Farmington Hills officials on Monday learned the city will be impacted for a third consecutive year by a rollback in its general operating, road, parks, and public safety millages.
Michigan’s Headlee Amendment limits a local millage to the amount it was originally designed to collect, plus a factor for inflation. When the city’s overall property valuation rises at a higher rate than the cost of living, millages are reduced – a “rollback”.
In presenting the 338-page, 2018-19 budget document, city Finance Director Steve Barr said a 3.38 percent increase in property valuation means $335,000 in rollbacks, $200,000 of which will come from the general fund.
“That’s our new base going forward,” Barr said, adding the city anticipates continued growth of 3-4 percent over the next six years.
The 2018-19 budget anticipates $59 million in general fund expenditures, about 3 percent over projected 2017-2018 spending. (The city’s fiscal year ends in June.) Barr said the budget assumes a 3 percent annual increase in operating expenditures, $1.6 million in debt payment and operating costs for the new community center at Harrison High School, a $4.5 million contribution to the Capital Improvement Fund, and staffing Fire Station #1 24 hours a day.
City manager Dave Boyer said Fire Department representatives will make a formal presentation to council with the rationale for expanding service at the Nine Mile and Drake Road station.
The 2018-19 budget estimates expenditures will exceed revenues by $1,475,220, but Barr noted that state shared revenues and other factors are still unknown. He noted a decline in tickets issued by the Police Department, which is not fully staffed, and a decline in fees paid by developers.
Boyer said several construction projects expected in 2018-19 should bump the latter figure.
Because of the anticipated red ink, the city’s unassigned fund balance will drop from $14.36 million to $13.09 million, about 22 percent of general fund expenditures. The balance of all funds will drop from $32.8 million to $31.4 million.
Barr said the city still has the 12th lowest tax rate among Oakland County municipalities, and the total proposed property tax rate will drop by .0771 mills to 14.5798 mills.
While the budget doesn’t include much in the way of growing revenues, Boyer said there will be a review of the city’s fee structure and possibly new user fees related to the new community center.
“We have a great base to start with,” Barr said. While he sees more years “in the red” and a decline in the city’s fund balance, he added, “I think we’re in really good shape.”
Officials will hold additional meetings in May to review the budget in more detail.