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Royal Oak

July 29, 2013

Mayor addresses pension debt and more during State of City

By Robert Guttersohn
C & G Staff Writer

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Mayor addresses pension debt and more during State of City
Royal Oak Mayor Jim Ellison speaks with Deputy Chief of Police Gordon Young before giving his State of the City address at the Royal Oak Women’s Club July 23.
Audience members applaud at the conclusion of the State of the City address. In the speech, Ellison said that Royal Oak’s unfunded pension liabilities need to be addressed.
 

ROYAL OAK — In the wake of Detroit filing for bankruptcy, Mayor Jim Ellison used his State of the City address July 23 to address, among other things, the city’s debt to retirees and ways to deal with it.

In the speech at the Royal Oak Women’s Club, he also touched upon what he saw as the City Commission’s priorities throughout the next fiscal year, which included the building of a downtown park and the establishment of an alternate revenue stream for infrastructure.

But most notably, he ended his speech this year on the human rights ordinance, referring to the petition drive that landed the commission-passed ordinance on the November ballot as “an abuse of statutory law.”

The ordinance was to prohibit “discrimination based upon actual or perceived race, color, religion, national origin, sex, age, height, weight, condition of pregnancy, martial status, physical or mental limitation, source of income, family responsibilities, sexual orientation, gender identity or HIV status.” But Royal Oak residents signed a petition to block the law from going into effect and placed its fate up to Royal Oak voters.

Ellison tied the passage of the ordinance to the viability and economic growth of the city, saying that in order for the city to continue attracting the young, creative class, Royal Oak needs to appear proactive on the human-rights front.

“Since these are precisely the young people who are looking at moving and working here, I think it goes without saying that passing this ordinance is in our best economic interest,” Ellison said.

Yet it’s a theory with which Mayor Pro Tem David Poulton disagreed.

The day after Ellison’s address, Poulton in a phone interview criticized the mayor’s attempt to tie together the passage of the human rights ordinance and the city’s economic growth.

He said both businesses and young people are already moving to Royal Oak.

“This is being done despite not having the human rights ordinance,” he said.

He also said it was absurd for Ellison to call the petition that blocked the human rights ordinance an abuse of law.

“According to the charter of the city, this is a right of the people, regardless of what the City Commission decides,” he said.

Ellison reserved the opening of his speech to thank residents for passing in November the public safety millage, which is projected to bring in about $8 million annually and allow the city to hire new police officers and order new fire equipment.

“Your willingness to return to pre-2008 tax levels and the truly humbling outreach we’ve seen on the part of individuals, service organizations and local business leaders to help us shoulder some of our common burdens have proven and will continue to prove to be one key to ensure that we will all continue to flourish well into the future,” he said.

And while he said that the State of the City is the strongest it has been in five years, he added notes of caution throughout his speech, particularly when discussing unfunded legacy costs and the city’s roads.

“When (city employees) were hired, they were told that, in exchange for earning paychecks lower than they would have got in the private sector, they would see a pension and health care at retirement — in essence being offered a partial IOU in exchange for longer-term security and stability.”

He said that over the past 10 years, the city has fallen behind on funding the retirement of its employees in order to keep taxes low and to maintain city services.

To deal with the problem, he said the city has been looking at taking advantage of low-interest rates by selling bonds to pay for its legacy costs.

But he added that Detroit filing for bankruptcy earlier in July could affect the region’s ability to borrow.

“It’s far too early to know what impact this filing is going to have on the municipal bond market for this region, but we’ll obviously keep a close eye on the situation and continue to study this option,” he said.

In addressing the city infrastructure, Ellison hinted at the possibility of requesting the commission place a road millage on the ballot.

“There are a handful of feasible options open to pay for these much-needed road repairs, and the city commission will closely consider them all before the end of this year,” he said. “But I am reasonably convinced that the decision will eventually be in the hands of the voters.”

It was another segment from Ellison’s speech that Poulton would not support.

He said with voters just approving the public-safety millage in November, it is too soon to ask voters to pay for road repairs.

“People are just trying to pick up the pieces and to saddle them with another obligation is inappropriate,” Poulton said.

But he found common ground with Ellison in selling bonds to pay for unfunded legacy costs and the development of parks, particularly incorporating water features into them.

“That’s a feature that young families that we are attempting to attract are looking for,” he said. “We just want a complete city.”

You can reach C & G Staff Writer Robert Guttersohn at rguttersohn@candgnews.com or at (586)218-5006.