Eastpointe to have ballot proposals in bid to close budget gap

By: Kevin Bunch | Roseville - Eastpointe Eastsider | Published October 9, 2013

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EASTPOINTE — The city of Eastpointe is going to have three ballot proposals for its voters to decide in the November election, and all of the proposals aim to narrow the city’s budget hole.

The first proposal increases the maximum-allowed mills the city can collect on a regular basis from 15 mills to 20 mills. City Manager Steve Duchane said the city currently collects 12.17 mills, plus an additional 7 mills in a special levy, for a total of 19.17 mills. A single mill is $1 for each $1,000 of taxable value.

The second proposal would override the city’s Headlee amendment reduction in the millages it can collect, so the city could collect the full 20 mills, if approved. Otherwise, the city would be limited to the 19.17 mills it collects now, Duchane said.

“So this would allow us on a regular basis to be at 20 mills, subject to the Headlee rollback,” Duchane said. “It’s only an additional 0.83 mills in actuality, but that does allow us to bring in slightly more revenue to offset the considerable taxable value losses we’ve had.”

The Headlee amendment limits the amount of money a city can collect in millages, rolling back the amount of money a municipality can collect over time. If property values increase, the reduction effectively allows the city to retain the same collection levels. On the other hand, Duchane said if property values fall like they did in 2008, the city collects much less money than it originally could have.

“Basically, it would bring (the millage) back up to the allowable maximum without the rollback,” Duchane said. “The average resident property in Eastpointe has dropped by a minimum of $12,000 in taxable value since 2008, with ’08 being the big-chunk loss.”

“The average tax bill is less by $407 per parcel,” he added. “You cannot grow your way out of it.”

He said that if the override proposal passes, the city’s millage collection would reset to the full amount. The millages would still be subject to future Headlee rollbacks as property taxes increase, Duchane added.

If both proposals pass, Duchane said the city would collect an estimated $385,000 in the first year.

The third proposal gives the statewide Municipal Employees’ Retirement System (MERS) corporation the authority to administer the city’s pension system, saving Eastpointe a projected $300,000, Duchane said.

Duchane said the city’s unions have all agreed to move to MERS for current and future employees, but a ballot proposal is necessary to move current pensioners to the system. He said the level of service is required to be the same as it is under the city’s administration, but this way would save money.

Not everyone agrees with Duchane’s assessment of MERS, however. Mayor Suzanne Pixley was the lone council vote against putting the retirement ballot proposal up, and said she did not believe MERS would be a significant savings over the existing pension board’s system.

Pixley, who also serves on the city pension board, said that under the current system, the pension board can change administrative companies and banks, and has more control over how the money in the pension system gets invested. Under the proposed amendment, she said the city would be locked in to MERS without an option to drop them if the city is unsatisfied.

“I just don’t think MERS is going to be a better thing,” she said. “I don’t like the idea of getting into something we can’t get out of.”

Duchane said these savings and revenue gains are important to helping the city close the budgetary red ink that is projected to hit in 2016. With no change to the current situation, he said the money would run out along those projected lines, as the city is currently using money from the general fund for approximately 24 percent of its operating expenses.

“It continues to punch a bigger hole in an insolvent budget, and as it is, we are structurally insolvent,” he said. “(The council and I) all agreed that we’ll all be cash insolvent by 2016, so if they don’t pass it, it accelerates the loss, and we’re having a $2 million hole to fill right now, and that takes a step toward that structurally unbalanced budget.”

If the proposals fail, Duchane said the city would continue to find smaller cuts and ways it can trim the budget, though he recognized there would still be ground to cover, even if the proposals pass.

C & G reported in August that under a city Economic Realities Report, Eastpointe has reduced its workforce from 180 employees in 2003 to 99 in 2013, but the state’s personal property tax reform that goes into effect in 2014 will slash an estimated $150,000 from Eastpointe’s general fund revenues next year.

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