Financial audit a positive one for Heights

By BOB OLIVER
Times-Herald Newspapers

HEIGHTS – Three representatives from Plante Moran, who performed an audit on the city’s 2012-13 fiscal year, addressed city council and stated that last year was a positive one for the city financially.

Their report was delivered to the council prior to its Nov. 26 meeting.

Plante Moran Manager Alisha Davis said the city’s corporate fund had a “fantastic” fiscal year for 2012-13

“You were able to have a positive result in terms of adding to your fund balance, or reducing, or out-performing your deficit elimination plan,” Davis said.

Davis said the city’s corporate fund balance has grown by roughly $4.4 million, or 12.5 percent, since 2011-12.

She said the increase was due to addition revenue gained by the city through property taxes, interest and money generated through the 20th District Court.

From 2011-12 to 2012-13, revenues generated from property taxes jumped from $19.4 to $21.8 million and court revenue rose from $2.3 to $3.1 million, something that Davis said the city shouldn’t count on with any regularity.

“These aren’t necessarily revenues that you could rely on to this extent every year, but it certainly helped you this year and I believe, to some extent, last year,” Davis said.

Davis said the taxable value for the city is slowly improving after it fell roughly 30 percent from 2009 to 2013, but that a return to 2009 values is not expected for possibly 20 years since the city is only gaining a 2 percent increase each year.

“Unfortunately, this is the position you and all communities are in because you can take that steep dive so quickly but it can take a long time to climb back after a recession,” Davis said.

Plante Moran Partner Martin Olejnik said that because Dearborn Heights is a more mature community may make its rebound take longer than some other communities.

“When you look at property taxes, clearly the rebound has been very slow and that’s something that we’re seeing all around the state,” Olejnik said. “Some communities are more fortunate because they have opportunities for new growth but that is not the case here so it is a slow process.”

Davis said the auditors felt that city has made great strides to eliminate its deficit but that without more cost-cutting or revenue generating changes there will still be a structural deficit where the city’s expenses would be greater than its revenues.

“Your revenues are far less than your expenditure levels,” Davis said. “At some point you really do have to close that gap.”

Olejnik said the city carried a deficit of $3.4 million from the 2011-12 budget into last year but finished on June 30 with a $3.2 million surplus, leaving an overall fund balance deficit of about of $143,000.

He said the city needs to “keep the pedal to the floor” and continue to work its way out of the deficit and to build its fund balance back up.

“You just need to keep things in check,” Olejnik said. “If you have to add extra staff or other expenditures just keep your revenues in check that way you can quickly rebound from it.”

He said the city does not have to submit a new deficit elimination plan to the state because it outperformed the benchmarks outlined in the plan previously filed.

“The deficit elimination plan from last year showed that you were going to have a deficit of $3.3 to 3.5 million but you finished at $2.7 million,” Olejnik said. “When you are ahead of schedule you do not have to re-submit you plan or change it.”

After discussing the previous year’s numbers, Olejnik and David offered several tips to the city to improve its financial situation and operations moving forward, including recommendations that a deputy comptroller be hired to work under Comptroller Vince Macari and that a better system be developed to track or adjust payments between city departments.

The city comptroller does all of the finance work and document review before sending to the auditors, and Olejnik said it would benefit the city to have a second pair of eyes viewing reports before they are sent out.

Macari said the city has already advertised for the position and hopes to bring somebody in to fill the spot as soon as possible.

Mayor Daniel Paletko, who sat in with the council during the presentation, said he would work with department heads to adapt each of the recommendations and that a study session is in the works between his administration, the city council and all of the department heads to discuss the city budget and other issues next month though no date has been set yet.

(Bob Oliver can be reached at boliver@bewickpublications.com.)