Panel: Share $1.3M shale lease pot

A recommendation to split the $1.3 million in shale lease money three ways will be forwarded to Salem City Council, with a chunk for capital improvements, a chunk to pay off debt and the rest in a discretionary fund for council projects.

The Finance Committee of City Council voted to make the recommendation Thursday night after discussing the issue again, along with eight or nine other topics during a two-hour session.

The city has been sitting on the $1,352,000 since last November, taking some time to decide how to use the one-time boost from a three-year lease agreement signed last summer for mineral rights on city-owned land outside the city limits.

Auditor Betty Brothers wanted debt paid off, Mayor John Berlin wanted money in capital improvements for paving projects and replacing the city hall roof, while the Utilities Commission lobbied to have the money deposited in the water reserve fund, since the lease involved land purchased with water department funds and the fund has been reduced because the city’s been keeping the interest for the general fund.

During a previous meeting, Councilman Dave Nestic suggested “split the baby” and he repeated that option Thursday. His plan, which was agreed upon by fellow committee members, Chairman Councilman K. Bret Apple and Councilman Brian Whitehill, included:

– paying off the debt for the Pershing Street Phase I and Cunningham Bentley Connector, Phase IV projects to the tune of about $650,000

– putting up to $633,442 in capital improvements to repave East Pershing from Ellsworth to Broadway and cover the city’s share of a Small Cities paving grant which could leverage even more money from the state to repave Second Street, Third Street and Ellsworth Avenue in 2015

– putting the remaining $68,558 into a council discretionary fund which council members could use for projects to benefit constituents or for their committees, with each councilman limited to up to $10,000 for a project they would have to present to council for approval.

Nestic also suggested that council stop taking the interest money from the utility department so the department can rebuild the reserve fund, but that won’t be part of the recommendation forwarded to council.

Berlin disagreed with the idea, saying the utilities department could lower the sewer rates and increase the water rates to build the water reserve fund back up. Residents would be paying the same bills they pay now, but the money would be distributed differently. He also talked about the large balance in the wastewater reserve fund.

Utilities Commission member Bob Hodgson, who attended the meeting, said that yes, there’s a balance in there, but they are required by law to set aside 5 percent per year and that fund has been built up knowing the city was going to have to upgrade the wastewater treatment plant, a multi-phase project that could end up costing up to $10 million. He said the fund will be depleted quite a bit over the next two or three years, with bids being sought now for Phase I.

Apple noted the keeping of the interest was supposed to be reviewed on a yearly basis and things have turned around since it was first done, even with the loss of some Local Government Fund money and the estate tax. Berlin said those were good reasons not to consider the interest situation at this time.

Apple said he would rather see the interest issue discussed during a Committee of the Whole meeting, which would include all seven council members, so no action was taken on the suggestion. He had stressed the importance of debt reduction in deciding what to do with the money.

Other recommendations made by the Finance Committee included using $8,470 left over from the Lexington Avenue drainage repair project to pave Continental Drive and providing up to $10,000 for a one-time payment to general fund non-bargaining full-time employees of 2.25 percent of their total wages paid in 2012. Affected workers under the general fund would include the fire chief, non-bargaining police lieutenant, service director, deputy auditor, administrative assistant and others.

Berlin had asked for the payment as recognition for their efforts since they received nothing in 2011 and 2012 while union workers received wage increases. He also asked that the utilities department and parks department be asked to do the same, at an estimated cost of $8,734 for utilities and $2,091 for the parks, which he said both departments indicated they were willing to do.

The committee again asked for more information on a proposal by Berlin to increase the street foreman’s pay to $23.71 per hour, an increase of $2.12 per hour, to fix what he considered a disparity with other supervisors in other departments. No action was taken on the matter, which will be addressed again at a future meeting.

Mary Ann Greier can be reached at