Cities in a Budget-Bind
 
Introduction
 The City of Pontiac's financial problems are severe, and The Oakland Press has month-after-month reported and editorialized about those problems. The magnitude of Pontiac's budget shortfalls and deficits is greater than Royal Oak's, but there are similarities in the causes. A January 21, 2009, article in the OakPress surveyed how state-appointed emergency managers have addressed the financial difficulties in several cities. Not all of the evaluations and suggestions coming from the state-appointed managers apply to Royal Oak, but enough of them do to make the newspaper's article helpful. The piece was written by Carol Hopkins.

Other cities in 2010

Cities throughout Michigan and nationwide are experiencing budget problems in 2010. Some, like Pontiac, are being or have been controlled by a state-appointed financial manager. As the year progresses, VersagiVoice will monitor reports about their experiences.

►The Troy Chamber of Commerce has come out in favor of a proposed maximum 1.9 millage increase for a period not to exceed five years. "A millage increase is not desirable, but [it offers] an opportunity to preserve services while we shift out of crisis and into a solution identification mode. The Chamber's letter in The Oakland Press goes on to mention the prospect of diminished public safety and the like, if voters reject the proposed increase.

Another letter on the same day urges a No-vote. "Frankly, I'm sick and tired of taxes and of those who continually prove they cannot live within their means so they always turn to taxpayers with warnings of 'dire consequences' should they vote it down."

Bloomfield Township seeks  1.3 mills
All revenue restored by the sought mills "would stay in Bloomfield Township to provide the same level of public service, including the level of coverage for police, fire and EMS currently employed," according to an official's statement reported in The Oakland Press. Other cities will be watching for the results of the 23 February election.

Ferndale has decided not to seek a vote on its plan to renovate city hall and and to erect a new courthouse. Two companies have provided bids on the plan, but facing a $3 million budget shortfall and resistance from residents and business owners, officials decided to postpone the project. In the press report, City Manager Bob Bruner is quoted as saying, "Without significant cooperation from  the unions, the council will have to reduce the number of city employees by approximately 30 positions to balance" its fiscal 2011 budget. -- The Oakland Press

Thirty central administrators and school principals in the Novi School District have agreed to an immediate 1.5% wage decrease, according to another OakPress report.

 

 


 

 

 Before 2010, VersagiVoice commented:

To begin
There are no magic bullets, but there are actions which have worked, over several years, when they were mandated. Among them:

  • Close/privatize/outsource selected departments.
  • Sell surplus property.
  • Dissolve Downtown Development Authority
  • Reduce the pay of elected officials
  • Replace elected officials with an emergency manager
  • Really renegotiate labor agreements. (Apply them to current employees, not just to new hires.)

For Pontiac, an emergency financial manager who worked with Ecorse and Hamtramck, recommends: Close the Department of Public Works, sell all surplus property, close down all tax increment financing districts, and pay off the bonds. About those TIFA districts, Louis Schimmel is quoted as saying, "There are millions going to these authorities. They're swimming in money. That money should go to the general fund and I'd have enough to pay for police and fire."

About selling all surplus assets, Schimmel says, "[City officials] shouldn't worry about the sale price. Sell to private parties you can tax and make your money that  way."

In Ecorse, Schimmel was given authority to replace the elected mayor and council members. He privatized the Department of Public Works, sold its building and equipment, negotiated with the department's 25 employees to terminate their services in exchange for a negotiated finance settlement. Public Works employees retired, were bought out or dismissed.

In Hamtramck, he renegotiated labor agreements, sold the public works building to a private charter school, took over the downtown development authority, and "flat out ran the town," according to Hopkins's article.

Another emergency manager was involved in Flint, and city officials recall massive reorganization and layoffs and "spending cuts on everything." The city shut down rec enters and "any nonessential services were greatly reduced or eliminated." Fees were increased and Council members pay was reduced. The emergency manger, Ed Kurtz, converted the golf course to an enterprise fund.

In Highland Park, emergency finance manager Ramona Henderson Pearson instituted a hiring freeze and suspected elected officials' salaries and benefits. She laid off all police and contracted with the Wayne County Sheriff's Department. In July 2007, the police department was reinstituted, according to the OakPress article.