2013 Budget Beginning

by Jaime Greene on February 26, 2013

February 25, 2013

Greetings residents!  It is Budget time! I feel as if we were just here and I am having déjà vu.  We yet again have a $300,000 deficit.  It is crunch time and we have very difficult decisions to make.  It is time to think out of the box and “all options are open”.

 

The Council had an amazing meeting.  There was great cohesiveness, yet it was not a kumbyah meeting either.  Proverbs 27:17 says, “Iron sharpens iron; so a man sharpens a friend’s character.”  We got down into the nitty gritty and had excellent productive conversation.  There was some hollering but not at each other.  The frustration came from the mandates that were given to us by the State and Federal Governments.

 

The Council is in absolute one accord that we need to stand up to the State of Michigan and the Federal Government.  Those two entities are killing local municipalities.  If we continue to head down the road we are there will no longer be local control.  Through Acts, Regulations, and laws they are taking away our freedoms to govern ourselves at a local level.  This must be stopped.  I encourage you as a voter to fully educate yourself when you vote.  EVERY SINGLE CIRCLE COUNTS!  Do not look to the media for answers.   Call those folks up and meet them.  When they come to your door stop them and ask them questions.  We all have a role in Democracy!  We live in a Democratic Republic.

 

A democracy is one where the government is directly chosen by the people (i.e., through elections); a Republic is one where government authority is derived through the will of the people. Thus, a Democratic Republic would be one where ultimate authority and power is derived from the citizens.

 

For Example:

 

The Constitution directly states that the citizens (“We the people”) are the foundation of government, and that the government is chosen though democratic elections. Thus, it is a democratic republic.

 

You have the power to make a difference.  Now on to a summarization of our Budget meeting.

 

 

2013 Assessments

We have good news!  Property values are going up!  While some areas in town have gone up, others have gone down.  On average it appears the market is leveling off.  We will have a slight reduction ($36,852) in the General Fund this year due to this but I believe this is a good sign.

 

Personal Property Tax (PPT)

Personal Property Tax (PPT) is a tax on business for the items inside their businesses.  For example: Time on Main (our coffee shop in town), has to pay a tax every year for having their espresso machine.  Silly right?  I agree.  However, this tax was one of the ways the State of Michigan funded or “Shared” with local governments their tax revenues in what the State calls Revenue Sharing.

 

Revenue Sharing, or what I call Revenue Non-Sharing, has been a major budget frustration for the City.  There have always been expectations, some Constitutionally, that the State shares the revenues it receives from various taxes it imposes on businesses and individuals.  They have withdrawn this in recent years, which have left local municipalities such as ours to cut spending.  In truth it is because they didn’t want to cut their own budget they forced us to cut ours, which the City of Richmond has taken in strides.  I am simply amazed at how we even function as a City with what is in our General Fund.

 

The General Fund is the main “Fund” or pool of money that pays the bills in the city.  It is though that “Fund” that our police, fire, library, office staff, electricity… you get the picture, get paid.

 

The State has now gotten rid of PPT, kind of.  It will not be solidified until 2014 when brought to a vote.  It could all go back to the way it was (just think of all the crazy stuff that the administration has to do paperwork wise and number crunching all for nothing).

 

Because so many local municipalities absolutely needed those funds to run basic safety essentials, the State has “offered” a way of giving this money back.  (Remind you PPT is not the first Revenue Sharing they have taken away.  The State has taken away others and put penalties on municipalities for not complying to their way of doing things, again taking away local control).  And here the dance begins.

 

To replace the $43,641 the City loses from PPT collected by the State, they have given us “options” to recover our losses.

 

#1 Council has been given the authority to institute an “Essential Services Assessment”.  Translation we can tax the businesses ourselves to replace the loss.  I believe this is ridiculous and it makes the City look like the “bad guys”.  It appeared that Council was not in support of this.  It was actually discussed that many other communities will be forced to do this and we will not, so it may give us an advantage by making Richmond more desirable to business because we do not add extra taxes.

 

#2 Something the State is calling “Use Tax”.  Translation the State will give us $30,491.  I’ve got nothing more to support that.  It is unclear where they will get that money from and if we do somehow get it, I do not see how it will be sustainable.  Basically I am not holding my breath.

 

There are a few other tricky things about this but you are more than welcome to call me or e-mail me if you would desire all of the details.

 

Affordable Health Care Act AHCA (aka ObamaCare)

For the life of me I cannot imagine why on Earth this would be called “affordable”.  AHCA will be the absolute demise of our free market society.  The impact on the City alone is quite difficult to wrap ones head around.

 

Some basic figures:  On the books right now the City has 33 Full time employees this is not including ones that we have lost due to retirement or other circumstances.  It is Council’s desire to replace them.  We have many part time employees; here is where it gets tricky.  According to the AHCA, part time employees are considered “Full Time Equivalences” through an equation.  Meaning that we actually have 46 full time “Equivalent” employees according to AHCA.

 

The threshold for being considered a large organization is 50.  At 50 employees you have offer Health Care to any employee who works over 30 hours.  Translation if we move to 50 or more employees an employee who consistently works over 30 hours a week will be considered full time and we would have to pay them benefits.  Considering our circumstance of a $300,000 deficit we cannot afford to pay those benefits so we would then be fined for not offering them.

 

What does this all mean?

#1 We may have to bump those employees who work over 30 hours down to 28 hours.  If we do that those employees would lose pay.  Further the City could potentially lose great people. (Direction we do not want to head into but may be forced.)

 

#2 Possibly contracting positions that require more than 30 hours a week but less than 40.  (Not a bad idea there would be adjustments but then no one will lose hours.)

 

#3  We are FORCED by AHCA yes FORCED to not hire ANYONE else.  We are stuck at our current hours/employee number because it will throw us over the threshold and we cannot afford it.  This includes part time employees because remember they go into the equation for “Full Time Equivalents”.  THE FEDERAL GOVERNMENT IS FORCING US TO NOT GROW EVEN IF WE NEED TO!!!  The Federal Government is dictating what we at the local level need.  For example:  We get an influx of businesses or residents.  We then need a few more people to “run” the City (we are at a bare bones crew now).  We receive a bit more tax revenue, which normally would cover the cost of the new employees.  BUT NO we would have to offer benefits to those workers that fall between the 30-40 hour workweek.  So hiring would not only increase our cost by the wages, but we would also incur the cost of the Fines, a penalty for not complying, or we would have to offer Health Care to those employees between the 30-40 hour gap would could go well into the $100,000.

 

Am I explaining the circular reasoning well enough?

 

Big Picture!  See how this impacts our small community?  Further ask yourself, how does this affect business opportunity to grow…THEY CAN’T!!!!  Which means no business growth, economy goes in the tank.

 

(Stepping off of my soap box)

 

Seasonal Mowing

There has been a consensus to contract out grass mowing.  Yea!  Our DPW workers can spend time on issues they are professional trained on.  We are down a few workers.  Unable to replace them at this time this will relieve a tremendous burden off the DPW.

 

TIFA aka the Elephant in the Room

I have written previously about TIFA.  Please see that post for an explanation of TIFA

 

http://jaimegreene.net/2012/03/tifa-what-is-it/

 

As I stated in 2012 I will reiterate again.  TIFA has been a tool utilized by the City to fund various projects.  When this was the “land of milk and honey” it worked extremely well.  Yet as previously stated, if the TIFA did not exist, the taxes would go into the General Fund.  Let me break down the numbers for you.

 

TIFA captures a total of $614,765

Broken down parts

$452,000 – From the General Fund

$162,765 – From the County, and Community College

 

IF TIFA were to not exist, the City would lose $162,765 in taxes that would go back to the County.  We have a $300,000 deficit in the budget.  If TIFA did not exist then we would have a surplus of $152,000.

 

Ok wait a minute I do not want to lose the $162,765 either.  So I am certainly not proposing we ditch the TIFA, there is still value to it.  But do you understand the conundrum?   We are currently waiting on a legal opinion to see if we can adjust the capture so the TIFA won’t starve the General Fund.  If we are allowed to shift the TIFA capture without repercussions, I hope we will be able to fully fund the General Fund by this means.  We would still have $314,765 to continue funding our priority items within the TIFA.

 

By the Way!  There is almost 3 Million in the TIFA Fund Balance.  And yes there are some rather large projects that need to be funded.  HOWEVER, the TIFA plan needs to be updated so that 3 Million is utilized to its fullest capability… so wants need to shift to dire need.  I will post when those planning meetings are if you are interested in attending.  Please check my Facebook page.

 

 

Conclusion

And all this folks is what you elected us to accomplish.  Deficit of $300,000.  I am struggling to find the fat, can you?  The next few months will be a tough road ahead.  I certainly welcome your opinions and any ideas at all where we could find cost savings.  I personally believe we have already cut, and cut, and cut, and cut some more, so much that some of our Departments would not longer be able to function if they take another slashing.

 

Most of you reading this know that I am a fiscal conservative.  There are some things yes that could be trimmed but I would not be able to get the complete consensus of Council.  Which is ok, that is why there are 7 of us.  Please know that I am being very serious when I state there is not much else to cut, beside staff, which I certainly don’t want to do, and Health Care, which we will be forced to change because of the AHCA as we will be fined for the current plan we have (for another blog).  The idea of restructuring has occurred to me, to utilize staff in a different means, but figuring that all out is not my purpose on Council I can just make the suggestion.

If you made it this far I congratulate you!  Thank you for sticking with me!  May God’s Blessings be poured upon the City of Richmond!

 

In humble service,

Jaime Elizabeth Greene

 

 

{ 1 comment… read it below or add one }

Arianne Peterson March 9, 2013 at 9:01 am

Council Woman Greene,
As a citizen of the State of Michigan and a resident in Macomb County I value the transparency and information you have provided. I am a business woman, the blood of entrepreneurism runs in my veins hot and bold. Revenue, Revenue, Revenue! When I built my business and saved for my home, I worked more hours and took on more opportunity to make more money. Lost on our society is the idea that business needs to do more business. More money is more money, plain and simple Our economy uses the dollar to trade, barter, and function as a society. I hope we will all find a way to build up business and repeal laws or regulations that impede the free market growth. Are there more regulations or tax laws on the municipal level that could be removed to allow the business owners to make more money or put it back in their pocket to expand their companies? Just curious…

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