Launch of budget season brings optimism for the future
October 9, 2012
HARPER WOODS — In recent years, there has been little to celebrate during budget sessions in many Michigan cities, including Harper Woods.
With the budget approval date in early November creeping closer, Harper Woods is working on its numbers. While the news isn’t good for those in the city who were hoping the 9.5-mill special assessment would disappear after this year, it seems there is some light in the distance when it comes to the city’s financial future.
“The assessment’s not popular,” acting City Manager Randolph Skotarczyk said. “That assessment offsets the decrease in the taxable value.”
Even with the continued financial struggles, however, the city is digging out of a hole and should see some better financial days in future years, according to the presentation.
“In the five-year plan that I’m proposing, we’re going up to a healthy fund balance and then riding that out,” he said.
Skotarcyk gave a rundown of the city’s finances in a budget session Oct. 1. The city plans to discuss the budget again at its next meeting Oct. 15.
City Council members were pleased to hear some positive news about the future.
“He did a very positive presentation,” Mayor Ken Poynter said. “People have to realize that it’s not just Harper Woods; many communities are dealing with rough times. It’s exciting that he’s projecting a five-year budget.”
The city didn’t project out a long-term budget plan in the past.
“I think I came out of it very hopeful,” Mayor Pro Tem Cheryl Costantino said, adding that Skotarczyk’s five-year projections show that “we are going to be in a good spot.
“Harper Woods is on its way back up,” she said. “It’s good that we have a long-range plan.”
In the next year, the city is still going to bring in less revenue than it will expend to keep the city moving forward. With property values down significantly in the last several years and costs rising, the city has struggled with staying afloat.
Last year, the city assessed a 9.5-mill special assessment for public safety services. This year, it appears it’s going to have to do it again, but that is something the council will have to approve after holding the required meetings and public hearing.
Skotarczyk did look at other options, such as not doing the special assessment and not making major cuts. The city didn’t fare well under such projections.
“We have fiscal collapse by December of 2013,” he said.
With the 9.5 mills and some additional cuts, “we can continue to be the Harper Woods that we all know.”
Council member Charles Flanagan explained that this isn’t a compound assessment where they are adding another 9.5 mills to the ones approved for this year. It is just carrying on the same amount.
“It’s not going to hurt the taxpayers anymore than it did this year,” Skotarczyk said.
The average homeowner paid about $300 last year for the special assessment, but Skotarczyk said he understands that money is tight for people.
“I don’t like having to do (the) assessment,” Skotarczyk said. “I really don’t.
“The only other option to come up with a viable budget is a 25 percent reduction in staff,” Skotarczyk said.
He added that the city has cut people to the point that “they’re down to the bone right now.”
“The Police Department truly cannot function efficiently with any more cuts,” Skotarczyk said. “The services to the city would be altered significantly.”
The city has made more than $2 million in cuts for the general fund, but more are needed. The city has been working to make sure residents don’t feel the change when it comes to their services.
“The average citizen, as far as the services they receive, has not felt the burden of those cuts,” Skotarczyk said.
“There are more cuts that we hope to get, but I can’t take credit and put them in the budget until we get them,” Skotarczyk told the council.
The one area that directly affected residents, though, was closing the doors to public business at most city offices on Fridays. Yet, they haven’t received residential complaints about that change.
“It’s gone over quite well, and it’s helping us get our work done,” Skotarczyk said.
He is worried that if they continue to cut deeper, residents will start to feel those cuts. Also, the city needs to build up its fund balance.
“Right now, we’re running our balances so close,” Skotarczyk said, adding that he checks balances before issuing checks. “We do need a positive reserve in our fund.”
Skotarczyk sees things getting better down the road.
The unions and administration continue talking about ways to help the budget through cuts, and it appears there is a glimmer of hope when it comes to property values. There are significantly less vacant homes in the city compared with last year, city officials said.
“We’re making progress, and we’re starting to achieve some of (our) goals,” Skotarczyk said.
The change in tides can be seen in housing prices.
“I’ve noticed a trend that the real estate prices are bouncing back in the city,” Mayor Pro Tem Cheryl Costantino said.
“I’m seeing Realtor interest,” Skotarczyk said. “They’re looking here. They see value, and that’s good.”
Even if house values bounce back, it will take a long time for the city to get back to the revenue it was at during the height of the market, city officials said. No matter how much property values rise, the city is capped at the amount it can increase taxes via state law.
Some members of council said the city needs the public safety initiative on the ballot again next year to help the city with its financial health and to help with manpower issues. The issue of using cross-trained public safety officers failed when it was placed on the ballot in the past.
Another issue raised by residents at the meeting concerned a legal outcome concerning the city’s pension fund shortfall, which means more mills assessed to get that on track.
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