Service Cuts, Millage Hikes Likely to Address Budget Deficit

At his 2011 State of the City address Wednesday night, Dearborn Mayor Jack O'Reilly Jr. didn't spend much time focusing on the great things the city has done, but the things needed to ensure the city's future, including cuts and changes to services, as well as almost certain millage rate hikes.

The majority of those center around a projected $20 million deficit Dearborn faces if the city's budget is not adjusted–and fast. Lead up to by months of discussion of broad terms, at his State of the City address, O'Reilly dug into the first specifics of what Dearborn residents could be facing in the years to come.

"In four years, we will have lost about a quarter of our revenue, or $25 million, that was dedicated to providing you public services,” O'Reilly said bluntly to an audience of about 200 at the Henry Ford Centennial Library. "Partly due to this dramatic loss, we are expecting at least at $20 million deficit in the next fiscal year if changes are not made now.”

Losses for the city include a drastic drop in taxable property values, a $6 million decrease in state revenue and loss of personal property taxes totalling $16 million.

The reality, O'Reilly said, is that a combination of service cuts and methods of delivery, as well as increases in tax revenue from residents, is critical to closing the budget gap.

Though O'Reilly did not detail exactly which city services would be affected in coming months, he did address the specifics of tax hikes. The first measure will be a recommendation to City Council to increase millage rates from the current 13.62 to 15–the maximum allowed in Dearborn as approved by voters.

Furthermore, O'Reilly said that a proposed 3.5 hike in millage rates could end up on November's ballot. If approved, however, it would include a sunset provision,  "making the tax rate increase temporary, with an ending date established by law,” he explained. "That would give you, as voters, a powerful tool to hold us accountable. And it would require us to be as sufficient and direct as possible to expediently get rid of that structural deficit.”

Cuts to services are expected to be revealed in O'Reilly's budget proposal, which will soon be introduced to City Council in a new three-year format, which is expected to better outline the long-term financial goals of the city.

O'Reilly explained that instead of an outright slashing of services, the city would be examining ways to work with other Dearborn entities–or even other cities–to provide services. He gave the example of the city's move from in-house trash removal to its current collaboration with Republic, which has handled the job in Dearborn for over 20 years.

O'Reilly compared the changes ahead to Ford Motor Company's restructuring, saying that after all is said and done, Dearborn residents will see the benefits of the city's plan.

"It took great courage and sacrifice, but we need to acknowledge that the method is working for Ford," he said. "The same can happen for our city if we are willing to pay the price for success. That means sacrificing some services we may feel very strongly about. It means accepting change as something we critically need. It means putting more of our hard-earned money back into the community as a way to protect our investments."

As in the held last month, O'Reilly brought up the fact that while by July, 30 percent of government jobs will be cut, a drastically less number of fire and police jobs were lost. This is due to the fact that Dearborn has minimum staffing set in place for both its police and fire departments, while most cities only mandate fire minimums.

While he didn't mention whether the city is looking to cut public safety jobs—a measure that would require voter approval of a change in minimum staffing—O'Reilly alluded to the fact that the departments are sucking up a large amount of public funds.

"We are not taking in enough operating tax dollars to cover all of the costs of running our two public safety departments–let alone all of our other services that add to your quality of life," O'Reilly said. "Believe me, we will never compromise on public safety. But we need to understand that it’s a matter where we’ve got to look at how can we manage in light of those challenges.”

After taking several questions from the audience about the specifics of the city's plans, O'Reilly ended the night on a positive note, assuring residents that the city would persevere.

“These are unprecedented times. These are times we never imagined and no one foresaw," he said. "But we can get through them, and … we will make it work."

The full State of the City address will be shown on City of Dearborn Television starting Thursday, Feb. 24, and will be available for viewing on the City of Dearborn website starting Friday, Feb. 25.