The city of Wixom is turning to its voters in an effort to help sustain city services by putting before them a millage proposal during the Nov. 6 general election.
Voters will be asked to approve a four-year, 3.5-mill levy beginning July 2013 to help pay for city operating expenses for such services as police and fire, public works, and parks and recreation services.
The millage would generate over $2.2 million per year, or about $8.85 million over a four year period.
A ballot question that would have raised the city’s charter millage cap failed during the Aug. 7 primary election. This time around, the city administration is working to fully inform voters.
“The first time around, they didn’t understand the aspect of the proposal, but this time we’ve had better response and put a time limit on it. People appreciate that,” said city Finance Director Kevin Brady. “The four-year plan is so expenses and revenues break even. After four years, we would evaluate what’s going on. Some people voiced (concerns that) they wanted a time limit on the millage.”
The city is facing a deficit of over $1.7 million in the 2013 fiscal year, and expected shortfalls of $2.1 million in 2014, $2.5 million in 2015, and $2.6 million in 2016, for a total deficit over four years of $8.98 million.
Former Mayor Michael McDonald opposes the ballot proposal and is challenging the city to first exhaust alternatives before asking the taxpayers for more money.
“They have to renegotiate contracts, mothball the Community Center, cut leaf collection, and cut the budget to the point where revenues coming in will cover the budget and address it now,” McDonald said. “There’s not a will on (the Wixom City) Council to do things that are necessary.”
City officials pointed to reports by Oakland County stating that Wixom was one of the communities in the county hardest-hit during the economic downturn. Between 2007 and 2012, Wixom sustained a loss in taxable value of nearly 32 percent, compared to 24 percent for the county as a whole.
“We’re in the top seven communities that has seen (the largest) decrease in property values, and then take into account the loss of state-shared revenue that the state has reduced significantly,” said Wixom City Manager Mike Dornan.
Officials said that if the millage passes, Wixom property taxes would be 16th lowest of 32 Oakland County cities.
A mill is equal to $1 for each $1,000 of a property’s taxable value, which is generally equal to half the property’s market value. The owner of a city property with a $100,000 taxable value ($200,000 market value) would pay $350 in new property taxes in 2013 if the 3.5-mill tax is approved.
But city officials said the average cost per residential property owner would be roughly $271 per year, or $22 per month.
“That’s still less than the taxes residents paid on average in 2004,” Dornan said.
In the wake of the Ford Motor Co.’s Wixom assembly plant closing, the city adopted a five-year fiscal plan and instituted a budget stabilization fund in 2006. The assembly plant’s closure continues to hamper the city’s budget. In 2002, the city raked in $1.5 million in property taxes from the Ford property, compared to just $141,836 this year.
“The basic assumption with Ford leaving was that we’d lose 12 to 15 percent, but not the taxable value we’ve seen statewide due to the fiscal catastrophe of 2008,” Brady said.
“Thirty-nine communities in Oakland County since 2009 have asked for millage increases and Wixom is one of the last communities to ask its taxpayers for a replacement of revenue because we’ve been able to manage our budget longer than most in anticipation of the Ford plant closing through budget stabilization and multi-year budgeting,” Dornan said. “Wixom served as a model for other communities.”
While the budget stabilization plan kept the city afloat for several years, city officials knew it would peter out eventually.
“We knew it would end, so we cut back subtly for the last several years and sought new revenue sources, but in the big picture it was not enough to offset the dramatic loss in revenue,” Dornan said.
The city has consolidated and privatized a number of city services, saving over $700,000 since 2001, according to officials.
“We were the first in the region (to start) privatizing operations like our water and sewer in 1994. We’re recognized experts in privatizing worldwide,” Dornan said.
The city cut staffing 25 percent, from 65 employees a decade ago to 49 today.
“This was not done in a Draconian fashion, but over time as part of our fiscal action plan,” Brady said.
The city has saved $513,000 over the last three years due to wage freezes and benefit changes, not including the $1 million saved in health care costs since 2007 due to moving one-third of its employees to a health reimbursement account program.
“We can’t sustain defined benefit programs anymore,” said McDonald, the former mayor. “We need to negotiate contracts that are right now loaded with benefit packages.”
Union contracts don’t expire until June 30, 2014.
“(The employee unions) are very receptive across the board for a new fringe benefit package for new hires,” Dornan said.
Also in the last two years, the city put a moratorium on contributions to retiree health insurance.
“We can’t postpone it forever — the liability increases and it has. A lot of communities haven’t funded post-employment benefits, but we have since 1993,” Brady said.
Retiree insurance cost the city $624,625 as of June 2011. The city carved out $895,000 from the 2011 budget to fund pensions, a problematic budget item all municipalities are facing.
“Last year, we were 45-percent funded and all communities recognize they should fund it, but this is an issue to resolve on a long-term basis,” Brady said.
City administration is analyzing other cost control measures, such as outsourcing payroll at a savings of about $50,000, and eliminating capital outlay and capital improvements.
The city has also held off on filling three police sergeant positions. More possible cuts amount to $1.7 million.
“To offset the declines in revenue, the city has continued to diligently make decisions to contain costs to the extent possible,” said Plante & Moran auditor Joe Heffernan.
If the millage fails to pass, discussions have recently cropped up to consider contracting for police services with Oakland County Sheriff’s Department, possibly saving between $250,000 to $850,000. However, skeptics say response time would be longer.
Other cuts — such as privatizing or closing the Community Center and parks and recreation services, eliminating senior services and non-emergency overtime for events, park cleanup, leaf collection and snow/ice control — may be necessary if the millage doesn’t pass, officials said.