A legal opinion issued Tuesday answered City Council questions about whether Mayor Alvin Brown could use $37 million from reserves to balance his budget.
It also opened up a new wave of criticism, with one member calling the opinion “preposterous.”
In short, the opinion says the $37 million, if adopted by council, would be considered “current year revenues.” Ordinance code states the general fund shall be balanced from current year revenue and the opinion says council can use the reserves in adopting a balanced budget.
Council Auditor Kirk Sherman has shared his concerns that the amount would put the city below a 5-7 percent reserve threshold and could violate the law. The legal opinion, though, says the percentages for operating and other reserves are planning targets, not requirements.
The overall opinion rankled a few council members and brought up new concerns.
It says Brown’s proposed budget doesn’t violate code, because the budget section applies only to the “final” budget, not the mayor’s proposal.
“It might be the most preposterous thing I have ever read in my entire life,” said council member Richard Clark, chair of the Finance Committee.
Clark said he had never read a document that says a mayor has any right and doesn’t have to follow the rules because his proposals were just suggestions.
Council member Bill Bishop took Clark’s idea a step further, telling his colleagues the memo said the mayor can “submit whatever he wants.” In addition, because of Sherman’s interpretation about the amount needed in reserves, council couldn’t pass the mayor’s proposal.
“If we follow the law, we are required not to pass the mayor’s budget,” said Bishop, a mayoral candidate against Brown in the 2015 election.
Council member Lori Boyer said language could be interpreted to mean the final budget, but the intent of previous councils was clear: they wanted all budgets balanced using current revenue, not reserves. In 2005, council passed legislation prohibiting such reserves from balancing budgets.
Council member Bill Gulliford said spending one-time money for reoccurring expenses is “not responsible” or “balanced” and has called for council to send the proposal back to Brown.
The ruling is conflicting about whether the mayor has to submit a balanced budget. In some areas it says only the final budget has to be balanced. But in one place it says “in no case whatsoever shall the Mayor submit an unbalanced annual budget proposal to Council.”
The mayor’s office strongly defends the budget, saying it is balanced. The talk of sending the budget back is “disappointing” and not constructive, said Chris Hand, Brown’s chief of staff.
Clark said he wants to schedule a meeting next week to address the budget language brought up in the legal opinion.
It wasn’t the only budget-related discussion from Tuesday.
During a special meeting in the morning, the council Finance Committee unanimously agreed to ask for more time before setting an advertised property-tax rate for the upcoming year.
With so many budget questions still unanswered, members wanted to provide Sherman and his staff more time to analyze the numbers before setting a rate.
The advertised rate would be the highest possible homeowners are charged.
If council were to set a rate then later raise it, re-mailing notices would cost the city.
The new meeting to establish the rate is set for 8 a.m. Aug. 4.
Also from Tuesday’s council meeting:
• Former General Counsel Cindy Laquidara will be able to return to the city’s defense in several high-profile federal cases, but not at the initial $150,000 sought. Council declined an emergency for that bill, instead passing a resolution for council President Clay Yarborough to allocate up to $50,000 to hire Laquidara for upcoming August deadlines on two cases. The council president can authorize up to that amount from accounts, with the legal defense to come from a general counsel fund. The original bill for $150,000 will proceed through the normal council process.
• An incentive package providing Kraft Foods Group Inc. $425,000 was approved. The company will expand its Maxwell House facility Downtown, investing $16 million in capital expenses and creating 10 new jobs. The money comes from a Recaptured Enhanced Value Grant and the jobs will pay average annual wages of $57,400, plus benefits. The expansion will add coffee and bag lines to the 735 E. Bay St. facility.
• Speaking on behalf of the library board of trustees, board member Mark Wood asked council members for additional library funding in the upcoming budget. Wood said the board was thankful Brown included $500,000 for materials, money to keep the Main Library open another 10 hours and enough for three capital projects. But, he said, the board is requesting an additional $1.4 million to restore 20 hours to four regional branches, bringing them up to 2012 service levels, and $273,000 for a material vending machine on the Northside. The demand in the area is great, Wood said, and a second machine is needed until a branch is built.
• The Downtown Investment Authority has a new member after urban planner and attorney Doris Goldstein was confirmed by council. She replaces Mike Saylor, whose term was expiring. In other board news, board member Melody Bishop was confirmed for reappointment for a term that expires in June 2018.