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Audit shows township is in solid financial state

By: Nick Mordowanec | Fraser - Clinton Township Chronicle | Published October 7, 2015

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CLINTON TOWNSHIP — Years after the recession, communities such as Clinton Township are seeing the fruits of their labor work for them.

In a recent audit presentation by Plante Moran representatives at the Sept. 21 Clinton Township board meeting, results showed good signs of financial footing.

The presentation featured the accurate portrayal of financial statistics that have been unmodified by auditors, with accurate monthly updates occurring year-round to allow the township to continuously make the right financial decisions.

The audit results were for the fiscal year ending March 31, 2015.

General fund revenue for fiscal years 2014 and 2015 were first featured, with the 2016 budget and projections for 2017, 2018 and 2019 also included. Plante Moran stated that the revenue totals are consistent, with the biggest piece being state-shared revenue, which comes from the state and is driven by sales tax.

State-shared revenue experienced a modest increase due to more revenue than what the state originally anticipated.

From 2013 to 2014, total net position related to the township’s governmental activities rose about $8.4 million — with about a $7.5 million increase occurring as a result of revenue-exceeding expenditures due to additional tax revenue generated by the police and fire millages in November 2013.

Revenues are exceeding expenditures across all government funds by an approximate $2.4 million. This is due to closely monitoring expenditures, a lag in the hiring of unfilled full-time vacant positions due to retirements, and the deferment of capital expenditures.

The Department of Public Works and the Building Department saw an uptick in expenditures that were capital-related. To elaborate, an increase in 2016 expenditures is the result of such things like expected parking lot improvements at the township’s Civic Center.

Property taxes, which compose about 69 percent of the total source of revenue within the township, experienced a net increase of 1 percent due to an increase in taxable property values of approximately 1.4 percent — which was offset by losses in prior year tax revenues from Michigan tribunal appeals.

It’s the first year of taxable property value increases in six years within the township, with the prior five years experiencing deductions that totaled 25 percent.

Property taxes are vital to the police and fire funds.

Police fund expenditures have been fairly consistent between 2014 and 2015, and a modest increase is expected once the department reaches full employment. As revenues increase, so will expenditures.

The fire fund is in the same boat, and from 2016 to 2019, approximately $500,000 per year will be transferred from the fire fund to the fire equipment fund. Like the police fund, it is on solid footing.

The water and sewer fund includes operating and nonoperating revenue. Operating revenue relates to revenue generated from rates and charges, while nonoperating revenue refers to capital revenue. From 2014 to 2015, operating revenue increased slightly, and that trend will increase based on the 2016 budget. Operating expenditures are on an upward trajectory.

Water rate increases that were approved during the same meeting do not factor into the audit.

Significant obligations show the value of assets, with a portion of money that hasn’t yet been set aside for township contributions toward police, fire, the general fund and pensions. Also, some money is set aside for retiree health care premiums on a pay-as-you-go basis.

There’s around $188 million in assets set aside, and $297 million of total liability.

“The overall summary (is that) your main operating funds are in solid, very strong financial condition on March 31, 2015, which allows you to address some of the legacy liabilities that you have and be very strategic,” said Plante Moran representative Dave Herrington. “In a time when the economy was extremely difficult for local governments, this board and the department had everybody pitch in and find a way to be fiscally responsible.”

In terms of health care funding, Herrington said the township is “one of the best in class” and better than 90 percent of communities.

“This is a conservative budget and it still shows growth in the fund balance, which is a very encouraging thing in the local government,” he said.

Board members perceived the audit as a result of strong financial planning, notably in the years since the economic downturn.

“It shows the years of cutting and watching the taxpayer dollars that this board has done,” Trustee Dean Reynolds said. “We’ve done a wonderful job and we need to keep it going.”