Proposed Budget for Dearborn Includes Layoffs, Closures and Millage Hikes

More details about Dearborn Mayor Jack O’Reilly’s three-year budget proposal have been released this week in the form of a memo issued to members, including recommendations for millage increases, property closures, and city employee layoffs, pay reductions and benefits.

It is expected that the City Council will set several dates for public discussion throughout the month of May, although no dates have been set yet. City Council President Tom Tafelski said Thursday after the council's Committee of the Whole meeting that they are waiting to set public hearings until after budget sessions are held with the mayor and various department heads. Those meetings are expected to begin the week of May 9.

Tafelski added that budget approval efforts are slightly behind this year, but that the public will have time to give the City Council input.

The budget must be ratified by June 30.

Here are some of the highlights from Mayor O’Reilly’s budget proposal.

Revenue

• Revenue has been hit hard by continually decreasing taxable value of property. Values “have decreased to the fiscal year 1995 level, representing a 17-year loss of growth.” As such, the proposed budget includes increasing the tax rate from the current 13.62 mills to 15, which is the maximum allowed by the city charter.
• The mayor proposed a millage increase ballot proposal for November 2011. If passed, the proposal is expected to increase mills to 18 with a sunset provision, based on previous discussions the mayor has had with the public. However, the budget proposal does not include details about what that proposed millage increase would entail, nor does the current budget proposal include this revenue.
• Additionally, a .25 garbage and rubbish millage increase is proposed, bringing the mills to 1.63 for those services.
• Based on the Community Task Force’s recommendations, there is a proposal to increase all rates and fees by 10 percent. The resulting revenue is estimated at $303,471. Some of the increases would require ordinance amendments, to be considered by the City Council.
• It is proposed that parking rates would be increased from the current 50 cents an hour to 75 cents an hour. General fund support for the parking system would decrease $490,000 with this change.
• The sale of the Dearborn Towers is expected to generate $6 million, to be applied in FY 2012. Additional property sales would total $7.8 million, to be applied in FY 2014.
• Residual proceeds from the sale of the Andiamo’s property “are proposed to be applied to offset the operating subsidy” for the next three years. However, because the proceeds will be depleted by that point, the museum will have to have a plan in place to be financially self-sustaining by the end of FY 2014.

Cuts

• The following facility closures and sales are proposed to take place over the next three years: the closure of Hemlock, Ten Eyck and Whitmore Bolles Pools in 2012; the closure of the in 2012; the closure of Crowley, Lapeer and Summer-Stephens pools in 2013; the closure of the and in 2013; the closure of on Wyoming in 2013; the closure of the r and in 2014.
• The Health Department will be phased out entirely by the end of this fiscal year, and was not included in the city’s three-year budget proposal.
• Services such as sidewalk snow plowing in the business districts will be discontinued.
• The annual Beach Bash at Camp Dearborn—including fireworks­—will be discontinued starting this year.

City Employees

• Another 42 full-time city positions will be eliminated in FY 2012. According to the proposal, 206 such positions have been eliminated since 2001, representing a 35 percent reduction. An early-out program is set to begin June 1.
• The facility closures as outlined in the budget proposal will also result in layoffs and bumping of positions. Additionally, part-time staff paid for by the general fund will be decreased by 30 percent in all departments, excluding recreation and grant-funded positions.
• General employee pay reductions will total 10 percent in 2012, 10 percent in 2013 in the form of a 36-hour workweek and reduced facility operating hours, and 5 percent in 2014 in the form of unpaid furlough days.
• A contractual pay increase of 3 percent will take place for public safety positions in 2012, with 15 percent and 5 percent reductions proposed in 2013 and 2014, respectively.
• Pension contribution rates will increase across the board. Mounting health care costs for city employees are described as reaching the point of being “unaffordable,” given inflation rates. Health care disbursements currently cost the city more than $19 million, including active and retired employees.

Mayor O’Reilly added at the end of the budget proposal memo that the faster changes are made, the better when it comes to closing the budget gap for Dearborn.

“The faster right-sizing efforts are taken to avert financial crisis, the lower the risk of debt rating downgrades or the state appointment of an emergency manager,” he wrote. “While the city has taken significant actions for more than 10 years, the financially driven community depreciation spiral closely looms and prompt continued actions are necessary.

“I am hopeful that the right things can be done in a timely manner to head off the wrong forced defaults.”