City of Central Falls
Special City Council Committee of Financial Affairs Meeting
Wednesday, October 11, 2000
City Hall Council Chambers
At 7:00 P.M.
A Meeting of the City Council Financial Affairs Committee was held on the above date in the City Hall Council Chamber at 7:00 p.m.
Councilman Leger
Councilwoman Canavan
Councilman Lazieh
Councilman Noury
Judge Bruce Sawyer
Quorum present.
Council President Noury presided and led the Assembly in the Pledge of Allegiance.
Council President Noury welcomed Judge Sawyer to the Committee and explained that the purpose of the Committee was to take a detailed look at the City's Fiscal Affairs. He stated that the Council doesn't feel that they are getting any co-operation from the Administration and that never in his experience has he seen the Executive Branch of Government with the sole authority over all fiscal issues. He explained the actions taken by the City Council during the Budget Hearings, the Charter provisions dealing with a veto override and the Administration's view relative to the Budget. He stated that the City Council is a separate but equal part of City Government and that the Council doesn't agree with the Administration's Policies and is dismayed by the Mayor's appeals relative to the Arbitration dealing with the Fire Department. He stated that he wants to see this Committee operate independently and will allow Judge Sawyer to do his own investigation on these issues. Council President Noury then turned the meeting to Judge Sawyer.
Councilman Lazieh stated that for the good and order of these meetings they need to be televised and made available to the public in the future and he recommended that they should be rebroadcast and open to the public for rebroadcast.
Council President Noury addressed the issue and explained why Mr. Nadeau was not available.
Judge Sawyer thanked the Council President and stated that this is a difficult process to undertake for the City and that he would conduct this in an independent fashion and he will render his opinion and that he will not be swayed by the City Council nor the City Administration. He then stated that he would question Frank Juchnik and Edna Poulin former Directors of Finance for the City of Central Falls.
Council President Noury thanked both individuals for taking time out of their busy schedules to come to this meeting to discuss the financial condition of the City at the time they were Finance Directors.
Judge Sawyer asked Edna Poulin what year she was Finance Director.
Edna Poulin responded that she became Finance Director in January 1990 until January 1995. He then asked her what role the Finance Director plays in the Budget process.
Edna Poulin explained the process taken by the Finance Director relative to the budget. She stated that the Department Heads would submit their departmental expenses along with their "wish list" for the Next fiscal year. She then explained that should would review them with the Mayor and make adjustments as necessary and then it would be presented to the City Council for action. She related that it would be the duty of the Finance Director to review contracts and determine what Federal and State sources of revenue would be forth coming. She stated that she would match expenses against income and this would determine if there is a need for a tax increase. She stated that this was the case in the first year as Finance Director.
Judge Sawyer asked what made up revenues besides taxes.
Edna Poulin stated that revenues would consist of licenses, fees, violations State aid etc.
Judge Sawyer asked if this revenue would be classified to a certain department or did all money go into the general fund.
Ms. Poulin responded that unless it was a specific grant designated for a certain expense or special account then it would go into the general fund.
Judge Sawyer asked how revenue would be allocated to departments.
Ms. Poulin explained that she would sit down with department heads to determine their revenues if any and to calculate their expenses.
Frank Juchnik related that when he first became Finance Director under the Mayor Messier in the1970's the City's budget was in great distress. He gave a historical perspective of the City at that time. He related that Mayor Messier turned the rating around in a three-year period. He also commented on the State takeover of the schools and how the City needs to maintain its financial integrity and what the rating companies look for when determining these ratings. He commented on State Aid, Departmental revenues and tax dollars and the need to levy at least the minimum.
Mr. Juchnik commented on the TANs and BANs and how the City needs to keep it's rating for these.
Judge Sawyer asked about bonds and how they are paid and in what amounts.
Discussion also took place on the Charter and related Ordinances.
Mr. Juchnik also explained Municipal Bonds and how and on what ratings are based. He also commented on the agencies involved in these such as Mood's and Standards & Poors. He commented on the debt factor, tax collections and how payments are made. He spoke on operating surpluses and how they affect bond ratings. He stated that the accumulated surplus should be at least 5% of the operating budget.
Judge Sawyer asked how the City came about having this surplus and what it was when Edna Poulin and Frank Juchnik were Finance Directors.
Ms. Poulin explained that when she left the surplus was around $2million. She stated that this was due in part because of the State takeover and some tax increases that had taken place. She commented on the amount of money the City had to pay for the schools because the City owns the buildings. She stated that gradually over a period of time there were budget surpluses.
Judge Sawyer asked if revenues not expected created this surplus.
Frank Juchnik and Edna Poulin responded. They stated that the use of the surplus must be appropriated by the City Council and recommended by the Administration. They also stated that the surplus is part of cash.
Councilman Lazieh commented on a restricted cash reserve account and its creation in 1995 with a one million-dollar cash reserve in place. He also commented on a $250,000 capital equipment reserve account.
Council President Noury stated that the cash reserve account no longer exists and that it was recommended by the auditors and bond counsel to repeal the ordinance related to the account.
Frank Juchnik commented on the reason the City should improve its credit worthiness and on the fund balance.
Councilman Lazieh pointed out section 2-144 of the revised ordinances.
Judge Sawyer concluded his examination of the former Finance Directors and thanked them for their time.
Councilman Leger motioned to adjourn. All Agreed. So Voted. Time 8:20 p.m.
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Elizabeth A. Crowley, CMC
City Clerk