By MIKE ANTHONY

Executive Editor

Sunset Hills Mayor Bill Nolan and Revenue Review Committee Chairman Mike Sawicki are scratching their heads over the Board of Aldermen’s decision to reject placing a sales-tax extension before voters.

The Board of Aldermen voted 6-2 last week to reject the second reading of an ordinance to place a proposition on the April 3 ballot seeking voter approval of a permanent extension of an existing half-cent, capital-improvement sales tax.

After a first reading of the ordinance on Jan. 10, Ward 1 Alderman Dee Baebler’s motion to suspend the rules and conduct a second reading of the measure was seconded by Ward 3 Alderman Stephen Webb. Opposed to the second reading were Ward 1 Alderman Frank Hardy, Ward 2 Aldermen Scott Haggerty and Tom Hrastich, Ward 3 Alderman Jan Hoffmann and Ward 4 Aldermen Pat Fribis and Claudia Svoboda. None of the aldermen opposed to the second reading commented on their “no” vote at the meeting.

Under state law, a proposed ordinance must be read twice before it can be adopted by the Board of Aldermen. The deadline to place a proposition on the April ballot is Jan. 24. But after speaking with aldermen since last week’s meeting, Nolan told the Call he has no plans to call a special board meeting to conduct a second reading of the ordinance.

“At this point in time, the feedback from the aldermen is if I call a special meeting and we read it for the second time, they’ll defeat it … So there’s really no reason to have another meeting,” he said, adding he’s puzzled why aldermen would not want to allow voters to consider the issue.

The capital-improvement sales tax was approved by voters in 1994 to fund a more than $5.7 million bond issue for City Hall repairs, a new police station, a new public works building and street repairs, among other items. Because the sales tax is tied to a bond issue, restrictions exist on how revenue from it can be used.

The bonds were issued in 1996, refunded in 2004 and are scheduled to be retired at the end of 2016.

However, if the bonds are retired, the tax would end unless voters elect to extend it.

Nolan appointed the 11-member Revenue Review Committee in October to study the city’s revenue stream. Sawicki, a former Ward 1 alderman, told aldermen last month the committee was recommending the Board of Aldermen place the sales-tax extension before voters.

Sawicki said his committee viewed the extension of the sales tax as a “win-win” and urged aldermen to give “serious consideration” to placing the measure on the April ballot. He also presented a proposed ordinance for the board to consider to place the sales-tax issue on the April ballot.

Aldermen had no questions for Sawicki after his presentation at the Dec. 13 meeting.

Of the board’s vote last week, Sawicki told the Call, “… I’m kind of flabbergasted. I thought the Revenue Review Committee did a lot of homework. We presented some facts and figures at the December (aldermanic meeting). There seemed to be no discussion …”

Some of the aldermen who contacted him after the meeting told him “the sentiment is anti-tax and they think it might be better placed on the ballot at another time … I’m flabbergasted as I think anyone with a brain would be …,” he said.

The committee chairman said none of the aldermen contacted him for additional information.

“… I don’t think they contacted anyone else on the committee or at least not to my knowledge,” Sawicki said. “… I truly just don’t get it it. I keep hoping that someone’s going to send me an email or something and say, ‘Here’s a simpler, quicker solution.’ And I can’t see it.”

Nolan told the Call he is equally puzzled by the board’s decision. The city has the funds on hand to retire the bonds, which would save more than $41,000 in interest over the next four years.

“… Now you don’t have to be a financial genius to say, ‘If I have $500,000 in the bank and I owe $450,000 and I’m earning nothing on my $500,000 and I’m paying 4.5 percent (interest) on the $450,000, why wouldn’t I pay off the loan?”’ Nolan said, emphasizing if the bonds were retired, the tax would sunset.

“… The reasoning that’s been offered as to why we shouldn’t put this on the ballot frustrates me because it belies the intelligence of the Sunset Hills voters,” the mayor said. “It creates the impression that the people in Sunset Hills don’t understand that when you’re paying 4 percent (interest) and getting nothing, you save a ton of money if you pay off the bonds, and you can’t live without capital improvement money, so you extend the tax.”

If voters were to approve the extension of the half-cent sales tax and the existing bonds were retired, the tax would generate about $850,000 annually for the city.

Hrastich, who serves as chairman of the city’s Finance Committee, told the Call he voted against the second reading of the ordinance because he wanted more information.

Of Sawicki’s report to the board last month, Hrastich said, “… It was very slight on any facts and information about the full scope of the ordinance, and therefore it required more investigation when it was brought up. And I think it needs more information from either the committee or the mayor about what the plan is.”

Asked what information he was seeking, Hrastich said, “They failed to even tell you how much — what the value of the bonds were that had to be called early and to me, that’s a fundamental thing to look at and where (those) funds are coming from. And exactly what they thought they were going to use this money for in accordance with the state statute.”

Asked what he would like to see happen with this issue, Hrastich said, “… I don’t know that it’s going to be necessary before the year 2014 as we will be retiring about $95,000 to $105,000 each year up until 2016, in which year we’ll retire $235,000. See, I’ve done some research on it and I know where the funds have to come from … But then I’ve also done my research on the state statute and I really — I quite frankly don’t think it’s legal to simply extend your sales tax to 13⁄4 percent. And I get a feeling that’s what the real purpose of this is. We already get 11⁄4 percent and the capital improvement tax would be another half percent. But it has very limited uses.

“Even if we retire the bonds and we do this, you have to buy capital improvements with the money. Now exactly what those are — nobody talked about any of that and I think it needs more investigation before we ask the voters of this community to go ahead and keep their sales tax at the rate it is.”

Asked what he would propose, he said, “Well, we have to determine what you can use it for. To me, there’s a difference between a capital expenditure and a capital improvement. Some people think you can go out and buy new police cars every two years as a capital improvement. I don’t go along with that. I don’t believe that that’s true.

“You’re either going to have to build roads or you’re going to have to do — you can no longer pay with that money what you’ve been paying for in the Police Department building and the Public Works building and part of the City Hall and part of the old parks building and Watson Trails. When it sunsets, that money is no longer earmarked for that, and in fact, those are now no longer capital improvements. They are simply assets and you can’t use the money for that.

“So there’s a lot of thought (that) needs to go into exactly what we’re going to do and the pittance of information that was put out by this (Revenue Review) Committee didn’t cut it as far as I’m concerned,” Hrastich added.

Nolan told the Call he found it “shocking” that Hrastich said he needed more information.

“Now this is not going to increase my popularity with him, but he’s the chairman of the Finance Committee. He prepared the budget. He knows exactly how much money we spend from capital improvements and how we spend it. So the fact that he needed some other level of financial information is shocking to say the least,” Nolan said. “The issue here is that we’re going to lose a year if we wait until next April (2013). Next year, we’ll pay $17,415.63 in interest that we wouldn’t have had to spend if we allowed the people to vote on it this year.”