Search

Special Board of Aldermen 6-13-2022 Page 6

my home budget if | got a loan or a grant for $25,000 and | went out and bought something and then | had to whatever
| did and then that relied on normal income, those payments would then be in my home budget. If | didn’t get that
grant again the next year, then I’d be hamstrung because | wouldn’t be able to afford it. Does that make sense?

Steve Bolton, Corporation Counsel

No and let me tell you why. When we don’t think we’re going to get the same amount of grants, we reduce the amount
we’re assuming for grants in the next years’ budget. So if you look at what Mr. Griffin has given you, you see that the
amount of grants last year in ’22 was, Special Revenue Funds including grants, last year was approximately $96
million. This year, it's down to approximately $60 million. So you can see when your anticipation of what you’re going
to get in grants changes, you make that assumption in your budget. So in your home budget if you have a $25,000
grant or windfall from something else and you didn’t think you were going to get it the following year, exactly you don’t
plan or spending it the following year just as this budget and this calculation does.

Alderman Sullivan

Okay. | appreciate you pointing that out.

Mayor Donchess

And you’re right, it doesn’t make sense. That's why these ordinances had been passed. Again, | always thought they
helped. | always equated it with Congress passes laws that help to interpret things like the 14 Amendment or
whatever. But the Legislature invalidated ordinances that help make this more workable saying that only the language
of the Charter applies. So we come up a result that has the problems that you've just identified.

Alderman Clemons

Thank you. This bring up something | want to talk about, which is | did a calculation. Just a quick calculation here
and | took the $59 million that we’re budgeting this year for the FY ‘23 budget for grants. | multiplied by a factor of 3%,
so that comes out to be approximately $1.787 million. Are what you're telling me here is that in Fiscal ’24 if the
spending cap calculation is 3%, we cannot accept any grants above $59,581 plus the $1.787 million because we have
to stay under the spending cap?

Steve Bolton, Corporation Counsel

No. You have to stay under the spending cap in the gross budget, but it doesn’t apply line for line.

Alderman Clemons

Assuming the other lines go up by the same 3%, would that be true? In another words, here’s a better way of putting
it. If we come into a $20 million grant or a $16 million grant like we did this year with the ARPA Funds, right, we can’t
take that money? Is that correct or we can take a portion of it only?

Steve Bolton, Corporation Counsel

It would be theoretically possible to get into that situation, but there are things that can be excluded by vote of ten
Aldermen and that would be capital projects. | have to get the Charter out so | can remember exactly what it is. You
can exclude the principle and interest payments on municipal bonds or you can exclude expenditures for capital
improvements. Typically we have a significant amount of expenditures to capital improvement. So if you exclude
that, that gives you some wriggle room but in fact, you do not have an override provision that you can go to for
essentially and unlimited ceiling. There will be a ceiling of debt some level even if you take advantage of excluding
everything that you can exclude.

Alderman Clemons

So would a grant (theoretically) that went to fund let’s say firefighters gear for example, would that be a capital
improvement that could be excluded from the spending cap?

Steve Bolton, Corporation Counsel

| would say probably not unless you were telling me that the gear that you're talking about has a lifespan of 10 or 15

Special Board of Aldermen 6-13-2022 Page 7
years.

Alderman Clemons

So what | am coming to the understanding here is that we are this Fiscal Year ’23 we have $113 million under the
spending cap. It seems to me that if we don’t receive a significant sum of grants in the next year or before July 2023
that we could be in trouble?

The other question | have is around the same lines and that’s for the Enterprise Funds. If we see an uptick in
revenue, we can only spend — we can take the revenue in but we can only spend a portion of it out, correct?

Steve Bolton, Corporation Counsel

You could run into that issue. | mean you’ve got a significant gap here between the limit on total expenditure and the
amount of this proposed budget. | guess | didn’t understand you before saying that if we don’t by June 30 get a large
number of grants we’re in trouble because | don’t see that.

Alderman Clemons

Well here’s my question. Rather than talk about grants, let’s talk about the revenue fund. So as we all know, the
sewer system has continually plagued us with different - especially the overflow — has plagued us for years on having
to raise the rates for example so we can pay for projects. Are we constrained with how much we can raise the rates
because we are constrained with how much we can spend the following year on any particular project because of the
spending cap?

Steve Bolton, Corporation Counsel

Capital expenditures can be excluded.

Alderman Clemons

Okay. So they would have to be excluded and that would take a vote of ten Aldermen?

Steve Bolton, Corporation Counsel

Right but you never constrained on raising the rates. | mean your constrain is what you think is prudent and what you
think your constituents would be agreeable to. So the revenue side there’s no cap on the revenue side. The cap is on
the expenditure side.

Alderman Clemons

| guess my point is though is that if we are constrained on the spending side of it, you would only raise rates if you
thought you were going to do some big project or something you were anticipating in the future but if you don’t have
ten Aldermen come to agree to do that to exclude that out of the spending cap calculation, you probably wouldn’t want
to raise rates anyway. | don’t know. These are the conversations that come back with having the spending cap the
way that the State has decided that we must apply it. | agree with the Mayor and | agree with what Alderman Sullivan
was saying which is that it doesn’t make sense to have these calculations in there and | think the Ordinances we had
in place before were us recognizing or the Board of Aldermen recognizing that the Charter language is too strict and
too harsh. I’ve always felt that way as an Alderman. | always thought it was ridiculous that - and there have been
cases, there have been instances when I’ve been on this Board of Aldermen when we have received $500,000, $1
million and it can’t be spent because we're up against the spending cap, especially in those low inflation years. It’s
probably not going to be an issue in the next coming years but it happens. I’ve seen it happen. | think it’s something
that we need to think about how we want our Charter to read in the future. | don’t necessarily mind the spending cap
that or spend some kind of — | don’t really like the spending cap to be honest with you but if there is a spending cap,
we really need to think about not including grants and enterprise funds.

Steve Bolton, Corporation Counsel

If you are asking me if | think it makes perfect sense, I’ve never said it makes perfect sense. If you are asking me if |
think it could be better written, yeah | do.

Special Board of Aldermen 6-13-2022 Page 8

Alderman Clemons

And | would agree with you. Thank you.

Alderman Cathey

Thank you Madam Chair. | believe this question will be for Attorney Bolton among many questions. In the language
of the SB52 it states that “such a tax cut shall provide for an override threshold”. Am | to understand that piece of
legislation is dictating to us to create an override when it says “shall”? Like it’s telling us you have to put this into the
language of your tax cap laws or it just saying it can include it?

Steve Bolton, Corporation Counsel

No. The Statute requires that there be an override. That’s what the Supreme Court of New Hampshire held in 2019.
The spending cap in Nashua’s Charter was invalid because it did not have such an override provision. Last year in
2021, the Legislature passed a law that said essentially, not in these precise words, but essentially said that any tax or
spending cap passed prior to 2011 was valid regardless of any other problem. So the fact that it doesn’t have the
override which would otherwise be required, the Legislature basically said it’s valid anyway.

Alderman Cathey

So does that mean that we are in violation of this Statute that was passed in SB52 because we did not create an
override provision in our Charter to an Ordinance? Is that something that we need to do?

Steve Bolton, Corporation Counsel

No, it has to be in the Charter.

Alderman Cathey

Has already exist in the Charter.

Steve Bolton, Corporation Counsel

It has to be in the Charter.

Alderman Cathey

But we could add one?

Steve Bolton, Corporation Counsel

If you amend the Charter.

Alderman Cathey

But we’re not being told we have to now go do that?

Steve Bolton, Corporation Counsel

Well as the Supreme Court decided in 2019 without it, that provision in the Charter was invalid. The Legislature
basically said no the Charter is valid even without it. So we don’t have to do anything. Basically we’ve got the Charter
language as it is basically to do the best we can to make sense of it. It’s already been pointed out in some places it
may not make perfect sense.

Alderman Cathey

Thank you. For my own edification and maybe for others, are there any accounting principles, laws whether they’re
federal, or State, or even local that dictate how our accounting system works? Because to Alderman Sullivan’s point,
there is a difference between what they did then and what we’re doing now. And so for me, | need to go to what is the
underlying principle and process for how municipal budgets are completed whether it’s in Nashua or anywhere around

Special Board of Aldermen 6-13-2022 Page 9

the Country, what guardrails do we have that we say we have to include capital projects, or we don’t have to include?
Do we have to include enterprise funds or we don’t? Is there some metric, or some guideline that we can point to, or
can we sort of pick and choose how we would like to?

Steve Bolton, Corporation Counsel

| think the Municipal Budget Act has something to be said on what the budget is.

John Griffin, CFO/Treasurer/Tax Collector

Madam President and other members of the Board, this certainly very descriptive, detailed requirements on the proper
municipal accounting. This is an off book calculation that somebody was interested in making. That’s why when it
passed, me being a kind of practical person | said who is in charge? Who was actually going to tell us how this should
be constructed? Fortunately | had Attorney Bolton and Mayor Donchess and they said read this very literally and
present. It’s not even in the budget book because all the accounting is proper in there. It’s literally a calculation that
folks decided through Charter amendments and so forth are proper. So what | want to explain to everybody here,
don’t worry about the accounting. We've got like 15 years of unmodified opinions. We've got AAA bond ratings.
We've got an excellent presentation of our information. This is like one paragraph in the official statement of the City
and maybe even the GFO submittal to get the Award for Excellence on Financial Reporting. So you’re not going to
find it. You’re not going to be able to call anybody up at the DRA and talk to them about it because there’s a lot of tax
caps and spending caps.

Now | come from Massachusetts where good, bad, or indifferent where we had Proposition 2 1/2 back in 1982.
Extremely prescriptive, but a lot of outs. So here we’re just trying to take the best information we can and craft a
budget. But if | thought for one minute that anything in here was going to effect the accounting of the City, | gota
problem with that.

Alderman Cathey

Thank you. | appreciate that Mr. Griffin. | was just curious because as Aldermen | know a little bit about accounting
but not enough to know the rules and regulations of how these budgets are put together so | appreciate that.

To clarify an earlier statement | believe it was Mayor Donchess. The Ordinances that we used to have that were
related to the spending cap, those Ordinances no longer exist and/or apply to our current situation. Am |
understanding that correctly?

Mayor Donchess

As | understand it, they no longer apply because the Legislature said you have to go by the Charter language only and
you cannot alter it, interpret it, or modify it by an Ordinance.

Alderman Cathey

We can’t alter the spending cap Ordinance?

Mayor Donchess

Correct.

Alderman Cathey

Two questions, kind of together. One - I’m guess why we would include grants only because | don’t see them as
expenditure. | see them as revenue and even when we spend them now, it’s sort of like we’re the conduit for how the
federal or State government is spending money so it’s not really us.

And then two, wastewater is funded by users fees so how does that play in? That’s not necessarily | guess related to
expenditures because we’re getting revenue in to cover the cost of what we’re spending. So how do those two things
factor into the budget and how they apply to the cap when | feel like the cap is supposed to constrain us from
spending taxpayer money and grant money and wastewater money is not that. At least to my understanding, but |
could be incorrect.

Special Board of Aldermen 6-13-2022 Page 10

Steve Bolton, Corporation Counsel

Well | think that was the goal but that’s not what it says. It talks about total expenditures. Furthermore, the State
Statute about spending caps says you can exclude certain things by a simple majority vote of the Aldermen if your
Charter allows it. Our Charter only allows it in those two places where | mentioned - the interest and principle of
bonded debt and capital expenditures. So yes, would it make sense to treat things that have no impact on taxes
differently? It may well make sense. Our Charter does not make that distinction.

Alderman Cathey

Thank you Madam Chair. Mr. Griffin the Capital Project Funds you mentioned one was the Riverwalk Bonding
Project, and the Paving Bonding Project, and I’m sure there are a lot of other project listed in there. To my
recollection or understanding, those bonds have not been sold at least for all the paving project or the Riverwalk
project and in the case of the paving projects, it’s my understanding even though we have the approval for the bonds
you're not going to sell them all right away because it’s a five year project. So how do those numbers get to be
calculated into a 2022 budget when they actually haven’t been — you haven’t gone out and sold the bonds and won't
do so until maybe the 2023 year or maybe even beyond. So how does that get to apply to the 2022 because that sort
of changes the numbers?

John Griffin, CFO/Treasurer/Tax Collector

Madam President and members of the Board. Great question. | struggled with it but you are appropriating the
spending of $37.5 million at that evening or day that you approved it. You’re approving the $21 million. The spending
cap total expenditures, the spending cap language didn’t talk about vintaging, when you are going to spend it. Can
you imagine the calculations and the date of selling bonds, versus using general fund, and it became overly
complicated. So the Comptroller and | with the team basically said let’s put it all. It's an authority to spend.

Corporation Counsel - the plan could be expedited potentially notifying you folks if we wanted to be aggressive with
the paving or the Riverwalk. We wanted to turn a 3-year project into a 2-year. So | relied on the fact that you folks
appropriated the authority to borrow and spend money on the project.

Steve Bolton, Corporation Counsel

| mean is itan even more fundamental problem because you could say that about a lot of things. When departments
are preparing the budget in February for each individual department, there’s another five months of payroll that hasn’t
been expended yet. You’ve got to go by something. If you can’t go by what’s been authorized to be expended, then
you'd have to wait until July 1S‘ to add up all the checks that were actually written and you wouldn’t know what the
spending cap number is until after we were required to have a budget by August 1%. We'd certainly like to have it by
July 1 when the fiscal year starts but if you go by when you actually expend the money, it’s just practically as a
practical matter impossible to know those numbers in time to prepare a budget.

Alderman Cathey

| understand that and it makes sense. As a process and procedure guy, I’m always wanting to protect against future
instances. So my mind goes to what if someone wanted to artificially inflate the numbers and ask for an appropriation
that they may or may not need so we have more room in the spending cap. I’m not saying anyone is doing that, but
I’m just sort of thought exercise. Should we not come up with some way to protect that in the future?

Steve Bolton, Corporation Counsel

You. You vote against that appropriation. That’s why you’re here.

Alderman Cathey

I’m thinking more like - | don’t know — that’s sort of off the top of my head. If we say we need $21 million for
Riverwalk, then we go and sell bonds but we only sell $17.5 because we figure out that’s what we need not $21
million. Well that effects the budget and then obviously the cap because it’s $4 million extra dollars. So | didn’t know.
| don’t know. I’m just trying to think through the accounting principle wise how that works, why it works that way.

Steve Bolton, Corporation Counsel

Special Board of Aldermen 6-13-2022 Page 11

The good news is eventually it gets paid back because if you don’t spend it, it’s there. It doesn’t just go to the general
fund. It has to be either transferred to another capital project which the Aldermen find necessary to do or it gets paid
back to retire the payments on those bonds - retire that debt or a portion of it. So it’s not a waste and assuming
there’s no theft or misappropriation involved, it effectively lowers to the extent it’s not needed and never spent it
lowers taxes in the future.

Alderman Klee

Thank you Madam President. This conversation to somewhat does frustrate me a little as a State Rep. | worked very
hard to get the language of the State to become and change SB52 to allow for Nashua override. The only
municipality in the entire State that does not have that and sadly many residents from Nashua came and spoke and
as well as a certain Senator and so on. So it did not happen. The clear question here - | shouldn’t say that. | should
make a statement is that the spending cap is not the same thing as a tax cap. Just because we have a spending cap
does not mean that the taxes won’t go up. People conflate the two things. | know logic says if | don’t spend a lot of
money, then | don’t need a lot of money and so on. | disagree that grants should be excluded. Grants are still
expenditures. It may be free money and in end we may look at it and say it was a wash, money coming in and money
going out but how is that different from any other revenue source that we have? If we can get enough money ina
particular revenue source, why shouldn’t we be able to spend all that money and that’s not the way things work.

The way it works is that part of the spending cap is you have a limit of how much you can do on the spending cap. In
this particular year, it’s 2.8% and it’s a rolling three year average. So if you have a good year, or a bad year, or
whatever, it’s going to effect that. It’s very frustrating trying to work on a budget in that particular way especially in a
year where there has been a lot of grants that have been given. | can tell you that the City has a $1 million grant for
Locke Street and | sweat it all the time. Are we going to suddenly hit the spending cap and now we can’t use that
money? This has been promised since 2017, 2018 and that would be a horrible thing to do to these people. But just
putting that aside when our police and everybody works very hard to get grant money and the citizens say okay yeah
that’s a good thing because it’s not costing me anything out of pocket, it means that something else can’t be
purchased. Something else can’t get done because we got this free money. We tried very hard in the legislation to
put just that statement in that the override would be allowed in the one municipality. It got voted down because it was
not understood. | can see in looking at the horseshoe that it is a very confusing wording and so on. It is what it is.
The only way | know to change a Charter is to have a vote on it. The truth is if you go to the people and say let’s
change the spending cap, or let’s remove the spending cap, or let’s change it to a tax Cap, there’s going to be an
equal amount of people that are going to go out there and say no, no, no don’t do that because this is nefarious and
soon. So do we leave it? Do we change it? How do we educate people?

The bottom line is it’s there. | think that what Mr. Griffin has done is keeping it as simple as possible. As frustrating as
itis, | appreciate the work that you’re doing. The City does not have an override no matter what anybody tells us we
do not have an override. If you look at 56-D, the exception to the budget limitation is very, very limited and that’s what
we're stuck with and that’s what we're living with. Basically, pardon my language, but they gave the perforable finger
to our Supreme Court Justice when they put SB52 through and it was meant to hit Nashua and only Nashua because
it did not affect anybody and anybody who says or thinks differently is wrong.

Alderman O’Brien

Well stated.

Alderman Clemons

Thank you. | had a lot of thoughts but my question comes to the end of what Alderman Klee had just said and that is
has anyone challenged or is there going to be a challenge that you know of or to the Constitutionality of that Law?
Because if what you are telling me is that the State Supreme Court said one thing and the Legislature said another
that usually leads to the Court deciding who wins. So | don’t know if you think that...

Steve Bolton, Corporation Counsel

It’s not quite that simple Alderman Clemons. The Court interpreted what the Legislature had said. The Legislature

then amended the Statute so it said something slightly different with the clear intent to change the interpretation that
the Supreme Court gave. One - | know of no effort to challenge that; and two - | don’t think any challenge would be
successful. The Legislature had the perfect right to change its Statute.

Alderman Clemons

Special Board of Aldermen 6-13-2022 Page 12

So just to clarify that, there is nothing constitutionally in the NH State Constitution that they based their decision on. It
was purely Statutory?

Steve Bolton, Corporation Counsel

Yes.

Alderman Clemons

Okay. | guess I’m going to limit my comments to this tonight but what | think here is | do believe that the grants, and
the enterprise funds, and those types of things should not be included. | would be in support of changing our Charter
to state such a thing because | have been on the Board of Aldermen when we have received income from a windfall
or from something else and we have had Aldermen who couldn’t see the forest for the trees and realized that yes
you’re overriding the spending cap. However, you're not affecting the taxes. This is money that you know in some
cases it was money that the City didn’t even foresee coming. Came into the coffers and when | say appropriate it, we
couldn’t put it to anything. It just went and sit in an account. Period end of story. You may think that’s okay and
maybe in some cases it is but when there are needs in this City, and we have multitudes of needs, that’s a problem.

Where | really see this being a problem and when | look at that difference on this sheet between almost $96 million
and $60 million dollars in one year, if that goes the other way, we can’t do anything about that and we’re going to have
to turn down grants because grants are meant to be appropriated. When we accept a grant, it doesn’t come in to just
sit in an account. It comes in to be spent. So if we have a year that’s like that under this Charter, that’s going to be a
major problem. We're going to have to turn around and tell the taxpayers of this City sorry we couldn't accept the $25
million that came from the federal government or the $10 million that came from the federal government that would
have helped supplement some of the things that you wanted to see happen in this City. We couldn’t do that because
we have a spending cap that’s so foolishly written that it doesn’t allow for exception. So | will be looking into putting
before the voters something to change this and to make sure that doesn’t happen again.

Alderman Dowd

Yes, just a couple of things maybe for clarification. | spent a lot of time working on the bonding in the City and it is
true, the bonds are passed in this chamber by 10 votes. It immediately becomes an obligation. The City Treasurer
can go out the next day and sell the bonds if he wanted to. It doesn’t make sense but he could. We typically have -
there’s a lot of process in the bonding. The only thing to be concerned about is the debt service from the bond, which
is far, far including the bonded debt is far, far what is allowed by the State or even local ordinance. Not even close but
we do the bonding to keep the City where it should be relative to infrastructure and other things whether it’s paving,
new fire station, new DPW building, or whatever it is it’s justified and it’s passed by this Board.

The other thing is we heard about if we get a $1 million or $5 million grant from the federal government that we might
not be able to spend it. If we get a $5 million grant from the EPA to do something at the Wastewater Treatment Plant,
we don't have a choice. We have to do it. | don’t know how that factors into the spending cap but your hands are tied
because it’s a government mandate.

Having said that the other thing is that | was trying to point out but probably not too well since some people are
interpreting it the wrong way. This spending cap calculation and the spending cap itself has nothing to do with our
budget meetings other than we cannot have a budget that spent more than $113 million where it is today. Trust me,
no one is even going to try to do that. The budget that we’re trying to pass is based on what our Divisions need to
provide the services in a fundamental way for next year. There aren’t a lot of significant increases. So we’re going
through the budget, we’re listening to the Division Directors, we’re seeing where things make sense, and there may be
some things missing but | don’t see it changing significantly. In which case, it has nothing to do with the spending cap
because we aren't going to come even close. We're not even come within maybe $113 million of spending cap. |
think we’re in a position now where we have our trust in our financial experts, or legal experts, and the Mayor on how
the City Charter reads, and how the Court cases went, and how the State ruled. To me, that’s a solid argument for
the way we’ve calculated the spending cap but it shouldn’t be as big a concern because no matter how you figure it,
we aren't going to be close to it with our budget this year. Not within a $100 million, $113 million so it’s not something
we have to solve today or worry about today. People want to try and change the Charter, that is a huge, huge
undertaking but that’s not going to happen in the next few days. For one thing, it takes an election.

Alderman Jette

Thank you Madam President. So | have several questions. First question to CFO Griffin. If | understand you

Special Board of Aldermen 6-13-2022 Page 13

correctly, the number on your calculation on line item 14 if I’m reading this correctly, 14 total appropriations. That's
based upon the Charter provision of 56C which says total expenditures. Is that correct?

John Griffin, CFO/Treasurer/Tax Collector

Madam President - John Griffin, CFO/Treasurer/Tax Collector. That’s correct.

Alderman Jette

And the number on line item 25 - total proposed appropriations for Fiscal Year 2023, does not include any - there
have been no exceptions. Charter Provision 56D allows for exceptions as Attorney Bolton pointed out, the principle
and interest on municipal bonds and capital expenditures, you haven’t deducted anything from that number by using
those exceptions. Is that also correct?

John Griffin, CFO/Treasurer/Tax Collector

That's correct. The first line item #2 general fund that includes all the debt service, the general fund. Line #3 -
enterprise funds, that’s including all the debt service. So it’s only when you get a tighter differential between the
allowable and the proposed would you ever even consider coming in with - you don’t need it. You don’t need to have
the Board of Aldermen exclude that debt.

| think if | may, just a little bit of history because | asked this question of Deputy Corporation Counsel Dorothy Clarke, |
asked did we ever come in and ask for an exclusion. And whoever was on the Board in ‘03, ‘04, ‘O05 where as you
recall a lot of inflation, the first thing that Administrative Services Director Maureen Lemieux did was ask for the
exclusion so you didn’t have to worry about it. As Alderman Clemons appropriately said about getting a windfall, it
was subject to check. The City received $20 million from it was called “a Claremont Decision — education”. Those
members who were staunch - I’m voting no on every exclusion, voted for it because they could see the benefits of
putting $20 million in an account or in a fund. | just wanted to share that because | waiting to say that, but you only
want to exclude if you’re close or think you’re close because subject to my understanding, you can only exclude once
and that’s why Director Lemieux took the whole thing. Let’s do the debt service, the capital, the bonding, let’s throw it
all in as an exclusion then you don’t have to worry about it.

Alderman Jette
So when you say you can only exclude it once per Fiscal Year?

John Griffin, CFO/Treasurer/Tax Collector

Correct.
Alderman Jette

Could | ask you, do you have any idea if we did exclude principle and interest for municipal bonds, which also includes
school bonds and capital expenditures, do you have any idea how much money that would be?

John Griffin, CFO/Treasurer/Tax Collector

The debt service on general funds is about $17 million. Debt service on Wastewater is about $4 million subject to
check. Solid Waste is another $2.3 or 4. The capital is interesting because we usually don’t budget for capital and |
was going to get into that in a minute other than the $1 million or so dollars that you see. Usually what we do during
the year is when we need to we introduce bonding legislation. So what I'd like to add is to the extent we need more
bonding in Fiscal ’23, that’s going to add to the supplemental appropriations and will subtract from the $113 million.
That’s how the math works. So henceforth every time there’s a bonding authorization, I’m going to explain it in my
fiscal note that you’re — actually I’m going to explain it in the submittal of the bonding resolution how much you're
under the cap because it just keeps subtracting from the capital - the difference between the available cap and what
we have.

Alderman Jette

Okay. So it sounds to me that given the constraints of our current spending cap of Charter provisions, there seems to

Special Board of Aldermen 6-13-2022 Page 14

be even though we don’t have an override provision, there seems to be quite a bit of room there if we voted to exclude
principle and interest on bonds and capital expenditures. There seems to be quite a cushion there to me.

If | could ask another question of Attorney Bolton. The last paragraph of 56C in the Charter says “This provision shall
not prevent the Mayor and the Board of Aldermen from appropriately funding any programs or accounts mandated to
be paid from municipal funds by State and federal Law”. What do you think that would include?

Steve Bolton, Corporation Counsel

Well there are plenty of things we’re required to do, mandated. One that we hear a lot is the payments to the State
pension system. That’s a payment we’re required by State law to make and it’s unfunded by the State. Municipalities
are required to make that payment. There are other things of similar nature. So we're required to do it. | think the
proponents of these cap limitations would say well you pay those first and then you have to make do with what’s left. |
don’t think that creates an exclusion by itself. So we’ve never had to argue that one way or the other. | think it was
put in there so they could say it didn’t affect our ability to make mandated payments. I’m not sure that is always going
to be true but | don’t think it’s affected it yet.

Alderman Jette

One more. | think this is the last. It may have been you said something about or | guess you didn’t disagree with
somebody’s statement that this is not the best written — these Charter provisions are not the best written legislation
you've even seen. |’m intrigued by the word “consider” - In establishing continued annual municipal budget for the
next fiscal year the Mayor and the Board of Aldermen shall consider total expenditures not to exceed an amount equal
to the combined annual budget of the current fiscal year increased by the ..... ” and it goes on. So that word “consider”
is an interesting choice. | looked up that word in the dictionary and it says “think carefully about something before
making a decision”. It doesn’t really say you can’t spend this money. It just says you have to think about it before you
do. So | don’t think that’s ever been considered by a court or ever been ruled by a court, but | think it’s an
interesting...

Steve Bolton, Corporation Counsel

There were a couple arguments the other way. Again, | think it could have been better worded but | think the intention
of the author or authors was to require that provide a limitation. The last sentence of the first paragraph says “the
Board of Aldermen shall act upon budget proposals in accordance with this paragraph”. Well the requirements are in
the next paragraph but anyway. So to say what shall be considered might be interpreted to exclude the ability to
consider anything else. So | think that’s one argument that says when they say consider they mean that’s the only
thing that will be considered. Then later on, they go and say you can go below this but you can’t go above it.

The other thing someone might say is look this was a clear intent was to place a limit on expenditures. They didn’t go
through all this to come out with something that was meaningless. If you just say “considers”, then you may decide
not to do it. Essentially renders everything meaningless but anyway, I’ve never advised anyone to rely on the word
“consider” as giving them a choice to accept or reject but that’s just my opinion. So if you want to say that you can
consider other things, that’s up to you.

Alderman Jette

I’m just raising the possibility that we can consider the very things that are listed here but after having considered
them, someone could say that we could go ahead and do something differently after having considered them.

Steve Bolton, Corporation Counsel

If you want to do that, that’s up to you. | think you might end up talking to people in black robes about it eventually.
Alderman Jette

| think there’s plenty of room in the legislation. | don’t think it’s as dire as | among others have initially thought
because there are the exceptions in 56D. Then there’s that final paragraph of 56C that says you have to do what the

State and federal government mandates. Thank you Madam President.

Chairwoman Wilshire

Special Board of Aldermen 6-13-2022 Page 15
You're welcome. Alderman Cathey?

Alderman Cathey

Thank you Madam Chair. | agree with Alderman Clemons. The grants should not be included. It does not make
sense to me that we would add them in as an expenditure and much to other Aldermen’s points about grants having
to be used. | know there is a lot of restrictions on a lot of grants. Some of them are time-based so we may lose it
after that year and never get it back. So to me, it doesn’t make any sense. If | had a house budget and then I’m
walking down the street and find a $100 bill, | could go home and add it to my budget if | want to and then spend it and
call it an expenditure or | can just take my wife out to dinner and my budget isn’t affected one bit at all. It just doesn’t
make any sense to me. So | would be in favor of at least taking care of the grant issue because it just makes no
sense to me.

In considering tonight’s meeting, I’m not really worried about solving the budget cap or worrying about the spending
cap. My main goal was to understand the cap because as an Alderman and a man who likes to do things correctly, |
don’t want to pass any budget without understanding everything | can about fiscal responsibilities of the City, and what
things our budget is subject to, and what things our budget is not subject to. Even if we’re 1000% under the cap, |
don’t care. | want to Know what the cap is, how it applies, how it does not apply because there is a lot of information
flying around. So if | call myself an Alderman who cares about the voters of this City, then I’m going to find out
everything | can about anything that has to do with the budget whether that’s spending cap, accounting Procedures. It
doesn’t matter so | can make the best decision come budget time. Yeah that might not have anything to do with the
cap, that’s fine. | still want to know what the cap is. | still want to know how it applies. Still helpful. So | think this
meeting is super beneficial at least to me. It was only beneficial to me. Sorry you're all here. | appreciate it.

The last comment I'll make or | have a question. Have we ever been over the cap in a significant way? Grants
notwithstanding but just in a regular budgetary proceedings? Have we ever when we had the cap back in the day is
anyone familiar with like we ever had an issue where we were way over the cap and we had to cut jobs, or cut funding
to City thing, or have we always been pretty under the cap considerations?

Steve Bolton, Corporation Counsel

There have been years in the early 2000’s when the provisions to exclude principle and Interest on bonded debts
and/or capital expenditures. Those exclusions were applied in some years. Once those exclusions were applied, the
level of expenditures permitted is obviously higher. We've always been under that raised ceiling.

Alderman Cathey

So we've never really had a significant issue with the cap where we had to really rein in our spending as it were?

Steve Bolton, Corporation Counsel

Well in order to get to that level that was under the cap, some hard choices occasionally had to be made. Some
employees went without an annual increase in compensation. Some desired expenditures were delayed. We got in
trouble one year with the Federal government over the number of English as a second language teachers was
inadequate. So there were struggles to meet those levels at times but no we were never over the resulting limitation
after exclusions were applied.

Alderman Cathey

Thank you.

Alderman Sullivan

Thank you Madam President. What would prevent us from just passing something on the Charter that would say that
the general fund could not be over a certain amount and just leave it to one line item and just be done with it?

Steve Bolton, Corporation Counsel

Well you can’t pass amendments to the Charter. It has to be done by...

Alderman Sullivan