City audit presents deep financial issues

By JAMES MITCHELL
Sunday Times Newspapers

LINCOLN PARK — More questions were asked than answered Monday about the city’s critical financial outlook for 2013 following a financial audit presentation by accounting firm Plante Moran prior to the regular city council meeting.

Elected officials will soon cast votes on how to best cover an estimated $2.4 million budget deficit, and Monday’s session provided some of the foundation for those discussions, but Mayor Patricia Diaz Krause said more is needed.

“More professionals need to be in the mix,” Diaz Krause said, “to crunch the numbers, see where are we bleeding, where we can stop it.”

The bleeding will not be found from a singular source, nor will solutions. Plante & Moran auditors Beth Bialey and Kristin Hunt provided council with an explanation of where the city stood financially along with cost-cutting suggestions that could save more than a million dollars, about half of the anticipated deficit.

Diaz Krause said that cuts alone won’t solve the problem.

“We also need to focus on economic development,” Diaz Krause said. “To keep cutting without looking to how we can increase revenues is not logical.”

Options for increased revenue are limited. Last month voters rejected two ballot questions to boost city income — one a bond question the other a millage increase — and ideas presented last week included a promotion tax and a library millage.

Instead, cost saving measures will be needed, and last week’s session raised possibilities ranging from staff cuts to closing the Lincoln Park Historical Museum — a savings of $17,000 that would have little impact on the problem — to dissolving the city’s Downtown Development Authority, a suggestion Diaz Krause said was impractical and would likely not be possible from a legal standpoint.

“It would be ridiculous to try to dissolve that entity,” Diaz Krause said. “It could be a quick fix, but in the process we would lose money doing that. The DDA actually saves the city tons of money.”

The prospect of layoffs hung heavy in the air Monday, a continuation of employee fears as Lincoln Park’s economic viability declined. The city’s payroll of $10.3 million represents more than half of the annual budget. Diaz Krause said she was unwilling to approve any layoffs without exhausting all other savings options.

“Cutting positions is the last resort,” Diaz Krause said. “Before positions are eliminated every avenue has to be examined. There’s already a skeleton crew at City Hall. Morale is pretty low. To say we’re just going to eliminate four positions without analyzing the impact on service is not a smart move.”

Among other strategies, Diaz Krause said she wants city officials to meet with department heads to better understand what’s at stake. A more likely scenario will be asking managers and other employees to accept salary reductions. Plante Moran auditors told council that if each employee accepted a 15 percent pay cut the city would be well on the way to solving the deficit.

Overall the ideas raised Monday were mostly short-term or limited.

“We need to be thoughtful,” Diaz Krause said. “We can’t just worry about reducing the deficit for six months or a year, we have to look at the whole picture and how actions today impact us long-term.”

As other Downriver communities have done, Diaz Krause said cooperative projects with neighboring communities will be one avenue explored. Diaz Krause said she met last week with Southgate Mayor Joseph Kuspa to begin discussions on possible collaborative efforts with public safety, parks or other services.

City Council will hold a study session prior to their next regular meeting on Jan. 7, and Diaz Krause and Council President Thomas Murphy agreed that many more similar sessions will begin addressing the specifics of both cost-saving and revenue boosts.

The Plante Moran audit, Diaz Krause said, was a suitable outline that will now have to be carefully detailed by elected officials and city hall staff.

“The deficit plan was too broad,” Diaz Krause said. “It still didn’t solve the problems, whether immediate or long term. We need to bring in professionals, toss around some ideas and make solid, sensible decisions.”