I.                      CALL TO ORDER

Mayor Rose calls the meeting to order at 6:38PM.

II.                   SALUTE TO THE FLAG

III.                WORK SESSION

A.     Review and Discussion of the FY 2016-2017 Budget

Mr. Luba was called to the podium to present on the East Providence 5 year plan expenditure projection and estimated tax requirements.  He explained what the tax rates would be given the possible scenarios.  He noted if needed he would be willing to provide a power point at the next meeting. The forecasts for the City and the School leading up to this point were pretty on target, not overly conservative or under the mark.   For the funds being requested something has to be done to cover the costs.  Some can come from State funding but the main source is taxation.  This has two different components, new growth and how to increase the base.  He explained the money spent each year from not being in synch with the State and the funding needing to fix that problem versus the funding needed for the schools and the upcoming union contract negotiations with both the City and the School. He discussed early pay options and money saved if they didn’t ask for this which the City could only do if synchronized.  The reason why this happening now even with the City running surpluses is that this year there is an increase in expenditures.  The big thing is the State funding for schools has leveled off.  If looking at the graph since 2013 the State funding has gone down and going forward is flat.  This could change but right now there is none scheduled to come in.  If dependent on this each year it's pretty easy to run up a surplus or have lower taxes.  This is the main thing which is different going forward and it is not only Affecting East Providence.  Others that come to mind are Providence, Pawtucket and Cranston which were actually getting more and are going to be in the same boat.

Councilman Britto asked if they were to revisit the budget and make additional cuts would this stop the tax increase.

Mr. Luba stated they will have less of a tax increase to cover.

Councilman Britto stated that Mr. Luba’s predictions show 7 years of tax increases.

Mr. Luba stated that was correct it would happen even without the school’s increase request.

Mr. Luba then listed the long term challenges such as synchronization which would probably need a few meetings before the City Council could commit or not. He noted one of the advantages would be that the schools would be happy with the Council as the split years make it very difficult to finance and to predict revenues but it is expensive to do this.  The benefits are long term, real long term.  It would be good for the City but the City also has to contend with new or repaired high school costs.  This will require a $100 to $150 million bond at 3.5-4% internet rate which could add $4-7 million in cost every year and that has to come from the tax payers.  He ran a few scenarios depending on the length of the bond 40 or 50 years.   It will be expensive.  It will save on repairs and may be necessary.  There is also the cost to refurbish the middle schools.  The State reports they need a lot of work.  At one point a number was thrown out of $5 million per school but it is higher.  There is also the issue of covering the pension arc.  The only immediate source of funding except going to the tax payers is the sync bond reserve, $3.7 million every year is put in that reserve as it is built into the budget.  The Council could free this up and this could come in handy to fund.  The Council has to decide if it feels it’s worthwhile to do this or maybe it is better to do other things with that money. 

Councilwoman Capobianco asked what the status was of the study regarding the rehab vs a new high school.

City Manager Chapman stated he and the Superintendent have spoken about this and she has sent her recommendations and he agrees with them.  They just spoke tonight about putting it before the Council at the next meeting.

Councilwoman Capobianco stated that she receives many calls asking about the rainy day fund and asked if Mr. Luba could please provide an explanation again for all to hear.  Mr. Luba provided the explanation again. 

Assistant Mayor Cunha asked if the $3.7 million is carried over.

Mr. Luba replied it is and the intent was to put it towards a sync bond costing $40-50 million so that the cost would not be so high.  It's a big undertaking and if the City has $10 million tucked away it cuts the bond.

Director of Finance Moore stated that the City currently has 3 years of sync bond funds tucked away.

Mr. Luba stated that if the Council funds the Schools the $1 million out of the synch fund it is $1 million every year going forward not just a onetime deal. That is like saying the Council will now take the $3.7 million and will only to put away $2.7 million each year going forward.  The $1 million to the schools is for operations every year.

Councilman Conley asked about the workers compensation and salary aspect and that this will need to be every year unless the workers comp rate goes down.

Mr. Luba stated the Council could do that, they can do anything they want but at that point they might be saying they are not going to do the synchronization anymore. 

Assistant Mayor Cunha stated it is a matter of priority.

Councilman Conley stated they just need to reduce the cost of doing business and fund the school and don't touch public safety.  The City cannot afford the size of the government it currently has.  

Mayor Rose stated Mr. Luba, Director Moore and City Manager Chapman already cut $3 million out of the upcoming budget and he is not for cutting out more.

Councilman Britto asked about the clothing allowance.  Mr. Luba explained that was contractual for all steel workers regardless of what departments they worked in.  

Eric Skadberg, City Engineer and head of the EPPMTEA is called to the podium.  Mr. Skadberg handed out a spread sheet from 2013-2017.  He noted salary the increases and used a chart to explain.  The federal cost of living increase is 0 and therefore all contracts received 0% increases according to the contract negotiated by the Budget Commission which is still in effect. 

Acting City Manager Chapman stated that the contract for schools and all the city unions was the same so by what the Council is asking the schools should be 0 based on the contract’s 4^th year. 

Councilwoman Capobianco stated the schools took a pay cut in 2009 so they are trying to put the schools where they should be.  

Mayor Rose stated they have to be aware they are deciding on this entire budget and looking at this they know that $3 million has already been found in cuts.  The schools needs $1.2 million. The steelworkers are here with a 0 increase and we need to find a way that everyone leaves the table a little unhappy.  It's a negotiation.  As much as we hate to hear it we are going to need a tax increase and it's going to get worse going forward. 

Councilman Conley stated we are going to have draconian cuts.  

Mayor Rose stated yes.

Assistant Mayor Cunha stated that is why we need the sync money.

Mayor Rose asked Mr. Luba if there was any way that they can allocate a onetime cost of $1 million from that fund. 

Mr. Luba came to the podium to state it was not a onetime allocation. However the Council could allocate the funds. 

Councilwoman Capobianco stated the school department needs the funding it’s detrimental to the City otherwise. 

Mr. Luba stated whether or not to synchronize will be a decision for the next Council, it might not be their number one priority that might be the high school.   $3.7 million is a nice start to fund this if the City is going to have to spend $7 million a year in additional taxes.  

Mayor Rose stated they will still have to have the tax increase but what about taking the $1 million onetime and adding it to the total budget then have the next Council decide what it wants to do.  He asks the Finance Director to provide the percentage rates of tax increases since 2005 and for last 5 years.  Director Moore provides this.

Councilman Britto noted that he disagreed with last year’s tax increase and disagrees with this year’s.  He added that right now he still sees more places to cut.

Assistant Mayor Cunha stated it is kind of unfair to the other unions if they take the $1.2 million from the sync fund.  

Mayor Rose asked what the tax increase was right now and the answer was 1.5% without the million.  The Mayor suggested 1.93% and $800,000 thou and $200,000 to the steelworkers then they are still at the same 1.9%.

Councilwoman Capobianco stated she agrees to take the million from the sync fund.

Councilman Britto suggested they cut some areas for $300,000 to get to the number for the steelworkers.  

Director Moore stated a 2.5% raise to all city employees would total $453,533.

City Manager Chapman stated for the record he doesn’t agree with any raises school or city unions and that they should all stick to their contracts across the board zeros that is why the Budget Commission was here.  That is what the 5 year plan calls for.  Mr. Luba backs this.  He is the state fiscal advisor and this was not done easily it was a lot of soul searching.  When the contracts open next year they can adjust it if they don't stick to the contracts they might as well throw them out the window.

School Committee member Joel Monteiro came to the podium and stated it is not city and schools as separate entities.  Schools implement daily life, they play a key role and this is what is missing.  Don’t pin one against the other they are departments. Teacher’s don't have the option to grab if their spouse has a lesser health insurance plan.  The Superintendent came to show what others cities and towns are funding for police, fire and schools.  In East Providence, there is a high turnover drastically in the school department which is affecting all our children.  The City is marketable because of the school system. There is a need to bring good talent in.  If our firemen were jumping ship and safety was at risk we would address it immediately.  How it impacts the economics of the City is important.  Don’t pick and choose when to follow the 5 year plan.  The turnover is a major issue and it needs to be addressed while still in the contract.

Mayor Rose stated that he was glad Joel brought this up.  When dealing with the budget the Council treats all the departments the same way.  The school is a much bigger department but it is a department.  It's not about picking it apart as it cannot be line item cut.   The City helps out with building costs, canvassing and crossing guards.  The City takes on those costs and all it can do is give a dollar amount to the school it cannot line item cut like it can the other departments.  There was $3 million cut out of this year’s budget already he added that he is not for any more. 

Give $800,000 to the school and $200,000 to the City and they can each cut a little more out of their budgets.  Either way there will be a tax increase and/or sync bond funds used.

Assistant Mayor Cunha stated he is not opposed to the 1.9% tax increase if they are applying funds to all.

Mayor Rose stated the Council can nickel and dime but he has sat on councils which did and when they got to the end of the year there were deficits. Councilwoman Rossi spent days cutting down to the smallest penny and at the end of the year they were having to look for more money.

Councilwoman Capobianco stated that she felt as though the City Manager, Finance Director and Financial Advisor did a great job with the budget.  She is agreeing with both Assistant Mayor Cunha and Mayor Rose that the first choice is to take the funds out of sync fund but she is also not opposed to the 1.9% tax increase.

Councilman Britto stated he is opposed to the 1.9% tax increase. He doesn’t want to go line by line as it's not his responsibility to do so.  He doesn’t want to be able to say they have to cut it when it might be something they need.  He assumes there is some fluff.

Councilwoman Capobianco asks City Manager Chapman if they took out the fluff.  He states they did and he would be happy to show them each and every department and where they made the cuts.  He notes that all three of them sat and went through each department line by line and cut a total of $3 million.

Mayor Rose stated that this was one of the highest in cuts brought to the Council the next highest was around $2 million.

Councilman Britto asked Director Moore about the surplus.  Director Moore explained that it is due to the way the Charter is written.

Mr. Moore noted that when the Budget Commission was here special consideration was given to the teachers due to the past cuts of the contracts.  The teachers are the lowest paid in the State.  East Providence is probably about $6,500 low on the 10th step.  

Superintendent Crowley came to the podium noting that what she had previously stated was not meant to pit one union against others.  Teachers are the lowest on the first step and therefore it is difficult to retain them.  When they reach the top step they are low.  She explained what happens when they hit retirement and what the health benefits are.  She elaborated what work the school buildings need.  She noted the State Report on the condition of the buildings which she handed out to the Council members.  She added that for a long time there has been one science lab in the entire high school and no physics classes because they can’t get a physics teacher.  They do have lean years and the unions are aware that it will be cost of living increases only.

Councilman Conley stated the Superintendent is being kind the high school has a 1950-60 science lab.  It is not state of the art even today with the changes made to it when he was on the School Committee.  His experience is that they work very hard with the resources they have and provide a real quality education.

Regarding the workers comp City Manager Chapman stated that he did suggest an administrator first to see what that number would be to see if there are other ways to look at it.  

Assistant Mayor Cunha requested that they take from the synchronization fund $1 million and raise the taxes a half percentage and this will total what they need.

Mayor Rose stated that by doing this all they are doing is stealing from Peter to pay Paul.  Mayor Rose asked if they can take it just this year.

Mr. Luba responded probably not as the tax rate next year is close to 4% and is capped at that so they are going to have to take it every year.

Councilman Britto asked if it can be funded back in.  Mr. Luba stated those tax increases are for operating there will not be any money to put back in.

Councilman Conley stated the City needs to address the equity with the schools and needs to own it.  He agrees this is not an ideal way by opening contracts mid stream.  However, they are right to question. The reality is that we fund our schools at 42% and our teachers are the lowest paid in the State.

Councilman Britto asked about the funds in the budget for Union Primary School.  City Manager Chapman stated that Buildings Superintendent Catelli has said it is necessary to keep it functioning for sale.

Councilman Britto asked about the project marketing study for the Riverside Square.

City Manager Chapman called Director of Planning Jeanne Boyle to the podium.  Director Boyle explained the reason was that the City is one of the successful applicants in the Strong Cities Grant and stands a chance of winning a $300,000-$500,000 grant and in order to make it competitive they did pledge that we put in $30,000 or a 10% match.  The capital budget predates the regular budget and they have been working on it with the City Manager.  

Councilman Britto asked about the $125,000 expenditure in the Capital for the Library as he thought this was already approved last year. 

Eileen Socha, Director of Library Services comes to the podium. She states that $95,000 of that has been spent so far but the budget year hasn't ended and they are only using funds from 2016.  They are going to attempt to run the budget on the cuts and they can't afford any other cuts.  

Director Moore provided an update on the timetable for the next meeting.  It is on November 18th at 7:30PM and is the 2nd public hearing on the Budget.  The final decisions have to be made and posted in the paper 7 days before the end of fiscal year and if not decided the City Manager’s budget goes into effect.

Assistant Mayor Cunha asked if they wanted to fund both the school and city unions from the synch monies it would be $1.4 million this year and going forward would they still need it?

Director Moore stated yes if they fund using the sync monies at 2.3 or increase taxes 1%.

IV.                ADJOURNMENT

A motion to Adjourn at 8:23PM is made by Councilman Britto, seconded by Assistant Mayor Cunha and on a roll call vote it is unanimous.

Approved By Council:  November 1, 2016

Attest:  _______________

            City Clerk