Administrator: Financial outlook to weaken in 2014

Sunday Times Newspapers

WYANDOTTE – The budget forecast for 2013 looks healthy, but that rosy picture may not last long.

During preliminary budget hearings for the 2012-13 fiscal year, which begins Oct. 1, City Administrator Todd Drysdale laid out the forecast for the next year’s budget as well as the forecast for the next five years.

The city will likely see a budget surplus of $140,000 for the 2012-13 budget year because of a 1.75 mill operations levy that began in November and brought in $1.25 million to the general fund.

In the budget suggested for Oct. 1, that number will dwindle to $968,000 because of a $55,000 reduction in taxable property values. By 2014, however, due to decreasing property values, the city will likely face a deficit of $140,000, which could necessitate further cuts.

After an anticipated $1.4 million shortfall last year, the city trimmed $329,900 from its budget by changes to health care, attrition of 13 full-time staff members, cuts to part-time staff, the adoption of an employee contribution health plan and other changes and the addition of the millage, and expect to end the fiscal year with a $747,000 surplus.

“When you cut $1.89 million out of your budget you expect to be in much better shape,” Drysdale said. “But unfortunately we can’t control property values.”

The five-year budget forecast presented at the meeting, Drysdale said, takes into account a 3 percent loss of taxable value each year, less than the 5.5 percent loss projected for the current fiscal year. For the prior two years, losses in taxable value were 8 percent for each year. When coupled with the loss of the operations millage, which will end in 2016, shortfalls are expected for each fiscal year after 2014, culminating in a projected shortfall of $1 million by 2016.

The “best case scenario” Drysdale proposed would include no loss of taxable values and still include a $345,000 shortfall by 2016.

Health care costs are also a factor, Drysdale said. Though the city last year implemented 20 percent payments from employees to defray health care costs, those costs still rose $127,000 for the city in the upcoming fiscal year.

Though 13 employees left by attrition last year, leaving the city with 120 employees, those cost benefits will continue to be seen in the upcoming fiscal year to the tune of $1.57 million in salaries and benefits that the city will not need to pay. Any further employees who retire or resign in the upcoming fiscal year, however, will be replaced, Drysdale said.

The city will also see drops in 2014 when its Neighborhood Stabilization Program, for which it received $8 million in total federal grants and from which it received annual revenues to repair and sell blighted houses, ends. That change will drop the engineering budget from $4 million in the current fiscal year to $1.6 million in 2014, and may necessitate layoffs in that department.

Further savings will come with a planned move of City Hall to the Chase Bank building, 3200 Biddle, in the 2012-13 fiscal year and will result from streamlined services including online bill payment and shared utilities with the building’s other two tenants — the bank and Henry Ford Health Systems.

That move will be further discussed in the next round of budget discussions at 5:30 p.m. Monday prior to the council meeting.