Officials meet with Department of Treasury, told review team not needed

Sunday Times Newspapers

MELVINDALE — City officials spoke with Department of Treasury officials about the city’s financial future and said a review team for an emergency manager was not needed.

The city has been operating under a Treasury-approved, five-year deficit elimination plan and Mayor Stacy Striz, Corporate Council Corinne Galusky, and Councilman Dave Cybulski met with the Department of Treasury to review the city’s progress Wednesday.

The idea of a financial review team coming in to evaluate whether the city needs an emergency manager had been looming over the city council for months, they said. At one point it was a real possibility if the treasury was not satisfied with the progress.

The general fund had a deficit of $1.2 million, according to the 2012 budget, and a governmental deficit of $800,396. That deficit was $1.7 million around the beginning of the deficit elimination plan, two years ago, but the city has made cuts and has been focusing on increasing revenue.

Earlier this year, the city began evaluating rates and fees charged to residents to find ways to increase revenue because councilors said they thought there were areas where the city was losing money due to outdated rates. They found three that required updating: water rates, inspection fees, and recycling fees charged to residents.

The water rate was increased 12 percent to subsidize a 4.4 percent increase by the city of Detroit, said Gerald Douyard, primary operator of the water department, and the additional 7.6 percent would be set aside for capital improvements.

Douyard said a positive balance in a capital improvement program is essential moving forward because the city’s infrastructure is deteriorating, noting the storm system and sewer system backups, water mains collapsing, and the increased scrutiny of the Department of Environmental Quality.

The council also increased the recycling fees, from $2 to $3 a quarter, for the recycling program because the city cannot afford to subsidize services provided to residents anymore. Councilwoman Medina Balderas said the city needed to charge an amount that can sustain the program without city subsidization.

The city also raised the housing and commercial inspection fees to become competitive with other cities in the area, Galusky said, because Melvindale’s rates weren’t producing enough revenue. Commercial inspection rates increased $50 to $250, single family residence inspections saw an $80 increase to $180, and two-family residence inspections increased $100 to $250.

Galusky said these changes combined with the merger of the fire department with Dearborn, and bringing in Rink Management to consult with the council on the civic arena was considered by the state treasury, enough progress to continue with the plan.

With the fire consolidation, Finance Director Richard Ortiz said the city will see yearly savings of about $330,000 for the next two years and the number will rise closer to $500,000. The reason for the difference, he said, is the 14 firefighters absorbed by Dearborn agreed to allow the city two years to compensate them for the benefits, salaries and pension contributions.

The city and police department is currently working on a collective bargaining agreement, and officials hope there can be additional savings realized through the changes made.

(Gabriel Goodwin can be reached at