Minutes of the Finance Committee Meeting of the City of Herrin, Il Held in the Conference

MINUTES OF THE FINANCE COMMITTEE MEETING OF THE CITY OF HERRIN, IL HELD IN THE CONFERENCE ROOM OF CITY HALL ON MONDAY, JUNE 29, 2015

AT 6 P.M.

Chairman Paul York called the meeting to order. In attendance were finance committee members: Alderman York, Alderman Craig, Alderman Ruppel and Alderman Shoemake along with Alderman Miller, Mayor Frattini, Deputy Clerk Shelly Huggins, Attorney John Brewster, Public Works Director Tom Somers, Budget Director Carrie Cravens and Police Chief Quinn Laird. Also present was John Helleny. Mayor Frattini stated that he knew we were in financial straits. Habit has been that we robbed Peter to pay Paul. $95,000 is already owed to MFT. $60,000 is owed to TIF, however $33,000 in receipts for covered expenses has been put towards that. Our immediate problem is $150,000 we need to borrow to make payroll this Friday. We could do this on a 90 day note. We need a long range plan which may include borrowing $1,000,000 which first would be used to pay back $300,000 to First Southern. We could pay back our funds we have borrowed from in the past. We could take this out on a ten year term.

We have a spreadsheet on water revenues. We are still having a short fall on monthly expenses even since the rate increases. Each department has a budget but have never really used it. There is a possibility of some short bursts of income by selling the football field to the school and there is a current offer of $150,000 for tower property at garage. Alderman Craig stated that then there would be a $1,000 per month cash flow gone then. The finance committee has to have oversight of expenses.

Alderman Craig stated that 61% of the months we lose dollars in the water department. We either are not billing or not monitoring losses. We need to curtail spending. We can’t giveaway recent raises and curtail it.

Mayor Frattini stated that our trash rate is $10.75 per month. Energy is 11.00, Benton is $13.12 with a senior rate of $12.64 and Carterville is $14.00. We have 4,938 inside customers. Mayor Frattini stated again that we haven’t had true operating budgets before. Alderman Shoemake stated that after the increases we should be ahead in water fund. Tom Somers stated that the sewer fund is breaking even or making money. He stated that old meters and breaks are ongoing problems. Mayor Frattini stated that we recently had a water meter vendor present us with a proposal. Tom has found another company that will guarantee their numbers. Alderman Craig stated that we need information to make informed decisions. Mayor Frattini stated that this kind of focus hasn’t been on these matters in the past.

We need a long range financial plan. There will be a four to six year turnaround time to get on solid ground. We can’t quickly overcome decades of spending. We will have a special City Council meeting this Wednesday, July 1 at 6 p.m. to take action on borrowing funds.

It was asked about borrowing against our bonds. Attorney Brewster advised that doing so would result in default and hurt our credit rating. Alderman Craig stated we are borrowing a second time and need a long term fix and to stick to the plan. Mayor Frattini stated that it is amazing we have survived so many years and now the accumulation is coming out.

Mayor Frattini stated that infrastructure repairs in the TIF can be billed back to TIF. We haven’t taken advantage of some eligible funds for certain expenses in the past. He believes every council person should know where we stand.

Public Works Director Tom Somers stated that recently we awarded a $300,000 MFT resurfacing project. He suggests we do not move forward as contract has not been entered yet. Action has already been taken and we may need to rescind at an upcoming meeting. Alderman York stated department heads must meet and find out how to cut expenses. Alderman Craig stated we may have to deny days off and pay in lump sum at end of year. Alderman Shoemake believes we must rely on Carrie to notify us of ongoing. Mayor Frattini believes that we are going in the right direction. Alderman Craig is concerned we voted to spend MFT monies we didn’t have. In the past a due to, due from was done in borrowing from other accounts. Carrie does not wish to do this.

Attorney Brewster reminded everyone that we are losing $15,000 per month on water account. Expenditures are apparently going up. When Rend Lake raises rates, we have to raise ours as well. This was not occurring for several years. We have unmeasured water loss. With recent increases we should be closer each month. Need to see where it’s going. Tom needs to go over line by line and check volume of leaks and loss of water. Also Rend Lake bills need checked. Mayor Frattini stated this will give us a clearer picture.

Attorney Brewster asked if First Southern is willing to loan. John Helleny stated that more than likely they will approve.

We will have this note on a 90 day loan and in that time we need to make a long term plan. The state situation could squeeze us as well. Attorney Brewster stated that we usually abate bond levies every year and we need to look at not doing that any longer. We already had to increase the levy amount to cover police and fire pensions. We need to get dollars back to correct funds and then accumulate to have 6 month reserves.

Mayor Frattini stated that over the next 90 days we need to take time in putting together numbers. We need a step by step detailed plan with earmarked funds going to correct fund. John Helleny suggested the council put their thoughts into writing. We must keep the City’s reputation intact. We must keep a positive image. We must find avenues of places that would be interested in loaning the larger amount in the future.

Alderman Craig stated that we shouldn’t raise taxes. It isn’t the taxpayer’s responsibility for our irresponsibility. Mayor Frattini agreed that we have to make sure we have done our part before going to taxpayers.

Mayor Frattini believes we need to do the loan. Alderman York believes we need to do the loan but get everyone’s thoughts as well. Alderman Shoemake and Alderman Ruppel agree to go ahead with loan. Alderman Craig does as well since there really is no option at this time.

Meeting adjourned at 7:43 p.m.