HomeMy WebLinkAbout09-20-2022 Personnel & FinanceOFFICE OF THE CITY CLERK
D AWN M.jONES, CITY CLERK
PERSONNEL AND FINANCE COMMITTEE SEPTEMBER 20, 2022, 5:00 P.M.
Committee Members Present:
Committee Members Absent:
Others Present:
Presenter:
Agenda:
Sheila Niezgodski, Eli Wax, Rachel Tomas Morgan*
Henry Davis Jr., Troy Warner
Sharon L. McBride, Lori K. Hamann, Karen L.
White, Victoria Trujillo, Shayla Kimbrough,
Maricela Juarez, Zoe Tembo, Bob Palmer
Daniel Parker, City Controller
Common Council Working Session #2: 2023 Budget
Di scussion
Members marked with an asterisk(*) are present digitally
Please note the attached link for the meeting recording:
https://docs.southbendin.gov/WebLink/browse.aspx?dbid=0&mediaid=358009
Committee Chair Sheila Niezgodski called to order the Personnel and Finance Committee at
5:00 p.m.
Common Council Working Session #2: 2023 Budget Discussion
Committee Chair iezgodski explained that the meeting's objective was to allow council
members to review the budget and seek clarifications from Dan Parker. She emphasized that
it was not a forum for public commentary but was open for public observation.
Councilmember Hamann asked about the possibility of freezing the PILOT program despite
proposed rate increases to avoid shifting funds from public works to the general fund.
City Controller Dan Parker, with offices on the twelfth (12th) floor of the County-City
building, responded by explaining that the PILOT program, or Payment in Lieu of Taxes
program, compensates the City for property taxes it would otherwise receive from utilities
operating as municipal entities.
Dan Parker further explained that the program constitutes three percent (3 %) of the net capital
assets of utilities, inclusive of depreciation, mirroring what a commercial entity would pay in
property taxes. He stressed the importance of maintaining a consi tent methodology to ensure
fairness and regulatory compliance.
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CITY OF SOUTH BEND OFF IC E OF THE CLERK
Councilmember Hamann expressed concerns about potential rate increases coupled with
PILOT increases diverting funds from public works.
Dan Parker cautioned against changing the PILOT methodology based on current policy
preferences, highlighting the risks of future inconsistencies and regulatory scrutiny.
Committee Vice-Chair Wax asked for the current PILOT figure.
Dan Parker replied that it stood just over six million dollars ($6 ,000,000) for water and
wastewater utilities combined. He clarified that the valuation of net assets used a depreciated
cost basis rather than individual assessments.
Committee Vice-Chair Wax sought information on discussions with non-profit entities
regarding payments in lieu of taxes like utilities.
Dan Parker confirmed such di scussions occurred, citing an example with the Pokagon Band.
Councilmember White sought clarity on whether the PILOT addressed the City's inability to
collect property taxes from nonprofits.
Dan Parker confirmed this, noting that utilities, as governmental entities, do not pay property
taxes.
When Councilmember White asked how other communities handle PILOTs, Dan Parker
explained that it is a common and recommended practice both statewide and nationwide. The
City has operated a PILOT program for at least fifteen (15) to twenty (20) years, with a
consistent methodology applied for the last six (6) to seven (7) years, despite decreased PILOT
amounts due to asset depreciation.
Councilmember White clarified that the PILOT does not lead to an increase in rates charged
to customers, aiming to prevent any public misunderstanding.
Dan Parker affirmed this, explaining that while PILOT contributes to the overall expenses of
water and wastewater utilities, it constitutes a small fraction of the total expenses and rate
increases. He emphasized that the main factor driving rate increases is the substantial
investments in capital projects, not PILOT itself
Committee Chair Niezgodski inquired about the Indiana Utility Regulatory Commission's
(IURC) role in regulating rate increases.
Dan Parker described the IURC's thorough re view process to ensure expense reasonableness,
including the PILOT, to prevent hidden tax increases.
Committee Chair iezgodski also raised concerns about low utility rates affecting state
funding, which Dan Parker confirmed. The state expects municipalities to raise rates to cover
costs before seeking additional funds.
Dan Parker clarified that only water and wastewater utilities pay a PILOT due to their
significant capital assets, unlike other departments.
Vice-Chair Wax suggested using PILOT funds for the Customer Assistance Program (CAP)
to avoid extra charges on ratepayer bills .
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CITY OF SOUTH BEND OFFICE OF THE CL ERK
Dan Parker indicated this is feasible, recommending annual appropriations for transparency
and debate. He noted that any CAP program changes involving water bills would need IURC
approval, but currently, the CAP applies only to wastewater bills , which are not IURC-
regulated.
Councilmember White suggested creating a comprehensive sheet showing various initiatives
and offices supported by American Rescue Plan dollars fo r clarity as the budget process
progressed.
Dan Parker agreed, stating he could provide an updated report either at the upcoming meeting
or a future one. He clarified that approximately twenty-five (25) to thirty (30) programs were
funded by the American Rescue Plan.
Councilmember White appreciated this information, noting the importance of having updated
data for reference, especially when responding to inquiries about program funding.
Dan Parker then outlined the schedule of upcoming budget presentations, including those on
September 21, 2022, for the Department of Administration and Finance, the Department of
Innovation and Technology, and the Office of Diversity and Inclusi on. The following week
would include the Mayor's Office, the Clerk's Office, the Council's budget, and the Legal
Department. The first week of October 2022 would feature a budget wrap-up meeting, and
the final budget vote was scheduled for October 10, 2022.
Lastly, Dan Parker noted the formal budget hearing set for the next regular council meeting.
State law requires this hearing, with at least ten (10) days between the hearing and the final
budget vote to allow fo r any public objections.
With no further business, Committee Chair Sheila Niezgodski adjourned the Personnel and
Finance Committee meeting at 5:3 5 p.m.
Respectfully Subm itted,
Sheila Niezgodski, Committee Chair
NOTICE FOR HEARING AND SIGHT IMPAIRED PERSONS
Auxiliary Aid or Other Services may IM! Available upon Rc11ucsl al No Char<,!C.
Plcasc l!ivc Reasonable Advance Rc11ucst when Possible
EXCELLENCE ACCOUNTABILITY INNOVATION INCLUSION EMPOWERMENT
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