Monthly Archive

the following comes from Brett Gourdie:

“NM3 Magazine is working to get a Creative Class group underway. For those of you who might have missed the articles, the idea behind the Creative Class is to have a professional organization where people of all backgrounds can get together and share ideas about business trends and network. This is not about the agenda pushed by larger organizations, just a place for everyone from local corporate workers to self-starters to have a meeting of the minds.

Tuesday May 11th 6:30pm at Cuppa Joe Bldg. 50 – we sure hope you can stop in, share your ideas, and get involved.”

*Plan for TC is happy to pass along these kinds of community announcements – here and on www.facebook.com/planfortc.  Just drop an email to chrisbzdok@gmail.com.

Note – this is the first in a series that will highlight community members who are serving the city.

This week the city commission appointed John Taylor to the Board of Traverse City Light & Power.  John, his wife and son live in Boardman neighborhood.  John has a masters degree in Resource Economics and a Masters Degree in Public Policy, both from Duke University, and a bachelors in economics from Kalamazoo College.  For the last eight years John has worked in the utility field, where he managed energy efficiency and water conservation programs. 
 
John says of his appointment to TCLP, “I’m looking forward to serving at this important time. In addition to ensuring we make smart investments to meet our base load needs, I’m interested in working with staff and the Board to help our community be more efficient with energy. Ultimately, I would like to see TCL&P become a trusted adviser for residents about energy decisions in our homes and businesses. “
 
John is also Chair of the Board of SEEDS, a solutions-focused environmental non-profit organization. www.ecoseeds.org.  In his free time, he  and his family get outside as much as possible to bike, run, and ski in our area.  Welcome to city government, John.  Your service is deeply appreciated.

The city budget is on the table for discussion Monday night. This post covers what we’re doing now, and then the big picture discussion coming in a month or so.

snapshot for this year

As outlined before http://planfortc.com/2010/04/12/city-finances-part-1-april-12/, the economy has put a strain on Traverse City but the city manager is working through it. The city commission has determined to spend $1 million on streets and sidewalks again this year. The CC also decided that in a year of flat revenues, the city must hold the line on total employee costs. The proposed budget this year does both of those things. The city plans to use about $375,000 from our excess fund balance* to supply needed funds to attain the $1 million street and sidewalk spending target. *Our excess fund balance is the amount we have in the bank over and above our policy of keeping 25% of our total general fund spending in savings.

And total employee costs are projected at around $8.56 million, a reduction of about $61,000 from last year. Because per employee costs are rising about 2% per year, holding overall employee costs flat was achieved by eliminating four positions – three by retirements, and one layoff. Otherwise, employee costs overall would have been up about $215,000.  Full details on this year’s budget are here:  http://www.ci.traverse-city.mi.us/City_Commission/Agendas/ Click on “budget report” (it’s a big download).

the big picture

 So after the $1 million for streets and sidewalks, what else do we spend your money on?

The city has a roughly $14.9 million budget. (For a legal reason, this is actually accounted for in two pieces, one for police and fire pensions – more on that below – and the rest for all other general fund spending).

Three years ago, at my request as a new commissioner, the city put together a set of comparable Michigan cities with which to compare our spending. At the time, Traverse City was in the top quarter of those cities in per capita general fund spending, and 1^st out of 20 in public safety spending (police and fire). Examining the reasons for this, and what if anything could be done about it, were the genesis of the COFAC group, who studied city finances for a year and a half and produced a report you can find here: http://www.ci.traverse-city.mi.us/COFAC/ .

This year – again at my request – the comps were updated. You can view the results at:  http://www.ci.traverse-city.mi.us/agendas/Packet20100410.pdf pages 27-28 of the pdf.

 Our general fund spending in 2010 is 7% higher than in 2007 ($989.49 vs. $925.72). This was true even though the city workforce has been reduced by 7%, or 12 employees, in two years.

public safety

 Of the 20 comparison cities, TC is #4 on general fund spending per capita and #1 on public safety spending per capita.  Mean public safety spending per capita among the 20 cities is $322.41. TC is $486.52, or 51% above the mean. It is up about 6.4% from 2007. This is true even though the police and fire departments have been reduced by attrition (retirements) the last couple years – 5 positions in the fire department and a couple in the police department. (Leaving these positions unfilled is what has paid for the $1 million in street and sidewalks per year.)

 By far, police and fire are the largest expenses the city has. The city’s police budget for next year is about $3.5 million. Our fire budget is about $2.65 million. Pensions for police and fire are accounted for separately now. This year city taxpayers will spend $1.2 million to fund police and fire pensions. Add it together and you have $7.35 million, almost half the total budget.

Now, any discussion of public safety spending needs to say – right up front – that our police and fire personnel do an outstanding job. They are highly trained and very responsive. Chief of Police Mike Warren and Fire Chief Jim Tuller are consummate professionals.

But if the city is looking at expenditures, and at least $1 million is dedicated to streets and sidewalks, and public safety is half the budget, and Traverse City spends more per capita on public safety than any comparable city in Michigan, and city residents want additional infrastructure investments and/or tax relief, it is logical and necessary that these areas must be examined.

the challenges of serving a region

Why does the city spend the largest part of its budget and the most per capita on police and fire? Part of the answer relates to the city’s position in the region. 130,000 people in the region use what the city provides in various ways, but only around 14,000 city residents plus those non-residents who own city property pay for what the city does.

Another part of the regional nature of the city is that some of this spending is paid for by other sources. Examples include the Airport paying the city for fire protection, and the Cherry Festival paying for police overtime during the festival.

Act 312

Another thing that drives spending – and this is faced by cities everywhere – is Public Act 312. Act 312 is the law that provides for the compulsory arbitration of police and fire. It’s compulsory because these workers have a right to collective bargaining, but a community cannot have its police or firefighters go on strike. So arbitration is how the disputes are settled.

Under Act 312 arbitration, each side (the city and the bargaining unit) submits its best “offer.” The arbitrator considers a number of factors, primarily wages and benefits of police and fire in other communities, and selects the offer the arbitrator thinks is closest to the right contract. (Baseball fans might be familiar with this kind of arbitration from player contracts).

The arbitrator does not consider the city’s ability to pay. As a result, with arbitrators looking primarily at other similar contracts in other communities and with negotiations driven by the need to avoid arbitration, police and fire contracts tend to rise year after year. Then, when the city makes contracts with other union and non-union personnel, the contracts tend to track the police and fire contracts. This is how a city reduces its work force 7% in two years, yet finds its employee costs and per capita spending rise and its #1 ranking in per capita public safety spending maintained.

what are our options?

We really have three options when it comes to police and fire budgets.

Option 1 – Stay on the track we are currently on. Continue incremental reductions in police and fire personnel by attrition until certain minimums are reached that will still provide an acceptable level of service. This is likely a few more positions in the police and fire department. Pros: levels of service are largely maintained; difficulties of significant change are avoided. Cons: savings, while significant, are more modest than other options.

Option 2 – Reduce the overall level of service. Examples could include consolidating to one fire station on Woodmere (this would have to be built); or eliminating sector police patrols. Pros: These options are within our control (i.e., they don’t require the agreement of the County or other units of government. Cons: Possible lower levels of service.

Option 3- Attempt to restructure services to provide them regionally. This could include working with Metro Fire for fire services. It could include seeking sheriff deputies from the County who would be assigned to the city under the same cost sharing arrangements the County now provides to the townships. Pros: These options provide the most savings over the long term, as well as promoting regional cooperation and economies of scale in the delivery of services. Cons: This would involve big changes in the way things are done, perhaps beyond what city residents will have a comfort level with. Also will require support of other governmental units. Regional cooperation is easy to say, hence lots of people like to say it – but when push comes to shove it’s hard to do.

Look for additional posts on the specifics of some of these options in the weeks ahead.

Post-script

All of the above discussion was about the expenditures side. The other side is the revenue side. Revenue can be raised by increasing the value of the tax base through economic development, and/or by regionalizing revenue sources through a city income tax coupled with a corresponding reduction in city property tax. (The latter would require a vote of the residents.) These are also subjects that require in-depth discussion. Posts covering them will be presented here later.