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NILES -- City council on Monday approved an amended fiscal recovery plan presented last week by Mayor Thomas Scarnecchia that the service director said is comprehensive and has the legs to carry the city out of fiscal emergency.
Council had to approve the plan before it is presented to the Niles Financial Planning and Supervision Commission July 27.
The plan calls for $135,000 a year for a street resurfacing program -- instead of $140,000 this year and $120,000 in the coming years. And, the new version calls for 10 new police cruisers, rather than seven, over the next five years.
Council members Frank Pezzano, D-1st Ward, and Linda Marchese, D-3rd Ward, voted against the plan at each of its three readings July 13 and 14 and Monday.
Pezzano said he can't support a plan to outsource the income tax department to RITA without having a presentation from representatives of the agency so council members could ask questions and get more details on a potential contract. Pezzano said he also can't support a plan that would eliminate more city jobs.
But, Scarnecchia and Service Director Edward Stredney contend the move won't eliminate jobs because Income Tax Director Lisa Smathers is retiring and other employees in the office can fill other positions.
Scarnecchia said the move is important to balance the city's budget in the long term, and with this plan, the city could get out of fiscal emergency.
"This plan and all of its components are a must. It is a wonderful plan and I think we will do well with it," Scarnecchia said.
Council on Wednesday will see legislation that begins the move toward RITA, Stredney said.
The plan also covers items members of the Niles Financial Planning and Supervision Commission asked be in the next version when they voted against the mayor's previous plan in April.
The commission, at their last meeting in June, threatened to implement a 15 percent slash in all city budgets if a viable plan wasn't presented. The city has worked under several version of the plan since Ohio Auditor Dave Yost placed it in fiscal emergency in 2014.
The commission asked for a new plan after elements in the fifth version of the city's recovery plan didn't come to fruition, and because the prior plan didn't account for repairs to the city's building, the installation of water meters the city has had in storage for years, and other infrastructure needs.
The new plan, which must be in the hands of commission members on July 25, two days before the 4 p.m. July 27 fiscal commission meeting, sets aside $500,000 for water meter installation -- a project that should start before the end of the year and take about a year to complete, Service Director Ed Stredney said.
The plan includes the implementation of two $5 license plate fees to generate $180,000 a year. John Davis, a member of the fiscal commission, said he thinks the city is overestimating how much the fees will generate.
"It would be generous to say there are 15,000 cars registered in Niles, so I don't see how they are reaching $180,000," Davis said.
And, the plan takes into account $1.6 million the city plans to borrow to make improvements to its buildings, Stredney said.
"The mayor has a plan that is fiscally responsible. This plan includes everything we need to get done, it is all encompassing. It is balanced and the five-year forecast shows no deficit spending," Stredney said.
Included in the plan is a proposal to outsource city income tax collection to the Regional Income Tax Agency, a regional council of governments that provides income tax collection services to municipalities across the states.
The city could save $42,000 a year with the move, according to documents provided by the city, and generate as much as $400,000.
After issues in the income tax department surfaced at the beginning of 2016, Scarnecchia said he'd give the department a year to see if the problems -- unopened mail and undeposited checks -- were resolved.
Niles Treasurer Janet Rizer-Jones said the department more than overcame the problems.
"I am very happy with our performance. We are ahead in collections this year, and we were praised at the last fiscal commission meeting for the progress we've made," Rizer-Jones said.
Scarnecchia agreed the department has greatly improved, but said he changed his mind about switching to RITA because of the overall savings in the long term.
The plan would not lay off employees -- one of the department's largest expenses -- because they would be moved to other city jobs, Scarnecchia said.
Rizer-Jones said she doesn't think moving to RITA is the right move for the city, because it isn't going to save or generate as much as the administration hopes it will.
Since the office started pursuing people who didn't file their taxes with the city, they have found the majority of non-filers didn't have to file, meaning there may not be that much money out there that is owed to the city and not paid, she said.
Davis also questioned the figures the administration is using to forecast the amount it would save with the move.
The elimination of the tax department left council members Frank Pezzano, D-1st Ward, and Linda Marchese, D-3rd Ward, asking questions. Both voted "no" on the plan.
Pezzano wanted to know why the administration didn't ask anyone from RITA to pitch the move to members of council and answer their questions. Marchese said she was concerned the city would lose a department the city's senior population may depend on during tax season.
And the move led the president and vice president of American Federation of State, County and Municipal Employees Local 506 to threaten to file a grievance and pursue arbitration against the city.
Stredney and Mayor Tom Scarnecchia said the move will not eliminate any jobs because the employees will be allowed to use their seniority to "bump" into other union jobs, and Lisa Smathers, the director of the income tax department, plans to retire. However, union President Bob Ward said the union will do what it has to do to protect the city's citizens from the loss of the department.
Pete Mollica, vice president of the union, said the administration is "playing with fire."
"We don't agree with this move. The city owes it to the citizens to provide the services it should," Ward said.
Ward lives in Girard, a city that uses RITA to collect its income taxes.
"You have two options, use a computer or go to the office, on Salt Springs Road. They don't take cash. It is inconvenient for some people. And the city will lose one more office that should be there to offer an interface with residents," Ward said.
Ward said the administration should drop the switch to RITA from the plan now. If not, the city will be on the hook for what RITA charges, plus arbitration fees, and the costs of running the tax department if the arbitrator sides with the union.
Smathers said she doesn't even have a horse in the race because she is retiring, but feels so strongly that the community needs a tax department that she will fight to keep it.
"There is no savings with this plan. There is no proof, just speculation," Smathers said.
Scarnecchia said the city could leave RITA after a year if they don't like it. However, Rizer-Jones said it isn't that easy because staff would have to be repositioned and trained and other things like software would have to be updated.
rfox@tribtoday.com