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Facilities bond payments to start in new fiscal year

By: K. Michelle Moran | Grosse Pointe Times | Published June 4, 2019


GROSSE POINTE CITY — Because interest payments on the voter-approved facilities bond start this year, Grosse Pointe City residents will be seeing their tax bills go up at the start of the 2019-20 fiscal year July 1.

The millage rate is rising from 16.6277 to 18.5721 this year because of the facilities bond, which is paying for new public safety and public works buildings and a renovated municipal court, the last of which will be moved into the historic old public safety building on City Hall property.

The Grosse Pointe City Council voted unanimously May 20 in favor of the new millage rate and the 2019-20 budget. The nearly $6.193 million general fund budget is only slightly higher than its predecessor of almost $6.023 million.

During a public hearing on the budget May 13, Finance Director/Treasurer Kimberly Kleinow said they were presenting a balanced budget “without a general operating property tax increase and also without using any fund balance.” The City has been at its Headlee cap for a number of years and therefore hasn’t been able to increase its general operating millage rate.

As is the case for the other Grosse Pointes, “we’re the most dependent on our property tax revenue,” Kleinow said. In the City, it accounts for almost 74% of total revenue.

The second-largest source of revenue for the City is state-shared revenue, at 9% of the total. The City expects to receive $536,639 in state-shared revenues during 2019-20, said Kleinow, but this revenue source has declined significantly over the past 20 years. Between 2003 and 2017, she said, they estimate that the City lost about $2.5 million in state-shared revenue.

Another budget challenge is health care.

“Our health care costs continue to rise,” said Kleinow.

Officials say the retiree health care trust has been drained to having less than a year’s worth of benefits, meaning that for the fifth straight year, the City is having to include a year’s worth of retiree health care in the budget; for 2019-20, the amount budgeted for retiree health care alone is $480,871.

It’s a cost that officials say is far outpacing what state leaders have deemed the rate of inflation — which was 2.4% this year. Kleinow said the City might exceed the state cap for current employee expenditures circa January 2020, which would mean the City would either need to “scale back benefits” or force employees to pay 20% of their health care costs.

The 2019-20 budget includes several large purchases, including a street sweeper, a fire truck and equipment, furniture and communications network systems for the new public safety and public works buildings.

“Our revenues are just barely enough to cover our expenses,” Kleinow said of the solid waste fund, which is exclusively for trash-related expenditures. Like the general operating levy, the solid waste levy is at its Headlee maximum, so City leaders can’t raise it. As a result, Kleinow said, the City has “no surplus for future capital expenditures.” The City has budgeted to replace its existing Cushman vehicles — which handle rear yard trash collection — over the next few years, and the City plans on using $200,000 in reserves to purchase a rubbish packer truck in the 2019-20 fiscal year, Kleinow said.

The Neff Park pool bond is decreasing, from 0.6919 mills this year to 0.6175 mills in 2019-20. City Manager Pete Dame said 2020 is “the last year” for the pool bond.

There are no parking fee increases planned for City-owned parking facilities.

City leaders praised administrators on the budget.

“These are times it’s not easy to balance a budget,” City Councilman Andrew Turnbull said. “(The City administration has) been able to do a fantastic job delivering balanced budgets and surpluses as long as I’ve been on council.”

City Councilwoman Sheila Tomkowiak concurred.

“My hat’s off to everyone who worked on the budget,” she said. “It’s tedious work, and it requires precision.”

Mayor Christopher Boettcher also thanked administrators for their efforts.

“Our road maybe has been a little challenging in the last couple of years,” he said, referring to maintaining services while also juggling myriad projects.