Ypsilanti City Council, staff begin working on plan to avoid looming budget shortfall
If the city of Ypsilanti were to cut its planning and zoning department, as well as eliminate its entire city hall staff, it still would not generate enough revenue to cover its public safety costs and Water Street debt payment in six years.
That’s how Mayor Paul Schreiber framed the city’s serious budget problems to residents in his recent mayoral update, and it’s the issue for which staff and City Council are seeking a solution at three budget planning meetings over three months.
If nothing changes, Ypsilanti’s $9 million in reserves will be wiped by fiscal year 2015 and the city will face a $5.9 million budget shortfall by 2017.
Ypsilanti has four main revenue sources — income tax, state shared revenue, property taxes and fees for services — and cannot significantly increase any option. It has been hit particularly hit hard by cuts to state shared revenue and a drop in property tax revenue.
Property tax revenues decreased by 5 percent, or $500,000, in 2010, and are projected to decrease to $6.2 million in 2017 from $8.5 million in 2010. The city is prevented by state law from raising more than 20 mills for its general fund, and it has already hit that ceiling. Additionally, the state legislature’s proposal to eliminate personal property taxes is expected to produce a $400,000 hit to the city.
Gov. Rick Snyder’s cuts to state shared revenue already mean $400,000 in lost funding for Ypsilanti. That figure could increase by as much as $800,000, depending on how the city fare’s in the state’s newly created economic vitality incentive program. In it, the state weighs how much money to give to a municipality based on its transparency, how it collaborates regionally to save money and the size of reductions to employee benefits.
Officials are uncertain on how the program will rate municipalities because it is in its first year, but projections call for a 25 percent reduction annually.
In 2007, voters rejected a proposal for a citywide income tax by a margin of 2 to 1, and the city can’t legally charge more for services than they cost. That leaves it with no obvious options for generating significant revenue.
Another main factor is Water Street debt — the city made its first $472,000 payment in May 2010 and must continue to make biannual payments through 2031. Those will grow to $1.5 million by 2017.
In total, the city’s revenue is projected to drop to $10.4 million in 2017 from $14.2 million. Meanwhile, general fund expenditures are projected to increase to $16.3 million in 2017 from $14.2 million this year.
How will the city avoid that scenario and the expected subsequent state emergency financial manager takeover?
Council is hoping to develop a five-year plan that will address the structural budget deficit through cuts and revenue increases and take action by the end of fiscal year 2012. Council and staff will select a strategy and outline on how to move forward through the next two budget meetings at Ypsilanti City Hall on Sept. 27 and Oct. 11. The first meeting in August was a review of the financial picture.
Among other topics, council will begin discussing possible revenue options at the Sept. 27 meeting.
In March, council member Pete Murdock said no revenue option should be off the table and offered several possible sources. Among them are:
- A pay-to-throw trash system.
- A citywide income tax.
- A Headlee override on solid waste millage to generate an additional $65,000 a year.
- A stormwater utility fee.
- Asking voters to approve a 4- to 5-mill debt retirement millage for Water Street debt.
- Reauthorization of bonds issued for street repair.
- Eliminating or restructuring the Ypsilanti Downtown Development Authority's funding.
Schreiber said the city is going to have to make cuts and find new revenue sources, but added that he felt there are no cuts or revenues that will make a big dent in the budget shortfall.
“How many cuts you can make and still have a city where people want to move?” he asked. “People feel comfortable here right now and I think that’s testament to how efficient energetic staff is. I don’t know how much further we can cut."
He highlighted the cuts the city has made over the past decade and called city hall a “very lean organization with no redundancy.”
In recent years, the city nixed its parks and recreation department and funding for human services. In 2008, fourteen vacant staff positions were eliminated, including six police officers. In 2010, two police officers were laid off. As part of their 5-percent pay reduction, city hall staff takes regular furlough days.
City Council must unanimously agree on whichever plan it moves forward with, Schreiber said, especially if the plan is to go in front of voters. He pointed out that council was divided over the personal income tax issue in 2007.
“If we can’t sell it to council, we’re never going to sell it to voters,” he said.
Schreiber attributed many of the problems to recent changes at the state level, and said the city can’t continue to improve as it has been when there are constantly new financial challenges being placed in front of it.
“We aren’t doing anything wrong,” he said. “We’re just trying to absorb cuts at the federal and state levels, and there’s no way we can shift our cuts down. We’re going to try our best, but we’re only going to do as much as council and voters can do, if anything ends up in front of voters.”
Comments
Glen S.
Tue, Sep 27, 2011 : 12:24 p.m.
People can continue to claim otherwise, but Ypsilanti is by-and-large a very well-run City. Despite more than a DECADE of deeper and deeper cuts, the budget crisis we've faced -- and which is now reaching a climax -- has always *largely* been the result of factors outside our control: The flow of factories (and jobs) overseas; the fact that Michigan's tax system and method of funding local government is fundamentally broken; State and local policies that reward new growth in outlying areas (sprawl) over re-development of older, urban cities, etc. Then, of course, came the 2008 financial crash and corresponding "great recession," including the devastating collapse of the housing market, which has only accelerated the problem. The fact is that, unless we make some tough decisions, the city will be broke within the next few years. At this point, it is clear that neither Lansing nor Washington is going to help us. If we are going to save our community from being taken over and dismantled by an unelected, accountable "Emergency Manager," we are going to have to do it ourselves. That means that ALL of us are going to have to recognize the actual scale of the threat our community faces -- and be prepared to put aside past differences and grievances to focus on what matters going forward.
eastsidemom
Tue, Sep 27, 2011 : 10:24 a.m.
Andy YOUR council people supported the B2B trail...this is fact. The previous council brought us to this brink. Quit demonizing the very people we need to help.
Andrew Jason Clock
Mon, Sep 26, 2011 : 9:43 p.m.
Mr. Murdock is talking about putting everything on the table. Well, councils shortsighted decisions have likely taken a lot of county help off the table. We needed that help. A County run rec center and B2B trail link instantly makes downtown, and all of the city more attractive to potential residents, businesses and developers. Unless we're thinking downtown Ypsilanti is doing well enough on its own, and I think most downtown business owners would disagree with that. One other thing.We keep talking about the DDA. We talk about what a terrible job they are doing, and how the board is dysfunctional, but we don't hear much talk about reforming practices. Instead, Mr. Murdock moves right on to shutting it down and claiming that money. Honestly, I trust council less with those funds that I do the DDA. I think its high time the mayor and council call the DDA board on the carpet and reset their mission to one of supporting and drawing people to downtown as well as the rest of the DDA districts. We've done enough street and facade repair, we need some effort put in to putting people onto those streets and into those nicely remodeled businesses. That's the help our DDA district needs the most. Before we look to cut more, we need to take a look at making what we have work, because that's where we're failing. From the top down.
Midtowner
Tue, Sep 27, 2011 : 2:47 p.m.
Haters gonna hate!
Andrew Jason Clock
Mon, Sep 26, 2011 : 9:32 p.m.
The short shortsightedness of some of these commentators amaze me. You, like our council, just don't get it. First: News flash. Water Street has been off of the tax rolls for over 10 years, and there is pretty much zero prospect of that changing in the near future. So, we had a choice. Let 32 acres sit there vacant, or we could have sold off 10 acres, let the county build us a recreation center (since we can't afford one) as well as build all the roads and infrastructure to get to it, and all of a sudden we've got 22 acres that look a lot more attractive to a developer AND we have a few million to pay down on our debt. So what's better? No taxes or income of any kind, or some income, a lot of free stuff in the way of infrastructure, and a fighting chance to put 2/3 of Water Street back on the tax roll? You'll tell me in one breath buying Water Street for development was crazy, and in the next that we need to wait to sell to a developer! Who's talking pie in the sky here? We could have worked with the county to extend the B2B through our existing city parks and on to Water Street, past a new, 10 acre rec center (like the one on Washtenaw, but nicer and newer with 2 brand new pools) and on out to Ford Lake. Ever driven along the Huron around A2 & Dexter and seen the flocks of hikers and bikers? Thousands a year, right? Yea, we could have had that, too. But we passed, and we will get next to nothing out of that decision. To be sure, this stuff wouldn't have saved us, but it would have been a step in the right direction. The mayor keeps talking about how we are becoming an arts and entertainment city. Well, what supports that more, one pool in one of our most affluent neighborhoods, or a series of trails and a recreation center (with 2 pools!) in the heart of downtown, and connected to hundreds of miles of trails throughout the county?
jjc155
Tue, Sep 27, 2011 : 6:15 p.m.
so it is OK to keep the property off the tax roll then indefinately???? HAHA great reasoning, we have done with out for ten years might as well do with our forever. Dont forget that prior to the city moving forward with Water st project all the property was ON the tax roll. I can gaurentee that had the city allowed Burger King to buy the one acre they wanted (for the 400k that I have heard from creditble source) and pay the 35-45K a year in taxes that they would have paid (again from credible sources) things would be going better. BK would have been in there already for a year and I gaurentee that there would be ATLEAST 2 other projects in the works. But wait.........that didnt fit the city's master plan, which at this point should be, "ANY AND ALL TAKERS WELCOME!" City council meeting tonight should be reaallllll interesting.
mary
Tue, Sep 27, 2011 : 1:23 p.m.
Yawn.
SW40
Mon, Sep 26, 2011 : 6:01 p.m.
It is kind of funny that a year ago we were talking about they Ypsilanti Police Department taking over police services in Ypsilanti Township, now it seems more likely that Washtenaw County will take over police services in Ypsilanti. Ypsilanti's police chief has done nothing to improve services and has ran the department into the ground. Good luck in Ypsilant Sheriff Clayton hopefully you can do a better job.
General Demitrius
Mon, Sep 26, 2011 : 4:57 p.m.
The threat to dis-incorporate gives citizens more leverage than any other option. Banks that fear getting nothing are more interested in giving more favorable terms. A state appointed manager is purely bottom line oriented. I for one am not interested in paying city taxes for a part time government, limited police availability, costly trash removal, and an unresponsive fire department. Might as well live in a township. Cheaper taxes and crappy services.
mary
Tue, Sep 27, 2011 : 1:21 p.m.
The YPD does an excellent job considering the size of the department. I would look to DPW for cuts. I'm tired of seeing two people driving around in city trucks, usually at about half the speed limit, in absolutely no hurry to get nowhere fast.
eastsidemom
Mon, Sep 26, 2011 : 4:49 p.m.
There is no big (enough) revenue coming from a rec center or a trail. A rec center would be great, the trail is great. But it boils down to we must suffer from a bad decision, made in a moment of "exuberance". The citizens of Ypsi listened to a bad deal and let the then council make this bad decision that we all must pay for.
jjc155
Mon, Sep 26, 2011 : 5:56 p.m.
Not to mention that a Rec Center would be County owned which means TAX EXEMPT!!! that is the OPPOSITE of raising revenue! LOLOL Only revenue would be from the sale of the land, which I'm sure would be a some, below market price sweetheart deal. Also even if the Rec center increases call load on the Police (petty larcenies, disturbances on the BBall court etc) by ONLY 2 calls a week that equals 104 extra calls for service to the Police. Say there is ONLY an additional 2 calls a week for the FD (sprained ankles, chest pain etc) there is another 104 extra calls for the FD. That would be an additional 208 total police/fire runs per year (cost) for a NON revenue generating property with the same (or less) cops and/or fire fighters on the job. Brilliant!!!!
mojo
Mon, Sep 26, 2011 : 1 p.m.
Solutions please . . . . How about cutting costs by the same amount that revenues declined? Cut salaries, cut benies', cut perks, close down the gov for the 4weeks over winter, no travel, and perhaps sell off a downtown building to put it back on the tax rolls. . Ypsi needs someone to step up - stop whinnin' - and get the budget balanced right now.
xmo
Mon, Sep 26, 2011 : 12:53 p.m.
I thought that this was a viable plan to cut expenses: "the city of Ypsilanti were to cut its planning and zoning department, as well as eliminate its entire city hall staff" Great place to start!
Justice4all
Mon, Sep 26, 2011 : 11:22 a.m.
Looking into the future I see a financial manager coming in and the first step will be contracting with county for many services including police services. It's so obvious and I'm wondering why council refuses to seriously look at that option.
Justice4all
Mon, Sep 26, 2011 : 11:23 a.m.
Lose a police department or lose a city?
Elan
Mon, Sep 26, 2011 : 10:45 a.m.
Thanks for this article that clearly gives Ypsilanti voters a picture of where we stand at this time. It's not a pretty picture at this point in time... but a realistic one at that. Thanks too to our city leaders for starting to plan for what looks like hard times ahead. Forget the past; deal with present realities only. Focus on one thing only.... getting through this!
Bones
Mon, Sep 26, 2011 : 9:30 a.m.
I was dead set against the water street project from the first time the idea was mentioned to the public. Now look at the mess that it has created. Lack of vision in this city has been, and will always be the case when you have the same old people in council and running for mayor. The city has for over thirty years done its best to run business out of the downtown area. They promoted Depot Town over the rest and then looked to the water street mess as a viable option. I guess its time to let the banks have that fiasco and let loose of a money pit.
Midtowner
Mon, Sep 26, 2011 : 12:53 p.m.
Can you offer up examples of businesses being run out of town?
Not the Lone Ranger
Mon, Sep 26, 2011 : 8:13 a.m.
Wow -- if only we'd had a crystal ball. If only we had seen this coming! Oh, yeah - that's right, we did. History lesson: who can recall those who raised a voice of concern when the City leadership mortgaged our futur for the "Pie in the SKY" Water Street Project? Those who hammered this thru should be held accountable. Wow -- only to find that they all bailed from city employment as the demise was imminent. Fled to higher ground. No one left to hold accountable. Guess we're stuck with the tab. Water under the damn. I vote to disincorporate. The City of Ypsi is no long working in good faith; no longer on the 'positive' side of the model. Wave the white flag and cut the losses. There are other options, which need to be examined.
General Demitrius
Mon, Sep 26, 2011 : 2:44 a.m.
We have tried our best. This is one of the best managed cities in the state. We are too small to survive now, cool as we are. It's time to play hardball. Vote to dis- incorporate rather than have some state appointed bandit sell off everything we have. Council should pass a resolution stating that any appointment by the state of a manager will trigger an automatic vote on dis-incorporation within 30 days. Stick the banks with Water Street. See how easy it is for them to sell a piece of land in an unincorporated zone with no fire or police protection. The neighborhoods can join up with the adjacent townships. Alternately, the state can take their foot off our throat and help us survive this downturn, which will be better for everyone.
Jhonny
Mon, Sep 26, 2011 : 3:56 p.m.
I am confused why you would say a city that cant manage their finances is one if the best in the state. I would say you are one of the worst. I'll bet when that appointed state manager comes in he will balance your finances.
Justice4all
Mon, Sep 26, 2011 : 11:14 a.m.
Jjc took my thoughts...water street is the obvious example why your statement is laughable.
jjc155
Mon, Sep 26, 2011 : 10:49 a.m.
"One of the best managed cities in the State" HAHAHA you realize that if that statement was even close to being 3% correct then this article would not have been written, ie: there would not be the problems.
Andrew Jason Clock
Mon, Sep 26, 2011 : 12:31 a.m.
Its a good thing city council is working with Washtenaw County Parks and Recreation to bring the Border to Border trail, with its thousands of recreational visitors and their disposable income to downtown, and working with them to sell part of Water Street for a beautiful new recreation center with two new pools. They can use some of that money to retire the debt, increased visitors should do wonders to shore up the economy, and the Rec Center should serve to spur development on Water Street. Oh, wait. They chose not to work with the county, and to let thousands of dollars worth of work by our city planning department be pushed aside for a project that, while a community institution, will never do anything to help revitalize our city. Its time to put people on our council that will make tough decisions that will work to better our entire city, and help to pull us out of our financial hole, not just rubber stamp the pet projects of a few people that have the ears of our council members.
joe golder
Mon, Sep 26, 2011 : 4:10 p.m.
Thousands will use this trail over the course of a year. If they choose to take a break and venture downtown or depot town is the big question. I applaud individuals like Mr. Clock who step up and make a difference in Ypsi. This trail is another link in the chain that will power the needed changes. I believe many will head this way on that trail to take advantage of the great things Ypsi has to offer in the summer. The trail is a much needed alternative to packard and washtenaw for cyclist commuting between a2 and ypsi.
pseudo
Mon, Sep 26, 2011 : 3:17 p.m.
Andy, I like you but really, you are off your rocker on this one. Not a single one of these bike trail projects across the country has ever, EVER brought THOUSANDS of people to a city. Some have brought them THROUGH but your trail will not, cannot create anything close to a drop in the bucket of revenue for the city. Stop then whine man, you are smarter than this.
General Demitrius
Mon, Sep 26, 2011 : 2:28 a.m.
Thousands of recreational users? Try hundreds. We have enough great parks now. Rutherford pool is saved, and we don't have another park to maintain. Move on.