More belt tightening likely as City prepares next budget

By: K. Michelle Moran | Grosse Pointe Times | Published March 17, 2016


GROSSE POINTE CITY — Lower than expected taxable value increases are expected to put a crimp in the budget in the coming year.

In recent years, the City has been preparing five-year budget projections to help leaders plan for the long term and short term. But while property values continue to increase, a projected rise in residential taxable values of 1.6 percent for the 2016-17 fiscal year is turning out to be much smaller because of the low rate of inflation. During a Feb. 22 City Council meeting, City Manager Peter Dame delivered projections from Finance Director/Treasurer Kim Kleinow that show only a 0.3 percent increase in taxable values in the coming fiscal year, which starts July 1.

“The primary source of revenue that we have is property taxes,” Dame said. 

He said the reduction “immediately puts us into conflict” with the budget, especially with the City having already approved 2 percent raises for all staff members during the next two fiscal years. Projections for the next five years already showed expenses coming in slightly above revenues.

In addition, Dame said they’ve had to increase the City’s contribution from the general fund to retiree health care. 

“We’ve experienced an unprecedented number of people retiring this (fiscal) year,” Dame said. 

For 2016-17, the City is expecting to put $380,773 into retiree health care, and that contribution is slated to grow in each of the next five fiscal years, reaching $527,697 by 2020-21.

While the overall numbers aren’t as alarming as they were about four or five years ago, Dame said they still need to find new ways to cut costs.

“We can’t overspend and we can’t over-promise. … We don’t have any extra money laying around,” he said.

This month, the council is expected to discuss the budget and council priorities, he said.

“When do you start the budget process?” Mayor Dale Scrace asked.

Dame responded that they have already started. Draft budgets from each department are due in April, and a draft of the budget itself is expected in April as well, he said.

“In May, we have our public hearing (on the budget),” Scrace said.

Dame warned City leaders not to expect a large increase in state-shared revenue, despite a promise by state officials to give local municipalities more road funding.

“That’s not in our projections because I don’t believe that will happen,” Dame said.

The next City Council meeting is scheduled at 7 p.m. March 21. A public hearing on the proposed budget was slated, at press time, for 7 p.m. May 9, and the council was expected to approve the budget during a meeting at 7 p.m. May 16.