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GROSSE POINTE CITY — Grosse Pointe City is hoping to brace for financial challenges in the future by budgeting out further.
City Manager Joseph Valentine proposed implementing a three-year balanced budget this year as a way to prepare for lean times and avoid depleting the unassigned fund balance — aka the city’s rainy-day fund. Valentine said a longer-term perspective “gives you more time” to anticipate needs and make changes.
During a March 18 City Council meeting, Valentine shared financial projections for the next five fiscal years, along with a look at where the city has been financially over the last couple of decades.
“We’re at a point now where we need to make some changes,” Valentine said. “We’re going to have to really reassess how we’re doing things here.”
As budget history shows, the city was on the verge of depleting its reserves multiple times over the last two decades as revenues dipped substantially while costs continued to rise. Valentine said “a lot of hard work” by city staff and administrators enabled the city to balance its budgets and continue to offer the same services.
City Councilwoman Maureen Juip said it’s easy to say the city can just cut costs, but the city has been doing that steadily for the last 17 years.
Since 2007, the city has reduced its staff by 21 positions, going from about 80 full-time staffers to about 59; eliminated pensions for new hires; contracted out emergency dispatching services; gotten rid of cost-of-living adjustments for active employees; moved to a higher-deductible health care plan; eliminated pay raises in some years and lowered health savings account contributions from 75% to 50%.
After the Great Recession circa 2008, it took until 2022 for the city to get back to its pre-recession tax revenue collection of 2007 — a 15-year span.
“We knew it was going to be 15 years before we got back to where we were,” City Councilman Christopher Walsh said. “We’ve squeezed the lemon for all the juice we could get, and now we’ve got to consider more dramatic measures.”
Valentine’s suggestions to address declining revenues and rising expenditures in the future included reviewing the city’s fee structure to make sure they’re covering their costs, reviewing project estimates to keep from being surprised by higher-than-expected bids, and looking at ways to find funding other than the city’s operating levy, which reached its cap in 2016 and has been subject to Headlee rollbacks. Another option is exploring opportunities to share services or equipment with neighboring communities, especially when it comes to big-ticket items.
“It’s very interesting to see how much we’ve been doing with so little,” Mayor Sheila Tomkowiak said. “We’ve been doing it on the backs of the employees.”
Tomkowiak said they’ve been concerned about employee retention and need to restore staffing levels at least somewhat and provide incentives to reward and keep the staff they have.
The city also needs to find a way to save for larger projects and purchases, other than relying on savings from the previous fiscal year.
“At some point, I would like to see a line item in the budget for capital improvements,” Tomkowiak said.
