Monday, January 31, 2011

North Canton Streets Go Unpaved While Extraordinary Bonuses & Benefits Are Paid to City Workers

Prepared Comments Made to
January 31, 2011

For the last several years, council has made no secret of the precarious financial situation that the city has been facing for a number of years now.

One might ask if Mayor Held over the last five years as Mayor has made the tough decisions that are needed to put North Canton on a sound financial course for the future. Has City Council made the tough decisions it told residents were needed when town meetings were held at the Civic Center several years ago. President of City Council Revoldt talked of a state takeover during the town hall meeting if North Canton did not stop the City’s downward fiscal spiral.

Anyone who was at the meeting of the Council of the Whole last Monday, January 24, 2011, might question if city leaders really have a grip on the city’s financial condition. It seems to me that financial decisions are only being made at the eleventh hour when there are no other options available.

A good example of a crisis now facing the City is the revelation that North Canton’s promises to City employees to pay an unlimited amount of accumulated sick time as well as accumulated vacation pay and Medicare payments to City employees upon retirement has grown to an obligation of $1,849,075. This debt obligation, partially offset by a fund, called the Compensated Absences Fund, containing $608,436 leaves an unfunded liability of over $1.2 million for the City. This liability will continue to grow unless action is taken to control them.

Benefits such as these in the private sector were contained or completely eliminated long ago.

How many more financial body blows can the City of North Canton take before the City reaches the point of financial collapse?

This year, four city employees have indicated that they will take retirement. North Canton will have to cut checks to these four employees upon their retirement for accrued sick time, vacation, and Medicare totaling $215,040. These are benefits that retirees will receive over and above their pension.

Ward 3 Councilman, Jeff Davies, went on the record last week stating, “The City is facing a crisis.” I agree with you, Mr. Davies!

Since creation of the Compensated Absences Fund in 2006, Council has funded that account to the tune of nearly $200,000 per year. Added to the $100,000+ annual cost of the longevity bonuses paid out to city employees just before Christmas each year brings the cost of providing these benefits to well over $300,000 each year.

During the presentation of the City’s 2011 budget by Finance Chairman and Fourth Ward 4 Councilman Jon Snyder, Mr. Snyder noted that NO street improvements were in the 2011 budget.

Typically, North Canton budgets approximately $250,000 for street resurfacing, annually. This is not a total rebuild of streets but a replacement of the asphalt surface only on neighborhood streets.

Sadly, it is apparent that longevity bonuses at Christmas for city workers and windfall payments of accumulated sick leave, and vacation pay doled out upon retirement are going to be paid before city streets are resurfaced. That appears to be the case as City Council has budgeted NO funds this year for street resurfacing.

Given that North Canton can only pay down the unfunded liability of $1.2 million at the rate of $200,000 per year, could one assume that funds needed for street resurfacing will not be available for the next six years?

Several on City Council have stated that current bonuses and benefits for city workers were put in place by administrations of years past. I can only ask you, Mr. Revoldt, and others who have made those statements, if each of you is acknowledging your past participation in those decisions when you make those remarks?

Will your participation in the decisions of today be more farsighted than your decisions of the past? Taxpayers can only hope.

It was stated last week by Finance Chairman Snyder that payments for sick time and vacation pay that city workers have accumulated “must be brought in line with the City’s ability to pay.” With that said, I must ask Mayor Held if he thinks his selection for City Administrator will be able to lead the city with Mr. Snyder’s marching orders as city policy?

I say this because as a retiring city employee, Police Chief Grimes is by far receiving the largest payment of accumulated sick time and vacation time, under the city’s present benefits program with nearly $79,000 to be paid at retirement.

The greatest portion of the unfunded liabilities is benefits promised to unionized city workers. Mayor Held, when Police Chief Grimes retires and becomes City Administrator in March, will he have marching orders from you to work to curtail benefits paid to future retiring city workers covered by union contracts?

Given how Chief Grimes has benefited from the current City policy on payment of accumulated sick leave and vacation pay on retirement, how effective will Administrator Grimes be in persuading unionized city workers in renegotiating those benefits?

Passage of Ordinance No. 13-11 as written will curtail payments for accumulated sick time and vacation pay only for the City’s exempt employees. Council must make the hard choice. There is no room to fudge on this.

Decisions such as this should have been made years ago when tax collections with the loss of the Hoover Company reduced city revenues by a million dollars annually.

I would urge everyone on this council and in the administration to remember whom they represent and who elected them to office. Benefits such as the ones that are paid out now are unsustainable. This council knows that and has stated that fact publicly.

Please get a grip on the cost of government or I assure you it will get a grip on you.

Tax money paid for these unsustainable worker benefits must be squeezed out to allow for road improvements.

Taxpayers must come first. The future of North Canton depends on it.

Thank you,
Chuck Osborne
Resident, City of North Canton