Arbor Update

Ann Arbor Area Community News

Councilman Greden's City Budget Overview

31. January 2005

[posted with permission]

January 2005

Dear 3rd Ward Resident-

Happy New Year! As you know, the City of Ann Arbor – like most cities, counties, and states – faces a difficult financial situation. The City Council is planning the City budget for fiscal year 2006, which begins on July 1, 2005. Over the next several months, I plan to send several e-mails updating residents about the budget process. This is the first message in that series of e-mails. The purpose of this e-mail is to provide background information regarding the City’s budget. I feel it’s important for residents to have a full understanding of the City’s budget before we begin discussing possible revenue increases or spending cuts. I plan to issue additional e-mails in the coming months outlining the efforts the City has undertaken in recent years to cut costs without reducing any major City services; the problems that are causing the ongoing structural budget deficit; and the various options to cut spending and/or raise revenues.

Throughout this process, please e-mail me at
Lgreden@ci.ann-arbor.mi.us with questions or comments.

Overview of the City budget

The City budget for the current fiscal year (2005) is approximately $288 million. The City’s sources of revenue include:

  • property taxes;
  • fees (e.g., swimming pool and golf course fees, water bills, licenses, fines, etc.);
  • revenue sharing and financial grants from state and federal governments;
  • revenue from the sale of bonds (e.g., water bonds, environmental bonds, etc.)
  • investment income

The current property tax rate for a “homestead” property in the City is 47.3625 mills. However, only 35% of a property tax bill – 16.9015 mills – is paid to the City of Ann Arbor. The remaining 65% of our property taxes are paid to other governmental entities, including:

  • Ann Arbor Public Schools;
  • Washtenaw County;
  • Washtenaw Community College;
  • State of Michigan (general school millage);
  • Ann Arbor District Library;
  • Washtenaw Intermediate School District (WISD)

Ann Arbor’s 16.9015-millage rate is lower than the property tax rate levied by many neighboring communities, including Ypsilanti, East Lansing, Kalamazoo, and Ferndale.

The 16.9015 mills paid to the City are divided between the general operating millage and various special millages:

  • General operating = 6.2125 mills
  • AATA = 2.0948 mills
  • Debt service (e.g., environmental bond re-payments) = 0.600 mills
  • Street repair = 1.9693 mills
  • Solid waste collection = 2.5137 mills
  • City employee benefits = 2.0948 mills
  • Park acquisition (e.g., the “greenbelt millage) = 0.4871 mills
  • Park rehabilitation & development = 0.4601 mills
  • Park repair & restoration = 0.4692 mills

The City’s $288 million budget is divided between the “general fund” and several “special funds.”

“Special” funds

“Special” funds are established to set aside revenues and expenditures for specific purposes. The City’s special funds include:

  • Park Rehabilitation & Development Fund
  • Park Repair & Restoration Fund
  • Park Acquisition (the “Greenbelt” fund)
  • Water Supply System
  • Sewage Disposal System
  • Stormwater Sewer System
  • Major Street Fund
  • Local Street Fund
  • Golf Enterprise Fund
  • Solid Waste Enterprise Fund

Some of these special funds – such as the three parks-related funds and the Solid Waste Enterprise Fund – are funded by dedicated property tax millages that were approved by the voters and are part of the 16.9015 total property tax millage paid to the City (as outlined above). Other special funds are funded by their own revenue stream and/or state and federal grants. For example, the main revenue sources for the Water Supply Fund are the quarterly water bills paid by property owners connected to the Ann Arbor water system and proceeds from the sale of bonds. Money generated by special funds may not be used for any other purpose. In other words, funds from the special parks funds may not be used to pay for police or fire operations.

“General” fund

The City’s “general” fund provides funding for many major city functions, such as police, fire, park operations and maintenance functions not covered by the special park funds, community development, the City Attorney, and street lighting. The 2005 general fund budget is approximately $76.8 million. The main source of funding for the general fund is the City’s operating property tax millage of 6.2125 mills.

The 2005 general fund is broken down as follows:

Safety Services (police, fire, emergency management) = 41.8% Police Chief Dan Oates leads the Safety Services Area. The Safety Services budget consists primarily of salaries and benefits paid to police officers and firefighters. Labor contracts for police officers and firefighters are regulated by State law, which limits the City’s ability to reduce expenses related to wages, health care, and pensions. For example, the minimum staffing levels required by the labor contract with the Firefighters Union means that any further reductions in our Fire Services Unit would force the City to close one of our five remaining fire stations. The Police Services Unit include road patrol, traffic enforcement, dedicated “beat cops” assigned to specific areas of town, the detective bureau, and other support services. The Fire Services Unit includes the firefighters stationed at the City’s five fire stations.

Community Services (parks & recreation, community development, City Clerk, planning & development) = 11.0% Jayne Miller leads the Community Services Area. Her department provides a variety of high-profile services. The Planning & Development Unit reviews site plans, inspects rental housing, issues building permits, and administers the City’s historic preservation program. The Community Development Unit allocates several million dollars in federal funds – as well as $1.3 million in City general funds – to human service agencies. The City Clerk maintains all official City records and administers local elections. The Parks & Recreation Unit manages park facilities, such as swimming pools and community centers. As described above, the three voter-approved parks millages, as currently written, may not be used for park operations, and thus expenses for operating park facilities must come from the General Fund.

Public Services (park maintenance, project management, street lighting, customer service, solid waste) = 9.7% The Public Services Area, which is led by Sue McCormick, provides a variety of services, including cutting the grass at City parks. The three special parks millages approved by voters may only be used to acquire, develop, and rehabilitate parkland. As currently written, the millages may not be used to provide routine maintenance at local parks, and thus these maintenance expenses must be included in the general fund. The Public Services Area also handles road construction and maintenance; water and sewer systems; solid waste; streetlights that ensure safe neighborhoods; and customer service functions to assist citizens with solid waste and water matters. These departments have been significantly re-organized in recent years to save money and provide more user-friendly service for Ann Arbor residents.

Finance & Administrative Services (accounting, risk management, information technology) = 8.8% The City’s Chief Financial Officer, Tom Crawford, leads the Financial & Administrative Services Area, which includes the clerks who collect taxes and fees, accountants who ensure compliance with financial reporting guidelines, and the information technology unit. The Assessor Unit – which appraises real and personal property located inside the City – is also included in the Financial & Administrative Services Area.

15th District Court = 4.5%
The 15th District Court, which is mandated by State law, is comprised of three District Court judges elected by the citizens of Ann Arbor. The District Court handles, among other things, misdemeanors and small claims. The Court generates significant revenue for the City through filing fees and fines paid by individuals who use the Court system.

City Administrator = 2.73%
The City Administrator’s office includes the City Administrator (Roger Fraser) and his staff; the Human Resources Unit; and the Environmental Services Unit. The Environmental Services Unit includes the City’s Environmental Coordinator and Energy Coordinator.

City Attorney = 2.06%
The City Attorney’s office is led by the City Attorney (Stephen Postema), and includes his staff of attorneys, paralegals, and assistants. The City Attorney provides legal advice to City staff; negotiates and reviews contracts; defends lawsuits filed against the City; and prosecutes individuals who violate City ordinances. The Attorney’s office generates significant revenue for the City through its role as prosecuting attorney for the City.

Mayor & Council = 0.41%
The Mayor’s office includes one individual who serves as Executive Assistant to the Mayor & Council. This budget also pays the salary for the Mayor and Council members.

Non-departmental transfers = 19.0%
A significant portion of the general fund is transferred to other units of government. For example, these transfers include the dedicated property tax millage for the AATA (approximately 2.1 mills), as well as investments in new technology to make the City’s operations more efficient.

Summary

I hope you find this background information useful. I am a member of the Council Budget Committee, and we have established an aggressive schedule over the next several months to tackle the budget, including three town-hall meetings with residents that will be scheduled in March or April. We will make every effort to balance the budget without raising taxes or eliminating major City services. Unfortunately, after several years of streamlining the budget, I anticipate that we will be forced to raise revenues, reduce or eliminate programs, or both. It is important for Ann Arbor residents to play an active role in shaping the budget. Throughout this process, please e-mail me if you have questions.

  1. Much as I may be displeased with some of Greden’s past actions, I have to give credit for his communications.
       —Murph    Feb. 1 '05 - 11:22AM    #
  2. Dear Council Member Greden,
    Perhaps you and your fellow council members should consider taking care of your legal and moral obligations to your employees and by association the citizens and not spending 5 to 10 times the actual cost(probably alot more) while attempting to deny and consequently defend an inmorral and indefensible position (regardless of what you may been or will be told) with respect to denying legitimate and extrodinarily well documented workers’ compesation claims. If you do not know who I am already just ask Roger Fraser I am quite sure he will fill your ears with his BS. If you were to really look at and scrutinize what he and his Leiuteants (Human Resources and Legal Dept. would be excellant starting points!)are and have been doing you and the vast majority of the public would be amazed and appalled. I find it all to be quite a contradiction with respect to the “image” of Ann Arbor and the public s’ perception of this “image”. With this in mind and in the absense of any faith whatsoever that the City of Ann Arbor will ultimately do the proper thing you should know that EVERYTHING I have witnessed, been subjected to, as well as all of the sorted details will be made very public in as many forums as possible, in the near future. In Summary I must express my absolute disgust with the Adminitration and its’ actions. It (the Administration”)is and has been unlawful, disgraceful, malevolent and ultimately exceedingly costly to its’ citizens who pay the taxes. These citizens have a high expectation that the HIGHLY paid administrators in the City of Ann Arbor will do the appropriate and prudent thing and NOT create 10 times the problems with 10 times the cost as they they most certainly have done in this case, it is is travesty and will need to be addressed as such.

    Sincerely,
    Jeff Harmon
       —Jeff Harmon    Jun. 1 '05 - 10:39PM    #
  3. Could you tell me the name of the company that supplies the new energy efficient LED street lights. Thanks


       —neil dorsey    Feb. 16 '06 - 05:20PM    #
  4. Neil, call Michael Bergren, Assistant Field Operations Manager, City of Ann Arbor Public Services, at 734-994-4918. He would know.


       —Steve Bean    Feb. 16 '06 - 11:54PM    #