What’s next for Carmel’s city budget?
On Monday Dec. 7, the Carmel City Council was presented with a plan to restore the city’s budget after cuts by the Department of Local Government Finance. This happens every year but never this late. Usually this occurs in March and not with such a ticking clock hanging over everyone’s heads.
The problem – besides running out of time – is that Carmel might also be running out of money.
Carmel Mayor Jim Brainard and his advisors admit that revenues were less than projected. His financial advisor Curt Coonrod admits that maybe they should have listened to councilors like Luci Snyder and Rick Sharp, both of whom will be leaving office having lost their recent elections, when they preached for more conservative approaches.
Essentially, the proposal was to move money from one fund to another so they city could make a $2.9 million debt service payment due in December and so they city can make payroll and pay it’s employees. It would cut money from other places where it wasn’t needed in the budget and move money around to meet obligations, but as a result, once spent, the city’s general fund would be at zero with no money in the bank account entering January until the new revenue comes in. Certain funds – such as the motor vehicle highway fund – would be empty. The city could borrow from other funds, such as reserve accounts, the rainy day fund or the Carmel Redevelopment Commission.
“I believe that mentioning the rainy day and the dozen other funds with balances would be helpful each time the general fund is mentioned,” Brainard wrote in an email to Current. “I suspect in total the ending operating balance of all funds will be in excess of 20 million.”
The council voted 3-3 with Councilor Ron Carter absent. Brainard was also absent and could have broken the tie. Either Carter or Brainard would have likely voted for the proposal and it would have passed.
With the proposal dying, the City Council has rescheduled an emergency special meeting for 4:45 p.m. Monday, Dec. 14 at City Hall to fix the proposal. Here’s what we know:
WHAT OPTIONS ARE LEFT?
Brainard said he was happy with his solution but now that it was voted down, it’s not possible to resurrect that proposal since all budget proposals need more than a week’s notice before they can be voted on. There’s not enough time left to go back to that plan.
“In fact, we did offer the Council a solution, and those voting nay offered none,” Brainard said. “I still stand by my proposal, which addressed the fiscal issues at hand. We would also note that the ordinance that was before the Council this week was merely a confirmation of appropriations of funds that the Council had already approved.”
Snyder said the new plan of action is to borrow money from the CRC to make the bond payment since she thinks that’s the only legal thing can be done at this point.
Snyder wrote an e-mail to the Current and echoed the sentiments in a subsequent phone call with the Current about what she think should be done:
There was never a question that payroll would not be met. Then he told Cindy just to pay the $2.9M bond payments without that authorization and he’ll fix it in January….she would not do that because…. it’s not legal. The way out of this is to ask the CRC to make the payments. I asked (CRC Director) Corrie Meyer if she “could” pay the $2.9M. Answer, yes…they have between $5-6M in their reserve account. Then, his new Council can pay the CRC back during the first quarter.(They should get that in writing).So…with any luck, on the 14th at 4:45…we will have a special meeting and authorize that solution. It will be unanimous.
I called the Clerk-Treasurer’s Office and they confirmed Snyder’s statements with me.
Brainard responded that it isn’t illegal to pay the employees without passing the proposal.
“The City of Carmel has legal contractual obligations with employees and others. To not pay those obligations would be illegal,” Brainard said.
THE MAYOR DOESN’T THINK THE CITY WILL RUN OUT OF MONEY
Mayor Brainard expressed some disappointment with what he saw as some sensational coverage of the budget situation that made it seem like Carmel is on the edge of financial ruin (not the story in Current in Carmel though). He e-mailed some remarks to Current to clarify what he thinks is accurate.
“My administration representatives made clear the City will not run out of cash,” he said. “Far from being ‘close to broke,’ my administration is increasingly confident that when the books are closed in three weeks, surplus cash will be available in the General Fund. That is in addition to the millions available in other funds. The ordinance itself would have had no effect on cash or revenue. The ordinance was needed only to authorize the Mayor and Clerk Treasurer to expend the cash that is available. The problem now is not a lack of cash. It is a lack of appropriations, which means a lack of authority to spend the cash … My administration’s categorical position is that the money is available to pay debt service and make payroll. All that is needed is the appropriation authority to execute the payments.”
Brainard disagrees with the idea that it is certain that the city’s money will run out.
“The premise is that money will run out, but that has not been established,” he writes. “What will be established in the next three weeks is that money will not run out. It is important to remember that there is a difference between having cash available and having appropriations within the budgeting process. Carmel is not ‘going broke.’”
Brainard feels like people are acting like there’s no money, when in his mind it’s just moving money from where it isn’t needed to where it is needed.
‘THEY WERE RIGHT’
City Councilors Rick Sharp, Luci Snyder and Eric Seidensticker say they are not acting out of “revenge” by voting against the mayor’s proposal. They feel like they are keeping the city’s best interests in heart but even so there’s an extra element that makes this disagreement feel personal since many of them were criticized for being “negative” when it came to their respective elections. Brainard and others said they were trying to scare people with financial outlooks that Brainard said was unlikely. Even this week, Brainard kept that position.
“We are simply working through the actions of some outgoing City Council members who felt the need to try and paint a bleak picture about the city’s financial strength,” he said.
Sharp, Snyder and Seidensticker said they feel offended because in their minds they turned out to be correct in their positions. Financial advisor Curt Coonrod said, “The people such as Councilor Snyder who said we should be more conservative with revenues, they were right.”
“Several of us up here were ridiculed as not understanding or not being sophisticated when it came to talking about the city’s finances,” Sharp said. “And this is personal for me because I was told that I was trying to scare people to win an election (for mayor).”
Sharp said he’s not going to “break the law” in order to clean up the mayor’s mess. He said the mayor wasn’t just “not forthcoming” but was “downright deceptive” by not telling people that revenues wouldn’t meet previous projections. Sharp said the mayor knew the whole time.
Snyder said she feels the mayor hasn’t properly included herself or Sharp in conversations. As the finance chair and council president respectively, she thinks both of them should be consulted. But she said she’s been excluded ever since the election didn’t go her way. She said she wasn’t invited when Carmel won community of the year at the state’s chamber of commerce event, even though the city bought tables for officials to attend. She said it’s impolite for the mayor to always bring up that herself, Sharp and Seidensticker are “outgoing” or were voted out of office. She said it’s very dismissive and unneeded.
“I’ve sat down with the man who is going to take my seat (Jeff Worrell) and I’ve went over everything because I care about this city,” she said. “I’m not playing petty politics.”
Snyder said the mayor only has himself to blame for not getting his budget proposal passed because it wasn’t brought to the council until very late in the year and while he was out of town. She notes that Brainard – who is in Germany speaking about climate change – and Carter – who is vacationing in Florida – could have changed the vote if they were in town for the meeting. She said she doesn’t begrudge anyone a vacation and she isn’t suggesting that anyone cancel their plans, but perhaps this proposal could have been brought to the council much earlier.
Sharp brought up that Finkam, Rider or Schleif would have made a motion to table the item until the meeting on Dec. 21 so some issues could have been worked out or so the deciding votes could have been in town.