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Lower projected revenue keeps Niles water fund in the red
By Jordan Cohen
NILES
Forecasts that the city’s water-fund deficit would be eliminated by the end of this year have come up short, meaning that red ink will continue to flow along with the water.
City Auditor Giovanne Merlo told council Wednesday that the fund, projected to bring in $7.3 million this year, is on track to generate only $6.5 million – a shortfall that the city is in no position to cover.
“The fund will not go into the black, and I’m putting a stop on [water fund] capital expenditures,” Merlo said after the meeting. The auditor can reject any spending if he determines that revenue is unavailable.
The issue came up as council planned to vote on authorizing contract negotiations for repair and ongoing maintenance of the city’s two water towers. At Merlo’s suggestion, council tabled the issue, and no action is expected on it for the foreseeable future.
With Niles in fiscal emergency since late 2014, eliminating the water-fund deficit is a critical component of the financial recovery plan. The city raised the water rates, which substantially reduced the deficit but not enough to get into the black.
Water expenses aren’t the only ones concerning the auditor. Merlo revealed that more than $17,000 in what the auditor described as “unknown expenses” turned up in the final bill from Servicemaster of Warren for mold remediation at city hall last summer. He told council that the expenses were approved without his knowledge.
Including the additional amount, Servicemaster was paid more than $87,700.
Mayor Thomas Scarnecchia said the additional work and payments were approved by “the former director” James DePasquale, whom the mayor fired last month as safety-service director.
“I didn’t know anything about it,” the mayor said. Council was not happy with his answer.
“He’s the boss,” said Steve Papalas, D-at large. “He’s supposed to know.”
DePasquale, contacted by The Vindicator on Wednesday evening, also took exception to Scarnecchia’s explanation.
The mayor “is aware of everything,” DePasquale said. “He’s always in the loop.”
“Our auditor has to be fully informed,” said Robert Marino, council president. “We have to keep a handle on this.”
Council has asked Law Director Terry Swauger to draft an ordinance requiring two signatures and subsequent review by the auditor to avoid the issue from recurring.
Meanwhile, Scarnecchia has sent a letter to council asking it to change the name of the Ralph A. Infante Wellness Center to the Niles Wellness Center. Infante, the former mayor, has been indicted on numerous counts including theft in office, but that apparently isn’t the only reason for Scarnecchia’s request.
The mayor said that his administration is in contact with “people looking to expand the center” and said he felt they would be uncomfortable by keeping the name. He did not identify them.
Earlier this year, an attempt to lease the money-losing facility failed when no bids were offered for the lease.