The Carmel City Council voted Dec. 7 against a proposal to reappropriate $5 million within the general fund to cover a shortfall caused by lower-than-expected revenues. If passed, the ordinance would have shuffled funds to cover various expenses remaining this year and left no surplus. The proposal also included $1.1 million in budget cuts by executive order.
Curt Coonrod, one of Mayor Jim Brainard’s financial advisors, told the council the reappropriations are needed to be able to pay city employees until the end of the year, but other councilors dismissed that as a scare tactic.
“Let’s make it simple: We need to pay the firefighters. We need to pay the police officers. We need to pay our city employees,” Coonrod said. “We have a couple of payrolls left and we don’t have the authority to pay them.”
The proposal died 3-3 with councilors Rick Sharp, Luci Snyder and Eric Seidensticker voting against it. City Councilor Ron Carter was absent and so was Mayor Jim Brainard, who was in Germany on a trip with the U.S. State Department. Carter and Brainard both previously expressed support for the proposal. Brainard could have broken the tie and voted in favor of his proposal.
The mayor issued a statement Dec. 8 saying he wanted to, “dispel the misperception by some that the issue of restoring the budget is a problem of a lack of cash.”
“The ordinance would have had no effect on cash or revenue,” he said. “The only purpose of the ordinance was to give the mayor and clerk-treasurer the authority to expend the cash that is available. It is undisputed that 2015 revenue was less than projected.”
Brainard said the city will continue to meet all of its obligations and people will be paid.
“They are outgoing council members (defeated in the election) and the city should not suffer because they could not make a responsible decision,” Brainard stated.
City Councilor Kevin “Woody” Rider, who voted for the proposal, said nobody should worry because everyone will get paid.
Sharp said bring up payroll is “nothing more than a scare tactic.”
“It’s not a question of whether or not you want to run your city to the edge of a fiscal cliff where the slightest misstep could spell disaster,” Sharp said. “It’s not a matter of whether you want to spend every bloody cent that you get and take your general fund balance – for the first time in the history of the city – to zero. Those are policy decisions. That’s not what this is about. This is about the integrity of government. This is about a public debate where we talk about the issues and lay out the facts about the fiscal realities of the city.”
Coonrod said this is a routine matter. The City of Carmel passes a budget every year and every year the state’s Department of Local Government Finance will order the city to cut its budget because they disagree on revenue projections. Coonrod and Brainard have said that the DLGF is overly conservative and often revenue exceeds the DLGF’s projections and so the budget is restored to its original amount later in the year, usually in March.
The ordinance voted down on Dec. 7 would move money from one fund to another within the general fund but leave it essentially zeroed out for the rest of the year.
“The people such as Councilor Snyder who said we should be more conservative with revenues, they were right,” Coonrod said.
This year, the budget is being restored much later than usual, which Sharp and Snyder described as a tactic to avoid media attention.
“This is the end of the year, ‘Oops, I don’t have enough money’ dump,” Snyder said.
Sharp said it’s a “cover-up” by the administration, using the busy holiday season to avoid any attention from the general public.
In order to restore the budget, the City of Carmel usually uses money left over in the general fund and often there is still around $5 million left at the end of the year, which helps the city pay bills in 2016 until the state approves that year’s budget. This time though, the city would essentially zero out its general fund budget which would allow for no cushion in the general fund.
“Those cushions of money haven’t gone away,” Coonrod said. “They are just in the rainy day fund, but not the general fund.”
Snyder said that’s unacceptable because she describes the general fund as the city’s checking account and the rainy day fund as the city’s savings account. She said it’s important to have money in the savings account because it affects the city’s bond rating, among other things.
“This is skating on the financial edge but more than that, what the mayor told the public was just not true and he knew it,” Snyder said.
Councilor Sue Finkam, who voted in favor, said those that voted against are, “leaving the budget in limbo.” She said she’s certain things would have been different if Carter or Brainard were present.
“This is nothing more than if I had a business and I projected my revenue at a certain amount and it ended up being 20 percent less, then I would adjust my expenses to match my revenue,” Finkam said. “This not somehow ‘hidden.’ We are doing this in a public format.”