Finance Committee

Office of the Clerk of Council City of Gahanna 200 South Hamilton Road Gahanna, Ohio 43230 Meeting Minutes Finance Committee Michael Schnetzer, Chair, Karen J. Angelou, Ryan P. Jolley, Thomas R. Kneeland, Brian D. Larick, Jamie Leeseberg, Stephen A. Renner Kimberly McWilliams, CMC, Clerk of Council Monday, October 27, 2014 Council Committee Rooms Immediately Following Committee of the Whole CALL TO ORDER: Finance Committee called to order by Schnetzer at 7:34 p.m. Present 6 - Jamie Leeseberg, Karen J. Angelou, Michael Schnetzer, Ryan P. Jolley, Stephen A. Renner, and Thomas R. Kneeland Absent 1 - Brian D. Larick ITEM - From Director of Finance 2014-0160 Department of Finance Supporting Documents 1. Third Quarter Financials Teal handed out third quarter financials; first page: overview; expense side creates a vivid picture of city expenditures while adhering to standard operating model; report available on the webpage; begins with revenue; through September brought in 83% of planned revenue, ahead of projections; Teal noted real estate taxes are distributed before August, so 83% is slightly skewed; income tax note: City is seeing rebound from the recession; Teal’s estimate for income tax revenue is approximately $17 million for this year; positive outcome; however, not reliable in the long run, as businesses aren’t guaranteed to stay in the City; leveling trend on real estate taxes; income from building and permitting has remained high and projected to continue; however, it is difficult to predict what will be done with properties; Finance will work to develop the right mix to determine what our cash flow needs are; Teal added the income tax income’s largest percentage is withholdings; last collection remained steady; Kneeland inquired the net loss (delta from) the collected amount; has deviated $4 million from $7.5 million; Teal noted the easiest figure to begin at for net loss is the local government fund; City was at $1.4 million before and sits at $715,000 after cuts; estate tax is another facet to observe for loss, good collections, but a $750,000 to $200,000 difference; investments are another section for loss $500,000 vs $2 million before recession; TIZ Land Lease payments ended, and thus, the City received $ 1 million less per year; about $3 million per year loss; Teal additionally noted income tax increased by less; Schnetzer clarified we need to consider what it means to be more reliant City of Gahanna Page 1 Finance Committee Meeting Minutes October 27, 2014 on income tax; income tax based reliance is more volatile; sales and property being the other two sources of income; our diversification is an issue; we have many eggs in one basket; Kneeland concurred, because of one revenue source it is much more dangerous; Stinchcomb questioned if this an Ohio anomaly; Schnetzer replied Ohio is slanted toward a more risky source, income tax; neighboring states can be more stable; Schnetzer noted if we’re bottled into a one income source, a recession could take it away; Angelou noted when preparing for the future it may be helpful to have an Economic Revenue Plan; Teal added we have a diversified commercial portfolio; she continued with page four; clarified the numbers are not a fluke; have passed $16 million mark and are crossing a $17 million mark; will continue updating the income tax model; if overestimated, could feel hit; broke down categories of interests; Teal additionally brought attention to expenses as we are a service organization; not just how to spend, but what we provide with the spending; 41% goes to public safety; all other categories are generally even; revenue this quarter has exceeded projections; noted it can swing quickly as it is just a snapshot in time; excess pushed to $11.6 million; per Larick’s request, Teal included sustainable capital and the $6.4 million agreed upon; Teal provided a snapshot of the portfolio; Teal reported in September and October, the City has been making a transition to a fee based advisor; it is good relationship and they’ve taken over our assets and reevaluated our investments; can let go of investments sooner to permit more cash in the money market with the intent to solidify future financials; Kneeland inquired about the investments, is the risk level more or less with the new advisor; Teal clarified it will remain the same; Council has and will decide what risks we can take; Teal provided fund balances; reiterated snapshot in time and can change; won’t make final offer until later in year; likewise, escrow money brought in month to month; Q3 dashboard passed out next with desired changes; intent to do quality work and avoid redundancy; available on website as well; finally passed around proposed budget calendar; outlined what we have begun thus far, steps taken, and future projections; will get budget book to Council at the Council meeting to discussion budget; Teal requests December 15th budget passage at Council meeting; accounting activities, entering hundreds of POs, and normal budget passage on January second creates a chaotic timeframe in Finance ; earlier passage will eliminate department struggling during a time of heavy turnover; Angelou noted historically passage is for the first meeting in Jan; added it could be blocking Council incumbents if we move forward and change the tradition; Teal emphasized not intended to be permanent, but to avoid “new year crunch”; could take place on January 2; Teal added could annotate the appropriation, then compute, and not make it active until Jan 2; doesn’t change authority, but changes data entry; expenses would still be encumbered to new year; Stinchcomb noted many cities already pass budgets in December; Ewald noted historical practice; would’ve been concerned with the two year terms in Council; Ewald noted now would be the time to do it if we are going to try this; Angelou noted the waiting year for incumbents, as they would not be involved in the decision; Kneeland clarified the new Council members would be included in the budget discussion anyway, voting is the only issue; Kneeland also feels this could be a good year to try; Jolley noted we are enacting this many months before the newly elected will take office; Jolley City of Gahanna Page 2 Finance Committee Meeting Minutes October 27, 2014 additionally noted this is a planning movement and an administrative decision for the city; Teal stated department is supportive of change; will give a solid week to address yearly anomalies and will also address dead-time at the end of December; Ewald clarified the reduction of “then and now” submissions by early passage will help greatly; will also help when passing yearly contracts; Angelou inquired if legally the information could be loaded early for a January start time; Teal noted we would have to wait for signed legislation to proceed; has been discussed; risk is making promises and having to go back and amend if POs that didn’t actually take place; Teal’s instinct is to not have to go back and continue to make corrections; Leeseberg noted this is generally a “crash course.” If we have four seats turned over, could be resistance from new incumbents; Schnetzer clarified we are doing this for Finance’s benefits; Angelou doesn’t believe it will be an issue; Renner fully supports this move; we are here to approve the continuity of the City and ensure appropriate financial needs are met; Jolley noted the new Council could immediately overturn the change anyway, should they disapprove; Teal noted many other cities are passing budget appropriations in December; Schnetzer inquired if there was any additional discussion; there was none; Schnetzer inquired what goes into the “other taxes” category; Teal replied inheritance tax; Schnetzer inquired if anything was surprising; Teal replied there were no surprises and things are tracking well this year. ADJOURN - Meeting was adjourned by Schnetzer at 8:11 p.m. City of Gahanna Page 3