Harper Woods City Council approves 2014-15 budget

By: April Lehmbeck | Advertiser Times | Published November 19, 2014

HARPER WOODS  — Prior to starting the budget process weeks ago, City Manager Randolph Skotarczyk said it was going to be a tough process.

While that sentiment seemed to ring true based on the discussion about the city’s financial needs during the Nov. 3 council meeting, the council approved a budget that keeps the Public Safety Department intact and doesn’t hit residential services.

Yet, there were cuts, and the city is once again including a special assessment for police and fire services. The City Council approved the 2014-15 budget unanimously Nov. 3 after it had met for several budget sessions in recent weeks.

“This budget in the revenues does include a 15 mill police/fire assessment that will generate $3,055,300,” City Manager Randolph Skotarczyk said.

“Without that money, we would not be able to run Public Safety,” he said. “We just don’t have enough money to run it.”

The budget also includes fewer mills since the city paid off the previous road bond debt.

“The fact of the matter is we are reducing the tax 2 mills from last year,” Council member Charles Flanagan said of the road bond levy.

The city’s general fund revenues are almost $11 million.

The good news is that the city’s housing stock taxable values are moving in the right direction and the city is gaining population, but that isn’t resulting in increased tax revenue right now.

“The tax revenues generated from property taxes are only anticipated to be $4.2 million as compared to $5 million in 2013 in actual collections and $4.3 million from the 2014 budget,” Skotarczyk said.

“We are seeing a slow recovery of taxable value, but it is a recovery,” he said. “It looks like we will have a positive equalization ratio for the first time in six years, I think. That doesn’t translate into dollars for the city immediately. It’s a very slow process.”

The final fund balance will be more than $700,000, which is about 8 percent of expenditures.

“It’s doable,” Skotarczyk said of the fund balance. It’s not optimum. Optimum is to maintain at least 11 percent fund balance.”

To make ends meet, the city included minor cuts to the district court, Finance Department and Treasurer’s Department.

While the Public Safety Department did make some cuts not involving personnel, the department has plans to add a couple of police officers through a grant that the city acquired.

Overtime in the police and fire departments will take a hit to keep costs down.

“Those will be difficult cuts to maintain, but we’re going to do our best working with the director of public safety to try and keep those in line,” Skotarczyk said. 

Another area they cut was the building fund, but there are needs that will now not be addressed in this budget.

“I will caution that we have significant infrastructure problems in this (City Hall) building that we’re unable to repair, but in order to make this budget work, we were unable to put any additional funds into the building,” Skotarczyk said.

The city’s pension fund will not receive the full, required amount this year, either. The city will contribute $1.7 million, but $2.3 million is the annual required amount.

The difference is going to be used to help the city maintain operations.

“We’re already hard-pressed and stretched as far as we can,” Skotarczyk said.

“There’s not fat sitting on this budget,” he said.

Skotarczyk praised the city unions for the discussions he’s had with them to cut pension costs. For example, they’ve agreed to changes for new hires, and they’re talking about changes for current staff to help the pension fund down the line.  

“It’s important for people to understand that it’s these legacy costs that are so hard for us,” Mayor Ken Poynter said.

He also noted other rising costs, including insurance rates, which he said “just go up astronomically.”

Yet, he wants residents to know that “we’re still not paying more in taxes than what we did 10 years ago,” Poynter said.

In other funds, the city needs to transfer about $125,000 from the local street fund to the major street fund to balance that budget. The city is continuing to work on deficit elimination plans for its refuse fund and vehicle equipment funds.

The library is dipping into its fund balance slightly to balance its budget.

The water and sewer fund is looking better than it did a few years ago.

“The water and sewer fund is a far cry from 2012, when we were working with a $1 million deficit,” Skotarczyk said. “Now, we’ve got that fund fairly healthy.”

During the hearing of the public, one resident stepped up to the podium to say that maybe they need to file for bankruptcy to cut some fat, noting the continuing need for the public safety assessment.

City officials, however, said that the city wouldn’t qualify for bankruptcy because there are areas to cut — areas that would be highly unpopular with residents.

Bankruptcy could mean losing police officers, Poynter said.

“We need as many police officers as we can get in Harper Woods because of what we’re surrounded by on two sides,” Poynter said.

Poynter also said that Skotarczyk has training as an emergency financial manager.

“We will get out of this,” Poynter said. “We’re beginning to see the light at the end of the tunnel, as I’ve said a number of times before.”