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Clinton Township

May 13, 2014

Clinton Township treasury report shows stagnant interest rates

By Nick Mordowanec
C & G Staff Writer

CLINTON TOWNSHIP — According to Clinton Township Treasurer Bill Sowerby, it’s not dollars but interest rates that are causing stagnation in the township’s pocketbook.

Sowerby delivered his second treasurer’s report of the year at the township’s May 5 board meeting. A report is released for the public’s relevance every three months to make citizens abreast of the local government’s financial standing.

The previous report was delivered in January.

Clinton Township’s bank deposits were held by five institutions: Chase Bank, Comerica Bank, Fifth Third Bank, Flagstar Bank and Michigan Schools and Government Credit Union. The total of the combined deposits was $39,074,300. The accounts were public funds money market accounts that generated either earning credits that offset banking service fees, or interest bearing Federal Deposit Insurance Corporation-insured accounts.

The township held $43,165,188 in 2a7 pool funds (public money market funds) spread across eight institutions. The average earnings rate the last quarter was 0.2436 percent, as compared to the township’s bench mark rate of return was a reported average rate of return of 0.05 percent for the first quarter of 2014.

Sowerby said the township won’t be getting rich off its own dollars due to instability in interest rates.

“We are healthy with the dollars that we have in the township to cover us with all our bills for the upcoming fiscal year, as well as making sure we have enough reserved,” Sowerby said. “As far as township dollars coming in, I anticipate a stable forecast for that revenue coming in and a stable forecast for the expenditures.”

Federal Reserve Chair Janet Yellen has advised to keep interest rates low for a “considerable period” and to continue to reduce the pace of bond purchases.

Extraneous factors, such as a horrid winter and a geographic conflict between Russia and Ukraine, have also had an impact on the township, in one way or another.

Sowerby said the weather forced many people to stay at home and perhaps shop online rather than spend their money at the mall, and that many people necessarily did not go to car lots and look to buy new vehicles in that treacherous climate. People also may have avoided house hunting due to egregious conditions.

As for the Russia-Ukraine conflict, that has a trickle-down effect.

That is especially true for Wall Street, which pays close attention to conflicts such as those in Eastern Europe, the Middle East, North Korea or South America. When instability in the world market occurs because of conflict in some part of the world, that trickles down through the world economy and, eventually, through the local economy.

“We start seeing some banks change some of their lending practices to businesses; it results in changes to small businesses maybe expanding or not expanding. Homeowners are affected because they can’t find new jobs if they are looking, and so on,” Sowerby said.

You can reach C & G Staff Writer Nick Mordowanec at nmordowanec@candgnews.com or at (586)279-1118.