August 8, 2014 at 1:00 am


Michigan cities are in trouble

Let me give you a dose of our reality as we prepare for the demise of Michigan cities’ general services:

■In 2008-09 Eastpointe’s assessed value was $879.7 million and in 2013-14 it is $431.3 million, a 51 percent decline and still dropping.

■In 2008-09 Eastpointe’s taxable value was $786.1 million and in 2013-14 it is $430.4 million, a 45 percent decline (52 percent on residential) and still dropping.

■In 2008-09 Eastpointe’s general property taxes raised $15.4 million for operations and in 2013-14 it is $8.5 million, a $6.9 million reduction and still dropping.

■In 2008-09 Eastpointe spent $18.6 million on general operations and in 2013-14 it is $13.3 million, a 29 percent reduction with minimal impact to residents.

■In 2008-09 Eastpointe spent $3.7 million on costs for general operations retirees and in 2013-14 it is $5.2 million, a 42 percent increase.

■At the end of 2008-09 Eastpointe had a fund balance of $13 million, and on June 30, 2016, Eastpointe is broke.

Eastpointe has not been corrupt. Eastpointe has not been mismanaged like some cities. Eastpointe has been well managed and aggressively addressing financial issues for the past decade.

Pay cuts and/or reduced hours have been implemented. Pensions have been reduced for existing employees or pension contributions have been increased, with new hires going into defined contribution plans or a hybrid defined contribution/defined benefit plan. Health care changes have moved significant burden onto the employees, but the premium costs keep going up.

Full-time staffing has been reduced from 180 in 2003 to 105 today. Consolidation and new authorities have been created to save money. There is nothing left to cut except providing a bucket brigade for fire service and Barney Fife as police protection.

State statues prohibit us from asking residents to increase their taxes to maintain current services. Legislation being contemplated in Lansing, if fully implemented, would allow us to raise taxes to levels still below 2008-09 and still leaving us in a deficit.

Even if housing values increased substantially, Proposal A and Headlee will prevent us from seeing any of that benefit, limiting the growth in taxable value to 2.6 percent or rate of inflation, whichever is less.

I have served on the State Treasurer’s Local Government Task Force and presently sit on the SEMCOG Local Government Revenue Task Force and speak to treasury officials constantly regarding the municipal funding crisis. No option, such as fees or charges, replaces the loss of property taxes since the Great Recession and even stable governments face this issue.

The discussion needs to immediately turn to the reason we have cities and local governments; why Michigan needs them; and how they can be re-tooled for local sustainable success.

Steve M. Duchane, city manager