City balances budget with $1M general fund loss, hiring freeze

 

The city of Southfield headed into its 2013-14 fiscal year July 1 with a balanced budget. After months of working with the figures that revealed more than $1 million less to work with in the general fund, city officials say it’s about doing more with less.

The total budget rings in at $146.81 million, and City Administrator Jim Scharret said that puts it just four-tenths of a percent up from last year. The final general fund budget came in at $65,599,556, which reflects a decrease of $1,067,580, or 1.6 percent less than last year’s total.

Additionally, no fund balance reserves are expected to be utilized for general fund operation.

The budget was approved unanimously June 27, with two council members, Sylvia Jordan and Sydney Lantz, excused from the meeting. A public hearing was also held, though no members of the public spoke.

Council President Ken Siver pointed to fewer state revenue dollars, declining property values and “quite a few” commercial tax appeals, among other things, as responsible for a tighter budget. He said the trick with budget items is knowing when to give and when to take.

“A million dollars is a lot of money. Southfield has done a tremendous job balancing the budget and staying out of debt,” he said. “We balanced the budget without layoffs; however, how we’ve done it is by not filling roughly 220 positions across the board. There are scores of people who retired or left and are not being replaced. This has been happening for four or five years now, and it’s a key way we’ve balanced our budget.”

Internal changes include the retirement of Community Relations Director Nimrod Rosenthal, who worked in the department for 26 years. His final day in the office was June 7, according to the department, and Siver said that with the “hiring freeze,” there are no current plans to replace him.

“When budgeting, you look for things to save money without compromising safety and appearance in the city. People are your biggest cost,” he added. “By reducing the number of people on payroll, that’s really where the savings has come in.”

City staffing is listed as one of the six core areas of “continued progress” that the city will focus on in the upcoming year, according to a promotion video by City Cable 15, created to spread awareness about the new budget. This means employees will be wearing multiple hats to ensure there is no drop-off in service delivery to the public.

The budget allocates $9.7 million for capital projects, another item on the list, and $39 million for public safety, the third focus area, which comprises 60 percent of the general fund budget.

The budget reflects residents paying 6.80 mills for police and fire and 4.7 mills for their pension, which is up from 3.94 mills last year, Siver explained.

“Some homeowners may experience a slight increase in taxes due to the slight increase in the police and fire pension millage. ... Not much, though, because property values have gone down.”

Siver said the pension fund is part of the overall millage package the city levies and that the change may be offset by the fact that property values have fallen. On average, there has been an 8.5 percent decline in property values.

The Staffing for Adequate Fire and Emergency Response grant continues to supplement the millage, among many other grants the Fire Department, in particular, has secured.

The library is still operating, in part, by 2.8 mills and Parks and Recreation on 1.75 mills being levied, according to the budget.

Siver said that in most of these areas, grants have been secured to supplement declining revenue and fewer dollars at the city’s disposal.

Code enforcement/community appearance, business development, and education and cultural affairs round out the list of continued progress in the upcoming fiscal year, according to the city. In total, $8.4 million in grants has been secured so far, for various departments and projects.

That grant number is down from $8.8 million in the last fiscal year, but in the last decade, grant funds soared from a meager $3.4 million, Siver noted.

The budget also allows for $985,000 in savings, to be strictly used as a reserve for commercial appeals. According to Scharret, the reserve can be returned to the fund balance for future use if the projected amount allocated for appeals comes in lower.

According to new budget figures, Southfield property owners with a market value of $100,000 and taxable value of $50,000 will pay an estimated $1,220 in property taxes in the upcoming year — or an average of $3 a day. Councilman Donald Fracassi urged residents to remember that the city collects and processes only about 40 cents on the dollar for city operations, while the rest goes toward other taxing authorities and county services.

“I know our streets need some work, but we are busy trying to get that done,” he said at the meeting. “We live in a great city, great neighborhoods and have good public safety.”

Road repairs are an example of an expense item not compromised in the new budget: Greenfield Road between Eight and Nine Mile roads, Nine Mile between Greenfield and Southfield roads, and Evergreen between 10 Mile and 11 Mile roads all have big improvement projects coming up. A total of 19 infrastructure projects can be found in the budget, amounting to the $9.7 million for capital improvements.

Siver said roughly $500,000 will be budgeted for marketing, in addition to the $522,399 budgeted for community relations, to meet the goal of better publicity and outreach for Southfield. The idea is to rebuild the tax base by attracting businesses to Southfield to fill empty office space, he explained.

“The city is not broke; it just has to watch what financial resources it has,” he said. “As needs change, it has to adjust the budget accordingly.”

At the meeting, Councilman Jeremy Moss noted that the final proposed budget was reviewed in depth earlier in the month, including via an audit performed by Plante Moran.

“This isn’t just city officials and city administration saying what a great job we’ve done. We have an independent audit from a reputable firm that said that of all the challenges we’ve faced during the recession, of all the hurdles we’ve had to overcome, of all the things that have been thrown at us, we are still surviving,” he said. “The outside validation makes the residents know this isn’t spin, this isn’t fluff; these are validated numbers and we are doing everything we can to make sure that your taxpayer dollars are being wisely spent here in City Hall and that we are still providing those top-notch services.

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