Shelby Township faces continued budget deficits in 2013
Published December 10, 2012
SHELBY TOWNSHIP — Following the first general-fund deficit after three years of budget surpluses, the proposed 2013 budgets forecast more economic turmoil.
After adopting the final adjustments to the 2012 budget at the Dec. 6 Board of Trustees meeting, Shelby Township lost roughly $400,000 from its general fund, running its total to approximately $9.7 million.
And township officials agreed that continued falling revenue and the rising cost of personnel could make that a trend, rather than an anomaly.
“In 2013, $600,000 is what we’re looking at for a deficit,” Township Supervisor Richard Stathakis said.
The forecasted 2013 general fund shortfall comes despite a proposed drop in expenditures from $15.2 million in 2012 to $14.9 million. A fall in revenue from 2012’s $14.7 million to $14.3 million leaves the township in the red.
“Now, we always say at the beginning that it’s (the forecasted result) if we don’t make any changes,” Stathakis said. “And we’ve got to make some changes, and we will make some changes.”
The trends continue in the fire and police funds.
In the fire fund, revenues are set to drop by almost $500,000 from 2012 to 2013. That falloff is offset with a reduction in expenditures from $14.5 million in 2012 to $13.6 million in 2013.
“Everybody talks about a financial cliff; well, we have our own definition of a financial cliff,” Stathakis said of the forecasted deficits that extend from 2013 to 2017.
“In the fire fund, if we don’t make any changes, and we are going to, the fund balance will decline from about $14 million or so, all the way down to $7 million.”
The cliff is even closer in the police fund, as the fund balance for that department at the end of 2012 was $8.5 million, which is just more than 50 percent of the department’s total operating budget. To contrast, the 2012 township general-fund balance accounted for 63 percent of its operating budget.
“The police fund, we’re a little more desperate to cut back,” Stathakis said. “In 2013, our (police) fund balance is about $6.5 million, and that’s declining by about $2 million a year, which means that we will be out of money in the first quarter of 2016.”
The revenue in the police fund is forecasted to decline from $13.8 million in 2012 to $12.8 million in 2013, and expenditures in the police fund are forecasted to fall from $15.9 million in 2012 to $14.9 million in 2013, which would leave $6,555,277 in the police fund balance, or 43 percent of the 2013 operating budget.
Members of the Board of Trustees have contended that a major drain on both the police and fire funds are the costs associated with pensions for retired police and fire employees.
“The current business model is unsustainable and needs to be reformed,” Township Treasurer Michael Flynn said of the police and fire pensions.
“For instance, we need to look at retirement age. You can’t have people retiring in their mid-40s, collecting benefits for the rest of their lives and putting people at risk for tax increases.”
While discussing the police and fire budgets, Stathakis outlined a plan to negotiate defined-contribution retirement plans similar to traditional 401(k) retirements with both departments, rather than the defined-benefit plans that are currently in place.
“That’s why — the police contract negotiations — it’s going to be very, very crucial to really saving our department and making it the way we need to make it,” Stathakis said of the current contract negotiations between the township and its police unions.
“And we’re looking at some big savings and concessions because, right now, even though we’ve made some cuts, this is not nearly enough. And we’ll be looking at some really strong concessions from everyone in the next two years.”
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