July 10, 2000 - Special City Council Meeting

E. 1999 Advisory Opinion Digest of the Rhode Island Ethics Commission

F. John P. Kuzmiski, Finance Director to Councilwoman Canavan: Request for Information.

Motion to accept collectively and place on file with discussion on items A & F was made by Councilwoman Canavan and seconded by Councilman Lazieh.

Council President Noury restated the motion for clarification.

Councilwoman Canavan repeated her motion.

Discussion ensued:

Item A:

Councilwoman Canavan stated the importance of attending the Open Government Summit on August 8, 2000 and related to the Council President her willingness to attend this summit if the President found he was unable to do so. Council President Noury asked Councilwoman Canavan to attend on his behalf.

Item F:

Councilwoman Canavan stated that this is the additional information that she requested from the Finance Director regarding the outside legal fees that were previously asked for by the Council which did not include the first 6 months of 1996 from January through July. She stated that there was approximately $80,000 in additional legal fees, $30,000 of it was additional fees for Women's Development Corp bringing up the total for WDC to $275,000 and this is still an ongoing issue and still growing. She stated that she had continually asked during the budget workshop where the money comes from for NEED and that the Finance Director has finally provided the information. She stated that $100,000 that was needed for the privatization contract for two months come from the Highway Department Budget where 100,000 was transferred around from the Highway Department Budget items for Need. The Salary account $80,000, apparently was a pretty hefty account she stated Because $80,000, if you take away the salaries of the seven men that were laid off leaves another$40,000, in other words, if everything remains the same if the City didn't privatize, there would of been $40,000 left in surplus from the Salary account. $7,000 comes from the vehicle fuels that means an average of $1,000 per month on fuel for the vehicles, $28,000 was appropriated and they would have used about $12,000 and if everything remained the same and the City didn't privatize, there would have been another $16,000 surplus in excess in that fund. She stated that $7,000 remained in the winter road supplies account and if the City didn't privatize there would be another $7,000in surplus. She stated that the vehicle repair account of $6,000 was also surplus. She stated that if the City had waited until the new budget July 1, the City would have had a total surplus in the Highway Department of approximately $65,000 which could have been used to offset the deficit. She stated that the bottom line is the priority, which should have been the deficit, the priority was to privatize no matter what the cost. Secondly, she stated, the seven men laid off prior to the end of the fiscal year, these men, laid off in April, caused a problem with the unemployment compensation account which was budgeted at $30,000 and by prematurely laying off these employees overspent this account by $6,000. So the deficit was almost created or at least half created by the privatization. She stated that now the fiscally responsible this to do was to leave everything the way it was and take all the extra money in the Highway Department and use it to offset the deficit. The deficit was the priority and start the privatization in the new fiscal year and plug it into the Budget. She stated that she thought that it was fiscally irresponsible of the Mayor to go ahead and privatize and to transfer and that the money in the Highway was a pretty hefty amount and there was a Lot of surplus in that account. She stated that the Charter specifically calls for any deficit to be corrected and that you don't deliberately, when you running a deficit, take on any extra responsibility. She stated that you take care of the deficit like you take care of it at home and that the bottom line is WDC is $275,000 and growing.

Councilman Lazieh concurred with Councilwoman Canavan and stated that the use of funds, the transfer of funds within the Highway Department sent to the City Clerk's Office was dated July 6, 2000 and the Purchase Order was dated June 30, 2000 with payment to NEED in the amount of $49,700.He noted the account change on the purchase order and stated that 54033 didn't exist. He then checked the worksheet and found that the account had -0- appropriated in that account. He said the Council should review the appropriation and the use of these funds. He said he believes that Council had previously, by Resolution, notified the Mayor and the Finance Director not to incur any funds or pay any bills or encumber any funds to make payment for NEED. He stated that what the Council has before them is a payment which is in Violation of the Resolution submitted to the Mayor from the Council previously. He commented on the transfer of funds from various highway department items to other professional services to pay for NEED. He questioned the authority of this and commented on The way taken to circumvent the transfer of appropriations during the budgetary process in the last three months and the use of those funds to pay for a private contract that this Council specifically directed that payment should not be encumbered. He stated that he raises this as an issue and asked that the Solicitor investigate it.

Councilwoman Canavan stated that she noted on the transfer of the $100,000 from the Highway Department to Solid waste that the transfer wasn't made until June 30^th, the last day of the fiscal year, the City entered into the contract in April and she believes that according to the Charter before the City can enter into a contract there must be some documentation that there is money and in what account to pay for it. In April, she stated, there was no money in that account, and there wasn't really Any money to pay for this contract and as can be seen the money wasn't transferred until the last day of the fiscal year. The bottom line is that money could have been used to pay for the deficit or at least half the deficit. She stated that this is the way the Administration is operating.

Council President Noury commended Councilwoman Canavan on her understanding of the budget process and how quickly she is learning. He stated that he is also concerned and thanked Councilman Lazieh and Councilwoman Canavan on pointing out this issue to the Council. He stated that he might also have some legal questions pertaining to this matter.

Council President Noury instructed the City Clerk to request the City Solicitor to look into the legality of this and he stated that he is not too sure that the Solicitor's opinion is accurate on this point.

On the motion to accept collectively and place on file. All Agreed. So Voted.

Councilman Lazieh, for the record, asked that the Council accepts and places on file the correspondences from Chief DeNaro and from Lt. Minke regarding Lt. Minke's retirement. Without objection. All Agreed. So Voted.

Motion to accept and place on file was made by Councilwoman Canavan and seconded by Councilman Lazieh.

Councilman Leger stated that for the 5^th month this is not what was asked for and from this point forward he will no longer support this document being accepted as an accurate document of what the Council is asking for. He stated that the Finance Director proved himself wrong by providing the Council the information that the Council asked for during the budget process, and said it was readily available on the computer. Councilman Leger stated that the finance director stated this right in front of them and will turn around and say that he can't do it regularly on a monthly basis, so, as such Councilman Leger stated that he no longer thinks this is acceptable.

Council President Noury noted the Councilman's remarks.

Councilman Lazieh agreed that a budget review submitted by the Finance Department should be submitted to the members of the City Council on a monthly basis and the break down of each line item is available and is easily accessed by the Finance Department and should be readily available to the Council. Councilman Lazieh also request that a final year end close out balance, when Finalized by the Finance Department, be submitted to the City Council for review. He made this in the form of a motion.

Council President Noury did not recognize the motion since there is a motion already on the floor.

Councilwoman Canavan stated she feels that the Finance Committee works with these reports and she will support their views on this issue.

Roll Call on motion to accept report and place on file.

Motion dies 4 no 1 yes.

Motion made by Councilman Lazieh and seconded by Councilman Leger that the Finance Department submit a final year end close out balance ending June 30^th 2000 when finalized by the Finance Department to the City Council for review. All Agreed. So Voted.

Councilwoman Canavan stated that the last sentence of the veto states "In conclusion, this Charter Amendment is void and illegal." She stated that this is not a charter amendment this is an ordinance revision.

Roll Call:

Motion carried 4 yes 1 no

Mayor's Veto- Annual Operating Budget 2000-2001

Salaries of Department Heads and other Unclassified Services

Annual Capital Budget 

Council President Noury stated that he would take the above separately and asked for a motion on:

1. The Annual Operating Budget 200-2001

Motion to override the Mayor's veto was made by Councilwoman Canavan and seconded by Councilman Lazieh.

Under discussion Council President Noury read from a prepared statement as follows:

1. Budgeted Revenues in the amended budget passed by the Council do in fact balance with the appropriations.

Section 4-102 (2) requires the Mayor to "furnish to the council the estimated surplus or deficit, if any, of the current fiscal year and the estimated actual receipts of the city from all sources for the ensuing fiscal year which shall be available for meeting the ordinary expenses."

The Mayor has furnished the Council with a figure of $267,000 as proposed revenue. However, such amount is in reality not a revenue item since this amount is proposed to Be taken from a surplus account is no an estimated actual receipt for the ensuing fiscal year. Also, the surplus account was not established or supplemented in the current fiscal year. Therefore, the amount of $267,00 can not legally be included in the Mayor's proposed budgeted revenues.

The actions taken by the Council in amending the total appropriations by a corresponding$267,000 figure, in fact, balances the budget in light of the illegal characterization of funds from the surplus account as an estimated actual receipt for the ensuing fiscal year.

Section 2-301 (2) further supports this position by requiring that "the annual operating budget shall provide for liquidating any deficit…which are to be met out of the revenue of the City"; not out of any pre-existing surplus account.

The Mayor can only recommend the use of funds in the surplus account for Council Approval for those situations provided in Section 2-302.

2. The Council can reduce the bottom line for appropriations without amending particular line items.

Section 4-102 clearly establishes that it is the Mayor's duty and power to reduce the allocations of any department to avoid a deficit. As stated in Item 1 above, the Council did pass a balanced budget reducing the total appropriations by $267,000 to offset the corresponding illegal characterization of funds from a pre-established surplus account as an estimated actual receipt for the ensuing fiscal year. It is now the Mayor's responsibility to reduce the Specific allocations of any department to avoid a deficit. The Council is not asking the Mayor to do anything contrary to the Charter.

The legal brief by the Solicitors contradicts itself on this issue by faulting the Council for its failure to make amendments to particular line items and then in the next paragraph stating that the Council lacks any authority to make specific line item amendments.

3. The Council has the power to amend the proposed annual operating budget.

Section 2-301 (1) states that "it shall be the duty of the Council at least five days before the end of the fiscal year to adopt the annual operating budget ordinance for the next fiscal year."

The framers of the Charter intended that the process of adopting the annual operating budget ordinance would require necessary amendments. To impose any limitations of the Council in this respect would defeat the necessary role of the Council.

If the framers had intended such a result, they would have specifically required the Council to pass the annual operating budget ordinance proposed by the Mayor, while specifically indicating that the Council could not amend the Mayor's proposed annual operating budget.

The Solicitors' legal brief makes reference to the power of the Council to amend the annual operating budget ordinance after its passage. The legal brief seems to imply that such provision is on of limitation. However, if that were the case, then Section 2-302 would have to read that the annual operating budget ordinance may only be amended after its passage. Of course said section does not contain such language of limitation. Also, the Solicitors' legal brief cites Charter Sections 2-302 (5) and (6). However, Such subsections do not exist.

4. The Council has the power to fix salaries of Officers and Employees.

Section 2-308 clearly empowers the Council to fix the salaries of all officers and employees of the City. No where in the Charter is the Mayor granted the power to set and establish salaries. If the framers of the Charter had desired such a result, it would have been clearly stated.

The Solicitors' legal brief on this issue cites Charter Section 7-103 (4) for some unknown reason. This subsections only deals with the Council's authority to establish the maximum number of employees that may be employed in each class of positions by each office, department or agency of the City. Furthermore, Section 7-103 itself specifically does not apply to department heads.

The example given does not support the Mayor's position. It reaches an illogical Conclusion, since the Mayor does not have any authority or power in the Charter to increase the salary of a department head at any time during the fiscal year.

The Solicitor's legal brief argues in the alternative that if the salary adjustments were appropriate, they were not made by an amendment to the operating budget. This is a strange point to raise at this time, especially considering the Solicitors' earlier statement that the Council could not legally make an amendment to the operating budget. This is nothing more than double-talk.

Section 2-308 empowers the Council to fix the salaries of all officers and employees of the City whether it be by amendment or otherwise. There is no limiting language in this section as to how the Council can accomplish this act.

5. The Council has the power to establish the maximum number of employees that may be employed in each class of positions by each office, department or agency of the City.

Section 7-103 (4) specifically grants this power to the Council to establish the maximum number not to be exceeded. The Solicitors' legal brief offers no explanation why the maximum number of employees that may be employed is inconsistent with the amounts appropriated.

It is interesting to note that the Solicitors' legal brief stated in essence that "this ordinance is designed to set the maximum number of employees based on and consistent with the amounts appropriated in the annual appropriation ordinance." From the Solicitors' previous analysis only the Mayor was empowered to set anything.

6. The Council may amend the Capital Budget.

Section 2-304 (3) provides in part that "the Council may amend the capital budget ordinance but no amendment shall be valid which does not conform to the capital program." The Amendments by this Council conform to the capital program.

Section 2-201 (4) has not been violated.

Conclusion

The Council has passed a balanced budget for $14,448,315 and the Mayor must operate in accordance with it.

Council President Noury stated that the Council in talking about the issue itself has taken proper and legal action. He said that the issue is the Budget. He stated that the Mayor wants to continue to pay rich outside lawyers and the City Council will not support this action. He said it has to stop. He related that in his research of the Charter where does the Mayor gets the authority to hire these lawyers and he stated that this issue will be investigated. Legal Matters are suppose to be handled through the legal department. This Council will be the guardian of the "people's savings account." The Council will not support the Mayor's policy of funding outside legal fees. He stated that this is why he would ask support for the override of the Mayor's veto.

Councilwoman Canavan stated that she is greatly surprised that the Mayor used both the City Solicitor and Assistant City Solicitor on the same issue. She stated that every issue has two sides that's the way the court system is based on. One issue two lawyers one takes each side the strongest side wins in court. The Mayor took both attorneys to work together to come up with this opinion. The fact that they both worked together coming up with the very same opinion left the council with no legal counsel. How could the Council turn to one of the two and ask them to look at from the Council's point of view? They're not going to make a 180-degree turn and all of a sudden look at it from our position. Every issue can be looked at from two sides effectively, logically and legally from two different angles and it seems unfortunate that the Mayor used both leaving the Council and the President to its own resources but added that she would like the Mayor to realize not to underestimate the Council's resourcefulness.

Roll Call on motion to override:

Motion to override carried 4 yes 1 no.

Council President Noury stated that the veto is overridden and the Mayor must operate within the appropriated budget. He stated that the Council expects the Mayor to be fiscally responsible and live within the appropriated amount of $14,448,315.

Councilman Lazieh stated that he agreed with the Council President's review and agrees that the City Council has the authority to reduce the appropriations within the budget. He stated that he has witnessed this first hand. He said the Council can appropriate and does appropriate funds that are to be expended by the Mayor on what the Council has appropriated it and how the Council has appropriated it. He noted for the record that the budget review, or the budget that has been submitted was not complete and recommended that the Clerk process the budget ordinance and include the budget worksheet also a part of the working budget which he believes it the working budget of the Council. He said that is what was acted upon by the Council and he asked that this is what is to be sent to the Finance Department as the Council's adopted Budget.

The City Clerk noted for the Council's review that the amendment to that effect was indeed listed on page 6 of the Budget and stated it would be included in the final document.

The Annual Capital Budget Ordinance

Motion to override the Mayor's Veto was made by Councilwoman Canavan and seconded by Councilman Lazieh.

Roll Call:

Motion carried 4 yes 1 no.

An Ordinance pertaining to the Salaries of Department Heads and Others in unclassified service.

Motion to override the Mayor's Veto was made by Councilman Leger and seconded by Councilwoman Canavan.

Roll Call:

Motion carried 4 yes 1 no.