Madison Heights City Council reviews proposed budget
May 1, 2013
MADISON HEIGHTS — Rising bright and early the morning of April 20, Madison Heights City Council convened to review the proposed budget for Fiscal Year 2013-14.
While the recession continues to take its toll on the city, in the form of diminished property tax revenues, the silver lining is that the average homeowner will receive a tax break due to declining property values: average savings of $42 on the city portion of their bill, equivalent to a 1.3 mill rollback.
The tax break is based on the fact that the average residential taxable value in Madison Heights has dropped from $34,026 to $31,438, as of the end of last year. This is part of a 55 percent decline in the city’s average home market values over an eight-year period.
“Madison Heights residents and businesses are not being asked for significant new taxes or fees,” said Madison Heights City Manager Ben Myers.
Some points of interest
As proposed, the 2013-14 budget for all funds weighs in at $43.3 million, which is a $7.1 million drop (14.1 percent) from the current year’s budget. Of that, General Fund expenses are down $3.4 million, or 12.3 percent.
The budget has shrunk due to a number of factors, including:
• $1.1 million lost to declining property values, which affects real and personal property tax revenues. Such revenues account for 64 percent of the city’s General Fund, which pays for core services, such as police and fire.
• A $2 million reduction from transferring retiree health care premium payments from the General Fund to the Retiree Health Care Trust Fund.
• Around $652,000 in General Fund expenditure gap reduction measures, which includes at least $30,706 saved from a restructuring of senior management, following the appointment of the new city manager and other roles (as well as $12,650 in the Water and Sewer Fund); $15,700 saved from converting one police sergeant currently on the midnight shift to a patrol officer position; and anticipated concessions from all eight union groups, whose contracts expire June 30, failing which fund balance will be used.
• A $1.9 million reduction from dissolving the Housing Commission and transferring the Section 8 Rental Assistance Program to another agency.
• Scheduled reductions of $1.5 million and $376,000 in road construction projects funded by the Major Street and Local Street funds, respectively.
Complicating matters is the fact that, in the last 11 years, the state has sharply reduced statutory revenue sharing, taxes collected by the state that are then transferred back to municipalities. So far, this has cost the city $4 million in revenues.
Likewise, last December, Gov. Rick Snyder signed a package of bills reforming Michigan’s personal property tax (PPT), which won’t affect local budgets until 2015.
Once this happens, Madison Heights would lose $2.9 million in PPT revenues over 10 years, assuming the replacement mechanisms enacted by the legislature and signed by the governor are approved by voters in a statewide election set for August 2014. Without replacement, the city’s revenue loss could be as much as $13.9 million.
Many details regarding PPT reform remain unclear as they continue to develop in Lansing. In the meantime, all municipalities are under pressure to aggressively manage their finances, as traditional sources of revenue become less and less reliable.
There are no planned layoffs as a result of the 2013-14 budget. Staffing levels have already dropped by 105 positions since 1994, a 42 percent reduction in the city workforce. For the new budget, one vacant full-time Water and Sewer operator position will be split into two part-time Water and Sewer employees, for another $45,010 in savings in the Water and Sewer Fund.
The city has also implemented more than $5.5 million in gap reduction measures during the last four years. Voters in Madison Heights did their part with approval of up to 2.2 mills between Proposal L and Proposal MR.
The new budget proposal aims to maintain current staff levels while decreasing overall expenditures and using only reserved fund balance for library improvements.
Toward this end, $202,600 will be used for library purchases, including $153,000 in fund balance for the first phase of improvements to the library’s heating, ventilation and cooling system (total cost: $235,000). In addition, $49,700 is budgeted for the purchase of new books.
The April 20 workshop took only a couple of hours. Council was already familiar with the proposed budget, but a few suggestions did crop up during the review.
Mayor Pro Tem Robert Corbett suggested it might be wise to provide for some defibrillator units in the Madison Heights Police Department, where there are none.
“Not only for your officers there, but also when you consider the persons you are housing, moving in and out of there, and alcohol and God knows what else is involved,” Corbett said. “I was wondering if we could see a proposal for council to consider, and reconcile in this budget, to bring in either one or two (units).”
The cost for such a device is around $2,000 per unit, according to Madison Heights Fire Chief Gregory Lelito. Myers said there may be some units in the city that are not in use, such as at the Red Oaks Nature Center, where the county has brought in its own defibrillator.
Madison Heights Police Chief Anthony Roberts agreed the devices could be useful.
“Three would actually be appropriate: The holding cell area, the dispatch center and downstairs where the officers work out,” Roberts said.
Later, Councilman Bob Gettings, a former city employee with the Recreation Department, raised concern about the level of support for recreational programming.
“Is there any way we can look at possibly bringing in a full-time person?” Gettings asked, noting the current recreation coordinator, Kirby Rochester, is employed on a part-time basis, and the department’s staff is a shadow of what it was in the ’60s and ’70s.
“I know we’re trying to do a lot on a little … (but) I will bring this up for every year the people elect me to sit up here because I think it’s a very important thing,” Gettings said. “Recreation is what you do with your leisure time, and kids have a lot of time on their hands. (The recreation experience) is all the things that comprise an individual.”
Myers said it would add an annual expense of $65,000 to restore a full-time recreation coordinator to the budget.
“It’s a question of priority,” Myers said. “I won’t sit here and say we’re not strapped in a number of areas. But we are doing the best that we can with recreation,” including numerous county partnerships, he noted.
Gettings responded by saying, “I look at the budget here, and Parks and Recreation is only 1 percent of the proposed FY 2013-14 budget, while public safety is 34 percent. Now I’m not saying public safety isn’t important; it’s probably the top priority for most cities. But if we can just have an open mind to try and reinstate this position (of full-time recreation coordinator), or something along those lines, because … these are things that round out an individual.”
City Council will hold the public hearing on the budget at their meeting at Madison Heights City Hall, 300 W. 13 Mile, at 7:30 p.m. Monday, May 13. They are expected to adopt the budget and tax levy at the same meeting.
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