Hazel Park voters to decide how fire services are funded

Proposal seeks to create funding authority in Hazel Park, Eastpointe

By: Andy Kozlowski | Madison - Park News | Published January 21, 2015


HAZEL PARK — On Tuesday, Feb. 24, voters in Hazel Park and Eastpointe will be asked to approve a joint funding authority that would provide fire services in both cities. For the average resident of Hazel Park, the measure would cost an extra 38 cents a day, or roughly $139 a year, for the next 20 years.

Currently, both police and fire in Hazel Park is funded by a five-year 9.8-mill special assessment that was approved by voters in 2011. The special assessment was meant to bring in $2.1 million, but in mere years saw that reduced to $1.2 million, due to declining property values.

Now the situation with the housing market looks more stable, with property values on the rebound in Hazel Park. But the city has already cut to the bone in every department. The single largest cost continues to be public safety, and Hazel Park is struggling to find new sources of revenue to maintain these critical services.

That’s where the proposal for a new funding model comes into play. For Hazel Park, the new model would reduce the 9.8-mill special assessment to 2.8 mills, but then request an additional 14 mills, bringing the total millage rate for police and fire to 16 mills.

This would then form a joint authority called the South Macomb Oakland Regional Services Authority, or SMORSA, which would collect taxes from Hazel Park and Eastpointe, and then redistribute them to fund each city’s fire services.

The measure would also allow the city’s other municipal departments, including police and public works, to maintain their current level of service.

Hazel Park City Council approved the ballot proposal by a 5-0 vote on Aug. 25. If the proposal were to fail during the election in February, the city would simply return to the 9.8-mill special assessment currently in place, but city officials say this would be inadequate to continue funding services, and would run the risk of a significant deficit this year that could potentially wipe out the city’s cash reserves.

“It’s critically important for our city’s future,” said Hazel Park City Manager Ed Klobucher. “This is the only way we’ll be able to maintain the kind of services our residents have become accustomed to. We do a very good job in Hazel Park of delivering cost-effective services. However, both Hazel Park and Eastpointe saw their taxable values devastated by the foreclosure crisis in 2008 … and we’re left with a situation where it’s impossible for us to continue to pay for the services we provide now with the existing levels of revenue we have to work with.”

Klobucher said there is a fallacy, often brought up at the state level, where if two cities simply combine services, they’ll produce savings. But Hazel Park has tried this repeatedly over the years, with cities such as Ferndale, and time and time again, they’ve run into the roadblock of being unable to produce savings since they already run their police and fire departments so efficiently. Unlike those past attempts, however, this new proposal with Eastpointe is not a merger.

Klobucher said SMORSA is a necessary measure for the city of Hazel Park, but it doesn’t solve the greater problem facing cities across the state. He says that Michigan’s system of municipal finance is fundamentally broken, due to the interaction between the Headlee Amendment and Proposal A.

Because of these state policies, the city can only get 5 percent or the rate of inflation, whichever is less, from its current tax base. Due to the diminished property values, the city’s millage has been bringing in significantly less revenue than expected in recent years — around $168,000 per mill, or less than half their original value. Police and fire, in particular, would’ve been gutted if not for the measure that voters passed in 2011.

Klobucher said the city of Hazel Park is facing three problems beyond its control. Two of the three problems are issues that nearly every city in Michigan is facing: Diminished property values and reduced state revenue sharing. The third is unique to Hazel Park, Klobucher said, and that’s the decline of the racing industry.

He noted how in 1999, the city got almost $1 million in breakage money from Hazel Park Raceway; now, those revenues have slipped to just over $300,000. The track has enjoyed a second wind thanks to the return of the thoroughbreds, but it’s not back at the point where it’s a reliable source of revenue for the city. He said the state is to blame for its one-sided treatment of gaming in favor of casinos. For example, racetracks are limited in what gaming options they can offer compared to the casinos.

To stay fiscally solvent, an across-the-board 5 percent pay cut is permanently in effect for all bargaining units, and City Hall remains on a 32-hour work week, among other cost-saving measures. Further cuts would start to compromise city services and risk losing talented personnel to other communities that can offer competitive wages. As an inner-ring suburban community — and one more or less fully built out — Hazel Park was hit especially hard when the housing market crashed.

The financial company Standard & Poor’s (S&P) recognized Hazel Park’s progress by upgrading the city’s underlying rating for its general obligation debt early last year, raising it from A- to A+. It was the first time in several years the rating had been upgraded. The A+ means S&P believes Hazel Park is in a strong position to meet all current financial obligations. Strong city management, stable reserves and strong public support — such as 75 percent of voters passing the special assessment for police and fire in 2011 — all factored into S&P’s assessment.

Whether the city can maintain its delicate financial stability, Klobucher said, depends on whether SMORSA is approved by voters. Klobucher said it’s a good value, with the police department achieving the lowest crime rates in certain categories in decades, and the fire department quickly responding to every incident.

A town hall meeting was planned to take place Jan. 20, after press time, in the auditorium at Hazel Park Junior High, where city officials would discuss the ballot proposal with residents. Prior to the meeting, Hazel Park Mayor Jan Parisi said she believes SMORSA is absolutely necessary.

“We have to do something,” Parisi said. “We’re not a very wealthy community, and with our population having declined and staying low, we have to be creative. I think this SMORSA solution is genius, really. It’s about being more regional because we have to. Our fire and police people are the most expensive, but they’re also the most important for the residents, because they keep us safe.”