O’Reilly outlines plan to save city $20 million

Times-Herald Newspapers

DEARBORN – The city needs to reduce its annual expenditures by $20 million between now and 2013.

And at the Henry Ford Centennial Library on Thursday, Mayor John O’Reilly Jr. spoke on a process now under way that will do just that.

The city, he said, has lost a considerable amount of money over the last couple of years because its revenue stream is tied to property values, which have been in decline. Its budget for fiscal 2011 is about $96 million, some $3.9 million short of projected expenditures. Preliminary figures for next year place it at $86 million, with a $17 million shortfall if nothing is done.

“Every year you don’t address it, the amount you’re in the hole grows exponentially,” he said during his address, which was sponsored by the League of Women of Voters of Dearborn/Dearborn Heights.

A task force was created recently to take on the issue, O’Reilly said, and has been meeting with a goal of creating a five-year “toolbox” that will allow the city to better live within its means.

“Everything is on the table,” he said of the discussions. “There was no one solution.”

At the heart of the problem for the city are lower property values. People don’t realize their impact, O’Reilly said, because the financial loss to them can be delayed.

“People have lost the value of one of their most important assets: their home,” he said, “but that loss isn’t realized unless they attempt to sell their home.”

And that problem has affected nearly every community in Michigan, O’Reilly said.

“We’ve had almost a third of the value of property go down,” he said.

O’Reilly said the issue needs to be looked at step-by-step.

“We have to say, ‘This is a reality, I’m going to present it,’” he said, “then we have to say, ‘Where do we need to be if we’re going to be a successful community?’

“There’s no looking back to the past, there’s no waiting for things to blow over. We have to reorganize government and reshape ourselves so that we have a more solid base going forward.”

Changes already have been made, some going back to 2001, including eliminating 168 full-time city positions by 2010 and offering three early-out retirement programs in 2004, 2006 and 2010.

“These are some of the changes that have allowed us to reduce our expenditures by $12 million (since 2001),” O’Reilly said. “It’s a credit to everyone that we’ve done what he have so far, but I can’t underestimate the challenge ahead.”

Police and fire staff numbers also have been reduced, from 371 to 359 over 10 years. The biggest personnel decrease was by 29 percent in the number of general employees, from 540 to 384.

Those cuts were not made on a whim, O’Reilly said.

“Every community that’s been prudent has been reducing positions,” he said.

One suggestion the task force quickly rejected was simply cutting salaries, which the mayor said would not work.

“You would be doing a 40 percent pay cut,” he said. “That just illustrates there is not one some sort of easy way.”

The idea of raising rates and fees also was rejected, he said, because not only would the profit be minimal — around $2 million — but that as a result, no one would want to do business in the city.

“We would price ourselves right out of the market,” he said.

Camp Dearborn, which is owned by the city but located in Milford, could serve as a source of additional revenue, O’Reilly said, adding that officials are considering adding a water park, water slides and wakeboarding in the future.

“We think that there is a real opportunity to turn it into a real moneymaker,” he said. “That’s something we have to verify.”

Throughout the entire process, O’Reilly said, officials have kept one objective in mind: making Dearborn a better place to live.

“If at the end of the process, we have created a city that no one wants to live or invest in, then we’ve failed,” he said.

(Daniel Heraty can be reached at dheraty@bewickpublications.com.)