Payouts not the reason for rate hike, Columbiana officials maintain
COLUMBIANA – Electric rates for city customers were not affected significantly as a result of payouts to former employees, according to Councilman Lowell Schloneger.
Schloneger made the statement during this week’s council meeting. He said the rates increased by only four-tenths of a penny this month and remain lower than rates for Ohio Edison customers.
Finance Director Mike Harold confirmed Schloneger’s statement and said the increase wasn’t as significant as previously thought.
Councilman Bryan Blakeman asked Harold at the March 5 meeting if the payouts were what caused the rates to “jump,” and Harold had said yes.
The city paid a combined total of $40,000 to former City Manager Keith Chamberlin and Service Director Jay Groner following their December retirement.
The men worked for the city more than 20 years and retired in order to avoid being affected by changes in the Ohio Public Employees Retirement System. The payout was given to them in January and included in the 2013 budget appropriations approved for a first reading at the March 5 meeting.
The appropriations were approved for a second reading this week.
Schloneger said, and Harold confirmed, that Chamberlin and Groner were both paid for 240 hours of accumulated sick leave although they had 2,339 and 4,433 hours available to them respectively.
Sick leave is capped at 240 hours and while there is no maximum cap on accumulated vacation, eligible employees can only carryover so much each year.
Harold said the payouts to Chamberlin and Groner amounted to a fourth and a third of their annual salaries. Chamberlin was making $86,000 when he retired and Groner was making roughly $60,000.
The payout was split between the water, sewer and electric funds.
Schloneger noted the payout wasn’t as large as those given to retirees in other areas.
“Compare that to East Palestine where the city manager got $80,000 and the clerk of council got $15,000,” he said of Gary and Cindy Clark.
Harold attributed the slight increase on customer bills this month to an increase in the cost of power through American Municipal Power, the company the city contracts with for the service.
The city’s electric rates are set by the city manager on a monthly basis and fluctuate based on the city’s monthly cost for power and other expenses.
City customers were charged about 11 cents per kilowatt hour used earlier this month while Ohio Edison customers were charged .1252, Schloneger said and Harold confirmed.
Harold said it wasn’t until after the March 5 meeting he discovered the payouts didn’t affect the rates.
“Those payouts didn’t have anything to do with the rates,” he said.
On March 5 he did say the $40,000 payout caused some strain on the three funds since the money was taken out at one time.
That the payments were made from the three service funds was met with some contention by Blakeman, who has opposed paying salaries from funds in which revenue is generated by charging residents.
He had said doing so is “taxation without representation.”
Councilman Richard McBane didn’t agree, and publicly announced that this week.
“It’s been suggested that some of those costs associated with providing utilities should be paid out of the general fund and that not to do so is ‘taxation without representation.’ We are in a representative democracy; we on council provide the representation for the people,” he said.
He went on to say council members have an obligation to review projects and expenditures and make certain that cost of services are fairly included in the rate structure for the consumers of electric, water and sewer.
Blakeman believes the city needs to focus on cutting costs instead of raising rates, and specifically targeted health care costs.
The city spent just under $1 million on its self-funded health care program last year.
“If we look at raising rates to cover every single thing we want to spend, nobody would be able to live in this town. Why don’t we look at what most responsible people do, cut their expenses, not pass on cost,” he said.
Speaking directly to McBane, he added, “As for taxation without representation, I don’t believe there is representation here, especially with you. You didn’t win the election, yet you’re sitting here.”
Schloneger said if the city cuts hospitalization costs the savings wouldn’t necessarily be realized in the electric fund, but everywhere.
“You can cut expenses to the bare bone and layoff policemen and everything else but it’s still not going to pay for this new water plant,” he said.
To which Blakeman responded, “No one talked about cutting a single service person. I’m talking about a health care plan that is ridiculously overpriced. I’m talking about the fact that we have to spend $1 million to cover 56 people is ridiculous.”
McBane said paying expenses associated with the utilities out of the general fund is the equivalent of subsidizing electric or water usage with tax payers’ dollars.
“That sounds like socialism to me,” he said.
McBane and Schloneger also questioned Blakeman’s previous statements regarding his involvement with securing the USDA loan the city acquired to help fund the new multi-million-dollar water treatment plant.
Council members are looking at implementing a new rate structure to help pay back the 40-year loan and Blakeman opposes raising rates to do so.
“It seems disingenuous to take credit for getting the loan and then oppose plans on how to pay the loan back,” McBane said.
Blakeman did not wish to respond to those comments after the meeting.
While the rates are set by the city manager council does have the authority to challenge them or enact an increase or decrease, Municipal Attorney Daniel Blasdell said.