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2009-10-07 Finance Committee MinutesFINANCE COMMITTEE CITY OF SAINT JOHN MINUTES WEDNESDAY, OCTOBER 7, 2009 - 4:20 p.m. Present: Mayor Ivan Court Deputy Mayor Chase Councillor Court Councillor Killen Councillor Sullivan Pat Woods John Nugent Greg Yeomans Cathy Graham Hilary Nguyen Kevin Fudge Bob Crowley, Ernst & Young Also present — Barbara Mahaffy, Recording Secretary There were 4 members of the media present. 1. Approval of Minutes — July 13/09 On motion of Councillor Killen Seconded by Councillor Sullivan RESOLVED that the minutes of the July 13, 2009, meeting be approved. Question being taken, the motion was carried. 2. Adoption of Agenda Deputy Mayor Chase noted that there were two items on the agenda — Item 4 - the Terms of Reference for the Finance Committee and Item 3 - the Audit Proposal for 2009 -2011 from Ernst & Young. As the Audit Proposal is not a public document, it was decided to discuss this item in closed session. It was also decided to renumber Item 4 as Item 3 and vice versa in order to deal with it first as Mr. Nugent was only available to the Committee until 5:00 pm. 3. Terms of Reference for the Finance Committee Deputy Mayor Chase noted that the Terms of Reference for the Finance Committee needed to be revised in order to comply with a resolution of Common Council which tasked the Finance Committee with certain responsibilities which were greater in scope than the committee's historical role. The Terms of Reference were referred to John Nugent, City Solicitor, for review and recommendation for any necessary changes in regard to the additional roles Council has requested of the Finance Committee. Mr. Nugent has brought forward to this meeting proposed revisions to the Terms of Reference consisting of the addition of 3 sections in Section 3 of the current Terms of Reference. Mr. Nugent reported that the initial resolution of Council led him to write to Common Council with reference to the responsibility of the Finance Committee. Whatever roles are given to the Finance Committee must fall within their obligations proposed by provincial legislation. Common Council is looking at an enhanced role of the Finance Committee within the boundaries established by legislation and this gives rise to the proposed changes to the Terms of Reference for the Finance Committee. The Finance Committee needs to amend the Terms of Reference to accommodate the 3 proposed sections. Deputy Mayor Chase asked Mr. Nugent to show the difference between the proposed changes and the current role of the Finance Committee. Mr. Yeomans made it clear that this Committee reviews and has a consultative role and is not an Audit Committee. If the Committee agrees to the Terms of Reference as amended, then Common Council has to agree as well. Once approved, the role of the Committee is amplified and takes on a consultative role. Councillor Killen asked if the addition of these amendments makes the Finance Committee resemble a Standing Committee. Mr. Woods responded that by its nature, it is a Standing Committee, the difference being in the reporting relationship. In a Standing Committee, a staff member would report to the Standing Committee who would make a recommendation to Common Council — a very subtle difference. This Committee is consultative in nature. The decision making and direction rests with Common Council, with recommendations coming from the Commissioner of Finance and the City Manager. The final decision rests with Common Council. It was noted that these changes will go to Common Council and will be debated once this Committee agrees to the revised Terms of Reference. Common Council has to understand their relationship with the Finance Committee and what they are delegating to this Committee. Councillor Killen noted that it is a fine line to walk, where if a member of this Committee was providing advice to the Commissioner of Finance, they could have more influence on the Commissioner of Finance and the direction taken. He then posed the question — does the Finance Committee have undue influence on policy and direction. Mr. Nugent said that 2 these are questions and issues that Common Council will have to deal with and suggested that these questions be brought to Common Council for discussion and a decision. Councillor Killen stated that there needs to be a clear budget policy held by Common Council so the Finance Committee knows what advice and support it can offer. Deputy Mayor Chase noted that this Committee pushes policy down to the Boards and Commissions. Where there are only 5 members of Common Council on this Committee, Common Council makes the final decision. Councillor Court mentioned that if someone had a pet project, they could influence the recommendation put forth by the Finance Committee. However, Deputy Mayor Chase stated that it was unlikely as they would first have to convince both the Finance Committee and Common Council. Mayor Court wants to make sure that Common Council understands the consequences of every decision they make, including recommendations from the Finance Committee. He wants to ensure that Council gets the best advice when making decisions. Mr. Yeomans noted that the Boards' and Commissions' budgets go before Common Council first. They need to see the implications of these changes on the resolution adopted for the 2009 budget. He also noted that this Committee right now does not have the mandate to entertain budgets and this is the reason for the changes being proposed to the Terms of Reference. Councillor Killen does not feel that these changes are something this Committee should get into and he cannot support the changes as written. Mr. Woods stated that there is a need to understand and respect the roles. The proposed changes are consultative in nature and states that this Committee can review and discuss. Councillor Killen does not feel that this Committee has the right to assert authority on the Boards and Commissions as that is Council's role. Mr. Nugent had suggested that this Committee get together with himself, the Commissioner of Finance and the City Manager to discuss this issue and this meeting is exactly what should be happening. He feels it is important to report back to Council. Mayor Court feels that there should be a time limit identified. There should be an idea as to the number of meetings and the dates of these meetings, in other words, the time commitment involved with this Committee, particularly if this Committee is taking on a greater role. Deputy Mayor Chase asked Mr. Yeomans and Mr. Woods to make up a Q &A document for Common Council. 3 On motion of Councillor Killen Seconded by Councillor Sullivan RESOLVED that the proposed revisions to the Terms and Reference of the Finance Committee be tabled; and that Mr. Woods, Acting City Manager, prepare a document for Common Council's consideration based on issues raised at this Committee meeting. The question being taken, the motion carried. 4. Audit Proposal for 2009 -2011 from Ernst & Young Deputy Mayor Chase asked the media to leave as the meeting was going into closed session to discuss this issue. Mr. Yeomans noted that the 5 -year audit agreement the City has with Ernst & Young has expired. He will go to Common Council to extend the contract with Ernst & Young for a three -year period with this Committee's recommendation, if they are so inclined. This Committee could also recommend sending out a proposal call for audit proposals for the next 5 -year period. Mr. Crowley, from Ernst & Young, expressed their desire to keep the City work. He noted that there has been no increase in fees for the last 3 years. They are recommending an increase in fees over the next 3 years, that being 4 '/z %, 4% and 4 %. He also outlined what these fees cover, one of the items covered being the reporting to Common Council through the Finance Committee. Mr. Yeomans stated that if this Committee recommends extending the contract, then Common Council must also approve; if this Committee does not recommend the extension, then they are looking at a full proposal call. Councillor Court asked if there was room for negotiation of the fees to be charged and if we could counter - offer. Mr. Crowley left the meeting at 5:15 pm. Mayor Court noted that if we go to tender that we will end up paying more in the long run, a point which Mr. Yeomans confirmed. Mr. Yeomans also noted that Ernst & Young have experience in dealing with the City and have an extensive knowledge base of the City's processes and workings. Councillor Sullivan asked if the Finance Committee should do some comparison shopping and asked if staff are confident that this is a good deal. Mr. Yeomans responded that the City can go to tender in 2010, if so desired. 0 On motion by Councillor Court Seconded by Councillor Killen RESOLVED that the City of Saint John continue their relationship with Ernst & Young and extend their contract for a three -year period until 2011. The question being taken, the motion carried. The meeting adjourned at 5:30 p.m. Chairperson 5