Monday, February 11, 2008

Wasted Expenditures Continue In North Canton Despite Budget Woes

Prepared Comments Made to
February 11, 2008

On tonight’s agenda, as in the past, there is legislation authorizing expenditure of taxpayer funds that continue to drain city coffers while providing little if any benefit to the city and its citizens. As the council and the administration have continued to grapple with an uncertain future for the city, I believe it is timely to think about expenditures and the mentality that have contributed to the city’s financial distress.

I would like to start with some of the legislation that is on the agenda for tonight. Ordinance No. 12-08, authorizing payment to David Crowder brings to mind an option to purchase 24 acres of wetland from Mr. Crowder in November of 2004, for which former City Administrator, Michael Miller, paid Mr. Crowder $6,300.

I have a letter from the Director of the Ohio Public Works Commission, Mr. W. Laurence Bicking, in which he notes that several of the terms of the option agreement “raised questions with respect to the science supporting the necessity for constructing ponds on the site as would the lease back provisions. These concerns would have been raised with the City and most likely referred back to the District 19 Natural Resources Assistance Council for their consideration.”

In effect, the six-month purchase option was not acceptable to the State of Ohio and was of no use to the city. In addition to the $6,300 that was paid to Mr. Crowder for the six-month purchase option, former Administrator Miller also expended an additional $4, 550 for an appraisal and survey of the property. All of these expenditures were made without the knowledge or approval of council. Two members of that council have confirmed to me that council was not aware of former Administrator Miller’s expenditures to acquire the property.

When I hear the name Crowder I can only think of the expenditure of a minimum of $10, 850 for which taxpayers received absolutely nothing in return and Mr. Crowder receiving $6,300 for a purchase option with terms that were wholly unacceptable to the State of Ohio and thus not worth the price of the paper they were printed on. And now Mr. Crowder is coming to the city for an additional payment of $2,965 of taxpayer funds.

Ordinance No. 14-08 is legislation authorizing expenditure of $18,000 to a former city employee who was terminated from his employment with the city. It is not unusual for an employee to be terminated for cause, whether they are employed in the public or private sector. If this employee’s employment history had been properly documented over time there would be no reason for a financial settlement upon this release from employment. Wholly unacceptable employee conduct should not be rewarded with a nice big check as the employee is released from his employment. The employment of this individual came about under Mayor Tom Rice.

The mention of former Mayor Tom Rice brings to mind the removal hearings in 2004 and the sudden suspension of those hearings because elected officials put politics ahead of their duty to the citizens and suspended the hearings. For that lack of intestinal fortitude, the citizens of North Canton were asked three years later in 2007 to compensate former Mayor Rice and his attorney to the tune of $31,000.

The expenditure of $40,000 late in 2004 under the former Rice Administration for a sign at the airport was another waste of taxpayer dollars. The $40,000 includes rental space at the airport for a term of sixty months at $300 per month. I expect that if the world has ever heard of a Hoover vacuum cleaner, that they also have heard of North Canton.

Ordinance No. 10-08 authorizing the expenditure of $64,500 for a performance audit raises concerns of wasteful spending. How is it that department heads with decades of experience are not utilizing city resources to the utmost even after budget cutbacks that have been ongoing for several years?

I would expect that the most obvious areas for increasing efficiency have already been arrived at long ago but that there is no elected official who will step forward and initiate the needed action. We have seen at the county level discussions to centralize radio dispatch of safety forces. We have all discussed combining safety forces in some fashion to increase efficiency. Why is it that you must spend $64,500 to tell you what you already know?

How long will it take you to recoup the $64,500 spent for the performance audit? Are there savings to be had that will allow the city to continue much as it has in the past or will you be spending much needed funds to simply find out that this is the end of the line for life as we have known it to be in North Canton?

The expenditures noted above total $167,315. These wasted dollars add up quickly. That would have more than covered the $150,000 Mayor Held requested last week for engineering and design for North Main Street which would have allowed the city to apply for construction grants.

Increased labor negotiation costs are another waste of city funds that have occurred. For many years, a local labor attorney would charge the city $10-13,000 for negotiating city labor contracts every three years. In 2003, former Mayor Rice hired a labor attorney from Cleveland that cost the city $55,000.

While the city has returned to using a local labor attorney, the word is apparently is out in the legal community that the City of North Canton will pay big-city hourly rates for a labor attorney. In 2006 North Canton City Council authorized up to $30,000 for labor negotiations expenses. A savings of $25,000 over fees paid in 2003 but now double over the traditional fees charged up to and including the year 2000.

Had North Canton continued to use a local attorney for labor negotiations, the city would more than likely have saved in excess of $55,000 in fees for labor negotiations in 2003 and 2006.

The wasted expenditures of city funds noted above are just a short tally of small-time expenditures that I can recall. There is a major waste of city funds totaling $5.7 million dollars that would soften the financial stress for the city had those funds not been expended.

The first is the removal of $1.5 million dollars to fund the North Canton CIC in 2005. That expenditure was not budgeted by the city in its annual budget. At least $123,700 of those former city funds have been spent for the financial benefit of private business interests with no obligation for repayment to the CIC.

The expenditure of $4.2 million dollars for purchase of the former Arrowhead Golf Course in 2003 is another example of a major expenditure that was unbudgeted in the city’s annual budget. This expenditure by far has brought North Canton to its day of financial reckoning sooner rather than later. North Canton can soon match a recent Repository news story titled: Legends is costing Massillon big bucks.” Only the headlines will read: “The Fairways is costing North Canton big bucks.”

These expenditures have not benefited the taxpayer and that is, unfortunately, the bottom line.

Thank you,
Chuck Osborne
City of North Canton