Farmington city council members do not usually make formal presentations during council meetings, but these are unusual times.
Facing a bleak financial picture, officials have scheduled two financial sustainability workshops April 25 and May 16, 6:30 p.m., at the Maxfield Education Center, 32789 W. 10 Mile Rd. in Farmington. Led by a facilitator, the meetings will give citizens the opportunity to weigh in on the city’s financial future.
Council member Bill Galvin on Monday talked about why it’s important for residents to get involved in the upcoming budget discussions.
“The five-year forecast shows some pretty significant challenges if we don’t do anything,” he said.
Reviewed in January, the forecast shows six-figure deficits that would eventually wipe out the city’s unrestricted fund balance. The financial cushion dropped from nearly 27 percent of operating costs in 2015-2016 to 17 percent in 2016-2017.
$95 million lost
Galvin, who has served since 2011, said officials have been “fighting the financial stability issue” since the economic downturn of 2008. While a number of cost-cutting measures are in place, he said, the city has lost $92 million in taxable value and more than $3 million in state shared revenues since 2008.
Those two revenue sources account for more than two-thirds of the city’s general fund budget. Galvin said increasing fines and fees won’t help, as those provide less than 10 percent of needed revenues, and the city doesn’t have enough commercial real estate to build its way out of the shortfall.
Consequences of tight finances include deteriorating infrastructure, employee salary and benefit reductions, and a Capital Improvement Fund balance that has dropped from $2.17 million in 2008 to just over $12,000 at the end of this fiscal year. Still, the city’s millage rate has not increased, and citizens have seen no changes to services.
“Everybody’s getting their snow plowed, you’re getting your leaves picked up,” Galvin said. “We are literally doing more with less. We are more efficient than we ever have been.”
Last in state shared revenues
Farmington isn’t alone; financial troubles have hit virtually every city in Michigan. Galvin cited figures from the Michigan Municipal League that show a 56 percent decline in state revenues to local governments. Michigan falls dead last among all 50 states when it comes to growth in revenue sharing (2002-2012).
Farmington and other Michigan cities are also hobbled by limits on how they can raise funds, Galvin said. Local governments can only collect revenues from property taxes or an income tax, while other U.S. cities have a wide range of potential revenue sources.
Galvin talked about challenges created by the Headlee amendment, which limits tax revenues to the amount a levy was originally intended to generate, and Proposal A, which limits growth of taxable value to the rate of inflation.
On the expense side, the city’s pension obligation is going up $100,000 per year.
“By the time we get to 2020, we’re going to have to find an extra $1.5 million,” Galvin said. “We owe that. We have a lot of pensioners, they earned that.”
He encouraged citizens to attend not only the workshops, but also the April 16 annual budget presentation, the April 23 annual budget review meeting, and the May 21 council meeting, during which the budget is approved. In comments after his presentation, Galvin also said it’s time for citizens to demand some accountability from state lawmakers.
“We should shake down the state,” he said. “Our roads are underfunded, our schools are underfunded, our cities… Where is the state spending the money? The state has not made that easy for us to understand.”
Galvin believes an increasing partisanship has come with legislative term limits. Each side blames the other for a lack of progress.
“They never establish working relationships,” he said. “Lansing is stuck in a partisan bog, but we’re putting them there to work in bi-partisan fashion.”
Council member Joe LaRussa said this election year is “our opportunity to introduce some accountability into a system that’s perpetuating the problem.”
“Ask those questions … why are we making those decisions to withhold state shared revenue? Why is there no short-term solution to bridge the gap until property tax revenues recover?”