committee Chair and Councilwoman Pat Carlisle said the committee received a financial statement for the city from Feb. 28, 2014 as well as a comparison statement from February 2013. The General Fund for the city of Shelby remains in the red with a negative balance of $12,997. In February 2013, the General Fund was in the black with a balance of $186,502.
“For the second consecutive month, General Fund actual expenses exceeded actual income,” Carlisle explained.
The General Fund was not the only account in trouble as of February 2014, as Carlisle noted the Court Probation Fund is also in the red with a negative balance of $1,638, a sharp decrease compared to a February 2013 balance of $22,966. In addition, both the Police and Fire Pension Funds were “historically and dangerously low” with balances of $388 and $663, respectively. The Police and Fire Funds held respective balances of $42,740 and $35,805 in February 2013.
“Compared to 2013, the Capital Improvement Fund showed decreases in both revenue and expenditures,” Carlisle continued. “All three utilities – waste water, water, and electric – showed they are breaking even.”
In addition, the committee reported individual income tax collections were up by 4.71 percent compared to 2013, and business income tax collections were down by 31.06 percent. Withholding income tax collections were also slightly down.
Carlisle stated several procedures have been implemented in an attempt to stabilize the General Fund, some of which were suggested by Shelby Mayor Marilyn John at the March 7 Committee of the Whole meeting.
“Some are ‘stop-gap’ procedures, and only temporary,” Carlisle specified.
These procedures include changing the training schedule at the fire department for a savings of $6,000 annually, and raising the administrative fee on 18 city accounts from four percent to five percent to generate $269,000 annually.
In addition, a moratorium of health premiums paid from the General Fund has been approved for April for a savings of $61,000. The city can apply for a second moratorium in the fall, which would bring total savings to $122,000 annually. Carlisle stated a savings of $10,000 is also possible from a consultant review of employee health benefits, which was explained in further detail by Mayor John on March 7.
“A review of the employee health benefits with our consultant can bring about an annual savings of $24,000 total, with a savings of approximately $10,000 to the General Fund,” said John on March 7. “At this current time, the city of Shelby health plan is on a grandfathered status regarding the Affordable Care Act. Any further changes will remove this status and increase the cost of the health care plan beyond any potential savings.”
Mayor John also suggested, on March 7, a change of the income tax transfer to the Capital Improvement Fund from five percent to zero percent for only the year 2014. City income transfers into the Capital Improvement Fund are estimated to be $90,000; through legislation, the five percent of city income tax allocated to the Capital Improvement Fund can be lowered to zero percent, allowing the $90,000 to be reallocated to the General Fund. As of February 2014 the Capital Improvement Fund has a balance of $499,184.
“It is my opinion that while I do not suggest this as a long-term strategy, this action could be accomplished for one year without having a negative impact on the Capital Improvement Fund,” said John on March 7.
Carlisle stated changing the income tax transfer to the Capital Improvement Fund from five percent to zero percent remains in the Finance Committee for more discussion. Other ideas still under discussion among the committee are to transfer funds from the Electric Fund to the General Fund, requesting from the Richland County Commissioners that the city of Shelby become a separate township, and possible property and/or income tax levies on the ballot in 2014.
“I want to reemphasize that those are simply ideas that have been thrown out on the table,” said Carlisle. “None of those exist in legislation at this point, they are still totally under discussion.”
In other financial business, Shelby City Council unanimously passed an emergency ordinance to create appropriations for the city for the year 2014. With the passage of the ordinance, Council appropriated $34,371,646.28 to the city of Shelby for 2014. The ordinance certified that the city has either collected the monies or is in the process of collecting or borrowing the monies needed to meet the obligations of the city.
Councilman Steve Schag noted the bottom line general fund appropriations budget for 2014 was less than that of 2013. He also recognized the appropriation ordinance reflected many hours of behind-the-scenes work from Finance Director Bob Lafferty and others within the city administration that constantly look for ways to cut back and spend less.
“Their financial diligence and resourcefulness has saved the city of Shelby tens of thousands of dollars over the past decade,” said Schag. “These people genuinely care about the citizens of Shelby and its future.”
“Compared to 2013, the Capital Improvement Fund showed decreases in both revenue and expenditures,” said Pat Carlisle.
