Ypsilanti City Council floats drastic ideas for solving budget crisis
The Ypsilanti City Council instructed city staff to begin investigating a wide range of solutions to its projected $10.69 million budget shortfall.
During a “free form” discussion at a special goal-setting meeting on Tuesday night, council members each offered ideas and thoughts on measures to close the gap.
Highlighting the gravity of situation, previously unthinkable ideas - such as merging with the township or loosening firefighter safety guidelines - were discussed.
So far dialogue has largely centered around generating revenue through a Water Street debt retirement millage and an income tax. Both issues would have to go in front of voters.
Council members said some of the ideas discussed on Tuesday, including merging with the township, were highly unlikely, but they wanted to explore all options before asking voters to approve up to two tax increases.
The combined revenue generated from new taxes would likely not entirely solve Ypsilanti’s structural budget deficit. The city has $9 million in reserves, which are projected to be depleted by fiscal year 2015. If only one tax was approved, the city would remain solvent for another one to two years.
Ypsilanti Mayor Paul Schreiber discusses the budget at Tuesday's meeting.
Tom Perkins | For AnnArbor.com
The city is paying $30 million in Water Street bond debt and recently made its first $472,000 payment. It must continue to make annual payments of $1.3 million through 2031.
City Manager Ed Koryzno concluded the discussion by summarizing short- and long-term strategies the city will start exploring.
Staff will begin gathering information on consolidating with the township, seek an agency to update an income tax study from the failed 2007 income tax campaign, consider how to proceed with a Water Street debt retirement millage, explore the possibility of selling park land or community facilities like the Frieghthouse in Depot Town and explore how a stormwater utility fee would be structured.
Staff will also begin to looking into short-term solutions. That will include considering abandoning of the fire department’s “two-in and two-out” rule, exploring how to control rising health care costs, gathering information on creating special assessment districts for street lighting, looking for $500,000 in cuts to the operational costs for the 2013 budget and figuring out how to educate the public and make residents aware of the situation’s seriousness.
“Whether (the ideas) are possible or not, let’s at least look into them,” Council Member Mike Bodary said, adding that he feels many residents aren’t aware of how bleak the financial picture is.
“They don’t know how deep this pothole in the road is. If they did, they would be totally shocked,” he said.
The “two-in and two-out” rule is a national industry safety standard that requires two firefighters to remain outside of a burning building while two go inside. But it means the department must maintain higher staffing levels, and eliminating the rule could reduce costs.
Council Member Lois Richardson also suggested the city consider a public safety department instead of a separate fire and police department.
Council Member Brian Robb said he wanted to see staff reduce the city’s operating costs from $6.3 million to $5.7 million. He also suggested looking into a special assessment district around street lighting throughout the city.
“Those are good numbers,” he said. “Not just to balance the budget but to prove to voters that we are doing every extreme thing short of closing of the city.”
Robb also continued pushing for a reduction in projected health care cost increases. The city projections have health care increasing at 15 percent annually, and Robb said Council Member Pete Murdock estimated the city would save $1 million through 2017 if costs only increased by 5 percent.
Koryzno said that would be an issue to be discussed in collective bargaining, and Murdock said he wanted to start negotiating with the unions and have a resolution by May.
A stormwater utility fee has also been regularly discussed in recent months. The city can determine how much of a property is not permeable and apply a fee to it that would be used for the city’s street fund for making road repairs. One of several formulas could be used to determine the fee, and it also applies to properties not on the city’s tax roll. The fee could be enacted with council vote.
Although staff was asked to look into what kind of revenue selling the Senior Center, Freighthouse or parks could generate, council members made clear they weren’t suggesting it as a good way out of crisis, but more for informational purposes.
Staff was also directed to begin looking into how to put the Water Street debt retirement millage in front voters and send out an request for proposals for a company to conduct the income tax study.
Mayor Paul Schreiber said he hasn’t spoken with many people who opposed the income tax proposal in 2007 and now are supporting it, despite the dire situation.
“Many of them sill don’t support it, but they don’t have any answers for us either,” he said.
Comments
jbhuron
Mon, Nov 7, 2011 : 5:55 p.m.
I have read Council's 90 pages of analysis they have put out over the last few months. Not one single mention of growing the population of the city!!! They continue to look for cut this and tax that. Where are all the ideas to grow our city again? We need bold decisions! We can sit around and analyze this terrible drop in property tax revenue, and act like it's some sort of situation we don;t have control over, or we can do something about it. Give people reasons to come to the city. Additional taxes are certainly not the way. 1. Call Burger King and see if they are still interested in purchasing at least a small corner of the Water Street black hole. Why not? 2. Regardless, we're pretty much going to be bankrupt in 5 years. Let's offer free property taxes to anyone who make the City their home for three years! (I know you say we can't afford it, but why not spend the moneywhile we still have to at least try and jump start growth). 3. Let's start assesing a fee in lieu of taxes to the churches in the city. There is no reason these groups should be able to avoid paying for property tax when we as tax payers pay to pave the streets and provide the water and infastructure to these temples! And since most are christian, I'm sure they won't mind helping their neighbor. 4.Fix the schools! The reason people are leaving Ypsilanti like the plague and new families are not coming in is because our schools are and have been a joke for too long. The Council needs to be present at every school board meeting demanding accountability and plans opf action for building a world class school system so our city can grow again. Only one of these increase tax. We need our leadership to look for ways to grow our way out this hole and not cut it to the point where noting is left. We only have a year or two, and I say spend the surplus now because really, what do we have to lose. Tell the leaders we need plans for growth in addition to plans for cuts.
15crown00
Thu, Nov 3, 2011 : 7:12 p.m.
it's simple you either cut expenses or increase revenue or a combination of the two.
greg, too
Thu, Nov 3, 2011 : 4:30 p.m.
It's quite scary the lack of knowledge that the citizens of Ypsi have about what is going on. There were maybe 4 citizens (outside of the councilmembers, mayor, etc.) at the meeting. You can't complain if you aren't doing anything to help. Whining on a newspaper board, throwing out crazy ideas without any actual knowledge of what you are talking about, and just sitting back and complaining isn't accomplishing anything. I am not sure what is scarier to me....the catastrophic financial straits of the city or the citizens complete lack of desire to do anything about it.
Mark Hergott
Wed, Nov 2, 2011 : 11:17 p.m.
The townships won't go for a merger. There is nothing in it for them. If people think the townships are predatory now, just wait until we have an income tax. We will have a ring of former city businesses just beyond the city limits within five years of the implementation of an income tax. No... the only reasonable, possible course of action is to leave the income tax issue behind, partner with Washtenaw county to build the rec center, campaign for a Water Street debt retirement millage, attack structural deficits, and push for the Townships to join us in a public safety authority. And then cut, cut, and cut some more. Look, bad times are ahead of us. That being said, if we can retire the Water Street Debt, build the rec center, partner with the Townships for public safety... maybe we can talk about merging in 2032.
Meaghan
Wed, Nov 2, 2011 : 7:01 p.m.
Mr. Bodary: I think many Ypsi residents are fully aware of how bleak the situation is. Perhaps if the City Council could come to an intelligent decision in a timely fashion and let residents know exactly what you need from us to help fix this problem, you'd be shocked at how fast many of us will step up to save our city.
Martin Church
Wed, Nov 2, 2011 : 4:49 p.m.
Guess the idea of taxing the rich did not work. The rich citizens of ypsilanti who wanted to make us a little ann arbor have up and left us with the bill. Now the city council and the mayor want to take more of our meger income to pay for the old leaders mistake. And getting rid of the two in two out rule will put the city at even more risk. the options offered are no good. but we can not continue to seek to tax our way out ether. let's start with a petition requireing the state to pay their fair share. Then hold our state officers accountable. where is our state rep and senator. Oh yea, blaming the republicans for their failures to address the problems. And congress, they still can not pass a budget. three years and no federal budget. 2012 will be the time to change the leadership. till then, Lets start dismantling the city hall. we have a new manager coming on duty, His starting salary better be $60,000 and not $100,000
maallen
Wed, Nov 2, 2011 : 4:27 p.m.
Here's a great idea since this is being talked about on the national level to solve our problems, let's bring it to the local level and incorporate an income tax in Ypsi on just the rich! Tax the rich in Ypsi! There problem solved! ;) I also find it quite comical that while the city council is looking for more "revenue" because revenue has fallen, they are willing to SPEND money to have a company conduct an income tax study. Whatever happened to the city council doing their jobs instead of paying someone else to do it for them? While non union employees have received 5% reductions in their salary, why not ask the same of the unions? That would save us a tremendous amount of money. Reduce the employee benefits (health insurance, etc). I am not saying raise the employee contributions to the plan, but reduce the benefit level to match the private sector by increasing deductibles, copays, and prescription copays. Raise fees for use of the park(s), swimming pool, recreation facilities. Eliminate the assistant city manager, there is no need for a City manager, Executive Secretary, AND an Assistant City manager. Reduce the City Managers salary, which is at $200,000. Many cities larger than Ypsi pays their City Managers less!
xmo
Wed, Nov 2, 2011 : 2:39 p.m.
I thought that "Obama Care" was suppose to reduce health care costs so why is Ypsilanti projecting "health care increasing at 15 percent annually," Who is Lying? The President & Rep. John Dingell or City Council? It would be a great article!
Snarf Oscar Boondoggle
Sun, Nov 6, 2011 : 3:47 a.m.
yes.
maallen
Wed, Nov 2, 2011 : 4:29 p.m.
lol The President and Dingell! I have asked many supporters of ObamaCare to show me one thing in the bill that will actually cause premiums to DECREASE and all I get is silence. Things that were put into the bill actually INCREASES premiums.
Bill
Wed, Nov 2, 2011 : 2:31 p.m.
If City Council members would like to have the city staff ignoring a federal saftey standard for firefighters then have the city council members take the place of the firefighters and put their lives in danger. Put the health care insurance out for bid, this is what most private businesses would do on a regular basis.
City Confidential
Wed, Nov 2, 2011 : 4:34 p.m.
They wouldn't ignore Fed safety standards. They just wouldn't fight property fires from the inside anymore.
no flamers!
Wed, Nov 2, 2011 : 2:20 p.m.
A merger of the City and Township wouldn't really be a "merger" but instead would be a "bailout." I live in the Township and enjoy nights out in Depot Town. I want the best for the City. That said, because the Township has far more voters that the City, merging the entities would only work if the Township was willing. And the Township would not reasonably consider merging unless/until the Water Street oppressive debt was previously resolved and the City was able to project financial stability. Otherwise, it would be like buying a non-refundable ticket for cruise on the Titanic just after you learn it hit an iceberg. Like I said, I want the best for the City but no one is coming to rescue Ypsi from either neighboring communities or Lansing.
Pete Murdock
Wed, Nov 2, 2011 : 1:55 p.m.
The general fund deficit number over the next five years is +/- $24M. Deficit defined as expenditures over revenues with no revenue increase or balancing contribution from fund balance (reserves). The lower number in this article excludes the Water Street Debt payments and includes an "automatic" increase of 8-9 mils in the police and fire pension millage to 14-15 mils by FY 2017. The addition of a Water Street Debt millage of 5-6 mils and the P & F pension millage of 8-9 mils plus a City Income Tax may not fill the $24M hole. One can argue the merits of an income tax versus a property tax but this would not be substituting an income tax for property taxes, it is increasing City property taxes by 40-50% plus adding an income tax. Shouldn't we be looking at the question of whether the 4 square mile area known as the City of Ypsilanti - given that a third of its value is tax exempt and financing options are severely limited by state and constitutional restrictions - is capable of being the public service provider for the residents in that geographic area. And if so, at what price. As we explore all the possible options, this question will continue to surface.
Suzanne
Wed, Nov 2, 2011 : 1:52 p.m.
Important bit of information... Two in/Two out is NOT Ypsilanti's policy. It' a federal mandate to ensure firefighter safety. If Firefighter A and B are in the fire and A goes down, C and D must be at the ready so C can bring A out to safety and D can remain in the fire with B. No firefighter is ever to be in the fire.
City Confidential
Wed, Nov 2, 2011 : 4:33 p.m.
Well, the way the chief described it, those figures are only for going in to property fires (when no one is trapped). There are no mandated staffing numbers for going into life-saving situations (person trapped) and the proposal is that property fires would no longer involve firefighters going in - i.e. let property fires burn inside, fight outside only. Home owners insurance rates would likely rise when insurers realize that property would be allowed to burn inside.
Andrew Jason Clock
Wed, Nov 2, 2011 : 1:37 p.m.
Well, at least Pete and Brian have the right idea whither cutting structural budget items. And as much as I loath the idea' we should start the proccess of merging police and fire. As to not following fire safety rules, that wont save us much once IDEA starts fining us and insurance rates skyrocket. Mr. Mbodary, I question how well you understand our situation, because most residents I've ever talked to get it pretty well. Still not one single idea to work on reversing declining revenue in the long term. Not one. Don't tell me everything is on the table until you get moving on re-tasking the DDA, improving customer service, and the partner with Washtenaw Parks & Rec to improve amenities. Everything on the table ought to include more than taxes, cuts, and earth violations. Show us you believe in our city, not just in cutting it up..
pseudo
Wed, Nov 2, 2011 : 1:17 p.m.
You know, I know I sound like a broken record but geez, can't we get a clue. Less than 1/2 of the people who use our city infrastructure and services pay local taxes. An income tax (with appropriate real estate tax reduction) would be fair and raise more revenue. Ypsi is saddled with more than our fair share of 'off the tax roles' properties - beyond just EMU. Income tax would be across the board and doesn't have to be a further drain on moderate income property owners if it is accompanied with property tax reduction. Come on, folks, get a clue. Quit gasping and grasping your wallets like this is something that isn't required for our city to survive.
Steve McKeen
Wed, Nov 2, 2011 : 1:25 p.m.
The mayor told me he was against a property tax reduction.
cinnabar7071
Wed, Nov 2, 2011 : 1:05 p.m.
So you waste our money then think all you have to do is ask for more? Let me know how that works out for you? When I waste my money, its my budget that gets cut, as you are about to learn. Suck it up cause you aint getting a penny more out of the Tax Payers.
Dirtgrain
Thu, Nov 3, 2011 : 11:23 p.m.
Your statement makes it sound like all of the tax money the city collects is wasted; that's not the case. We have had good services in this city. The Water Street fiasco still makes me very angry, but it's in the past. My anger does not blind me. If we want to avoid future Water Street fiascoes, then we should make it a requirement that major spending plans be put before the voters. The Bush Tax Cuts, rising health insurance costs, and Snyder's budget cuts and corporate tax cuts have left us in a financial crisis that is not about wasting money; it's about a starve-the-beast strategy that is trickling down woe on local governments. A city income tax would help us, although I'm not sure it's enough. I'll vote for it again.
lumberg48108
Wed, Nov 2, 2011 : 1:03 p.m.
So is every idea on the table or not? "Council members said some of the ideas discussed on Tuesday, including merging with the township, were highly unlikely, but they wanted to explore all options before asking voters to approve up to two tax increases." What does this mean? "we talked about it and said no" is a way to pretend you explored an option ... why are home grown lackies afraid of mergers (of any kind)? Because they would lose power and holding power if often more important than what is right for a town. "The Ypsilanti City Council instructed city staff to begin investigating a wide range of solutions to its projected $10.69 million budget shortfall." I dont know if a merger is a good idea or bad, but i would want some research before I shot it down, look at other examples of mergers, seek feedback, hold foums ... in other words, I would take it seriously and not provide lip service. As mentioned, these are desperate times. So let the staff investigate a merger, not just consolidation. Politicans at every level rarely do what is best for the people they represent when the chips are down - they do what is best for them
City Confidential
Wed, Nov 2, 2011 : 12:49 p.m.
There is no way to "default" on the Water Street Debt. It is not a mortgage. It is bond holder debt, which the bond holders would sue for if it went unpaid. They would win and the money would still come out of the city general fund, plus some additional legal fees. It must and will be paid. We can either plan for it or we can just let it happen anyway, without a plan. As far as firing city employees, well that will happen. And then the few who remain will be the only ones paying into the retirement funds for the retired, so we will all pick up the difference. And we will live in a city with so few staff that we can't get permits, code enforcement, basic city maintenance services, etc. Yes, the taxes are high, but there really are few other alternatives at this point. Some suggestions for small trims to the budget in the short term are being looked at, but the savings are temporary and do nothing to address the long-term debt obligations that we can't "simply" walk away from. Do we want to live in a city with no city services whatsoever? An income tax, while hard to stomach, would be less regressive in that it wouldn't hit fixed income residents as hard as property tax increases. This stuff is going to hit many other communities, Ypsi is just the first to have to face it.
Hillary Cherry
Thu, Nov 3, 2011 : 4:33 a.m.
"They would win and the money would still come out of the city general fund, plus some additional legal fees." In Hamtramck, the city adds court judgements to the property tax bills as a special assessment. <a href="http://www.dleg.state.mi.us/ham/tax/decision/other/220264.htm" rel='nofollow'>http://www.dleg.state.mi.us/ham/tax/decision/other/220264.htm</a>
Paul Schreiber
Wed, Nov 2, 2011 : 12:38 p.m.
The city of Ypsilanti can't default on the Water Street debt. Information on financial options available to the city of Ypsilanti can be found at <a href="http://cityofypsilanti.com/bd_city-council/Mayor%20Updates/2011-10-25" rel='nofollow'>http://cityofypsilanti.com/bd_city-council/Mayor%20Updates/2011-10-25</a>.
pseudo
Wed, Nov 2, 2011 : 10:10 a.m.
instead of discussing merging with "the" township, might think about merging with ANY township. About the time we merge with Stumbo's crew...Ypsi City is no longer. Just look at how they take care of this side of I94. And they will out vote the City by 2 close to 3 to one. I think we can to much better than that by working with a less predatory neighbor.
betsytownship
Wed, Nov 2, 2011 : 1:06 p.m.
How about letting the City of Ann Arbor annex Ypsilanti? They have much deeper pockets to fund all the services of a city.