Roseville receives 2019 financial report

By: Brendan Losinski | Roseville - Eastpointe Eastsider | Published January 17, 2020

 Photo by Brendan Losinski

Photo by Brendan Losinski

David Harrington, of Plante Moran, gives a presentation on Roseville’s financial position at the regular City Council meeting Jan. 14.

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ROSEVILLE — Roseville leaders received the results of the city’s 2019 annual financial audit, performed by Plante Moran, and were presented with the findings at the regular City Council meeting Jan. 14.

David Harrington, an office managing partner for Plante Moran, gave the presentation and reported overall positive observations given Roseville’s financial position.

“Excellent, important and strategic decisions were made to balance the budget and focus on the long-term impact of legacy costs,” Harrington said. “They adjusted the budget so it could be balanced and broke out the police and fire pension plans so they could isolate the costs, since it was such a significant part of their costs, and deal with it as an individual issue. To get to that point and begin to address all these ongoing issues showed a lot of good problem-solving. It is still in process though.”

City Manager Scott Adkins said he was pleased with Plante Moran’s findings and said the city has been working diligently to maintain its finances as well as possible.

“We had an increase of revenues and a reduction of expenditures, which means we are on the right path. … We’ve been looking for the best bids, consolidating services, joining cooperative services whenever possible,” Adkins said. “Trying to spur reinvestment in both residential and commercial properties is a big push we’ve been making. It’s all part of preserving the community. You have to cut costs, but you can’t do it at the expense of residents, because then people will leave the community and you get no new residents, which is what kills cities.”

General fund revenue for the city increased from $34,440,000 in 2018 to $35,723,000 in 2019. General fund expenditures increased slightly from $35,311,000 to $35,677,000 in the same time frame. The city also was able to maintain a fund balance of $3,528,181. The fund balance is the city’s “savings,” or unassigned money that can be used in the case of unforeseen costs.

“I was very impressed,” said Roseville Mayor Robert Taylor. “I was impressed by John Walters, our finance director. He worked hard to keep our costs down.”

Both Harrington and Adkins stressed that despite the strides made by Roseville, many of the city’s financial issues are caused by factors that are determined at the state level.

“Ultimately, state revenue sharing and legislative change is necessary for real, permanent change,” Adkins said. “When you look at the amount of property tax and revenue sharing lost from 2008 to today, we are not able to regain that, and over the period of time, you are looking at millions of dollars that, without any control by the city, have disappeared and can’t be regained. When you are getting $8 million less each year for 10 years, that’s an enormous hit. For us to still be providing good community services and still having any level of fund balance is almost a miracle.”

Both said the Headlee Amendment and Proposal A, which are measures passed by the state of Michigan, limit the growth a city can make, which they said has been devastating for communities such as Roseville since the financial crisis of 2008.

“The Headlee Amendment and Prop A only allow for property values to go up at the rate of inflation, but they can go down, which is what happened in 2008, as far as the property values can go down,” Harrington said. “This meant that the city has been making a minimum of $8 million per year less than they were making in 2009. They had to maintain and provide services to a mature community with dramatically less revenue.”

“I think we’re in as good a position as we can be, given the circumstances and based on factors out of our control,” Adkins said. “When you are capped by the Headlee Amendment and we can’t control state revenue sharing, there’s only so much you can do. We have been doing everything we can by cutting expenditures without diminishing services while looking for alternative revenue sources without raising taxes.”

Harrington said his best advice for Roseville is to keep looking at the future whenever possible.

“I think they need to look at their contracts and make sure they are taking the long-term impact of these decisions into account,” he said. “We worked with the city manager and finance director to take these more long-term matters into account and not just worry about making it to next year.”

Adkins said the city is on the right track, but there are many things that have to change before it can be considered to be on strong financial footing again.

“I think the basic message is we are still cautious about the economy and that we are being as proactive as possible to protect city services and operations without an undue burden on residents,” said Adkins. “It’s difficult for most people to understand how finance and tax structure works, but to be where we are today in light of all of these outside influences that affected us in the last 12 years is a testament to how the people working for Roseville are working every day to maintain what we have and improve where we are.”

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