GROSSE POINTE FARMS — As Yogi Berra might have put it, the proposed 2014-15 Farms budget is a case of déjà vu all over again.
“Next fiscal year’s general fund budget is almost a carbon copy of this year’s budget, with an increase in expenses of less than 1 percent,” City Manager Shane Reeside said in an email interview. “The city is operating on the same budget numbers it did going back to fiscal year 2008-09, and the average tax bill is less than it was more than a decade ago.”
City Controller/Treasurer John Lamerato said the general fund budget of just over $13 million is only up about $84,000 from the 2013-14 budget, and the city expects to retain its current tax rate of 14 mills for the coming fiscal year, which starts July 1. As a sign of recent challenging economic times, he said the 2014-15 general fund operating budget is lower than it was in 2003-04.
On a positive note, Lamerato said they anticipate having about $3.6 million in unassigned fund balance, which equates to roughly 28 percent of the general fund budget.
“We like to try to keep at least 25 percent of our general fund budget (in fund balance),” he said.
If the Farms still has more than 25 percent in its fund balance when the current fiscal year ends June 30, Lamerato said they might transfer anything over that amount to the capital projects fund to use for a future project or purchase. Reeside said the city needs to rebuild its capital projects fund.
“(In the) next (fiscal) year, the city is increasing its funding for capital projects,” Reeside said. “We hope to see this trend continue.”
After an especially brutal winter, motorists likely will welcome news that roads will be a major focus in the coming year. Lamerato said the city intends to transfer roughly $525,000 from the general fund into capital projects for roadwork and replacement equipment, including a new rubbish collection vehicle that’s expected to cost an estimated $137,000. A new police patrol vehicle and a utility tractor are budgeted, as well, he said. But roads are the primary expenditure in this category, accounting for some $330,000 in Farms funds alone, he said.
“Next (fiscal) year, approximately $1 million has been budgeted (for) capital projects,” Reeside said. “The largest single expense is for road resurfacing. This will be augmented by federal and county grants for repaving a section of Moross Road (from) Ridge to Lake Shore Road, and Mack Avenue (from) Fisher to Moross.”
Smaller city road projects include portions of Lexington, the Mack alley between McKinley and Fisher, and Mount Vernon, Lamerato said. As to Mack resurfacing — likely to start after July 1 — the Farms’ share is about $100,000 for the $2.5 million project, which covers all of Mack in the Farms and Grosse Pointe City, as well as a small section in Grosse Pointe Park, along with the corresponding Detroit side of the street, he said.
“That’s a big project that’s going on this summer,” Lamerato said.
While some cash-strapped communities have had to forgo some road maintenance and repairs in recent years due to the recession, the Farms has continued its annual road program. Lamerato said they’ve spent about $300,000-$500,000 each year over the last three to four years on roads, to keep small problems from becoming bigger ones.
“We think our roads are in pretty good shape overall,” he said. “We try to keep up with routine maintenance before it gets to the point where they need total replacement, which is a lot more expensive.”
The city expects to benefit this year from a slight increase in state-shared revenue: Lamerato said they are likely to receive about 5 percent more than last year, or roughly $40,000 more, for a total of around $770,000.
Property values are also on the rebound, but low inflation means that the most the taxable value on a home that hasn’t been sold in the last year can go up is 1.6 percent, he said, “even though (the value) on your home may have gone up more.” For the average homeowner in the Farms, with a home having a taxable value of $180,000, Lamerato said that means their tax bill for city services would increase about $40 over the course of the year — less than $4 per month.
But new construction is slated to bring in about $138,000 in the 2014-15 fiscal year, with several new homes already built or in the process of being built, he said. The additional tax revenue is based on each home’s stage of completion as of Dec. 31, 2013, Lamerato said.
Retiree pensions and health care have become a challenge for many cities in the wake of the recession, particularly with skyrocketing annual increases in health care costs. But here, too, Lamerato said the Farms is “doing very well.”
He said the pension, at press time, was 108 percent funded for public safety and 88 percent funded for general employees.
“We’re in pretty good shape there,” Lamerato said.
It’s a different story with regard to retiree health care.
“We’ve been prefunding our retiree healthcare, but it’s still a large number that’s unfunded,” Lamerato acknowledged.
Retiree health care is about 23 percent funded for public safety and only about 3 percent for general employees, but he noted, “We continue to prefund those (accounts). We contribute more than what’s going out.” By contrast, many municipalities have been forced to cover these costs on a pay-as-you-go basis.
In addition, Lamerato said they’re eliminating future liability by putting new hires into a health savings account plan instead. He said the Farms — along with the other Pointes — is self-insured with regard to health care, which has kept costs down.
City Council member Louis Theros, who chairs the Budget and Audit Committee, could not be reached before press time for comment on this year’s budget.
Although the Farms still is operating on a relatively lean budget, administrators say they’re trying to deliver the best service possible to residents.
“Our priority is to continue to provide a high level of service and invest in the city’s infrastructure,” Reeside said.
At press time, the City Council was expected to vote on the budget during a public hearing at the next regular council meeting, scheduled for 7 p.m. May 12 at City Hall.
The proposed budget can be viewed online on the city’s website, grossepointefarms.org.