Ann Arbor mayoral candidates talk budget, economy, other issues in third public debate

"In terms of the brightness of our city, it is being dimmed, literally," she said with a laugh. "Our street lights are being shut off to save money."

As part of budget cuts being implemented by the city's administration, about 1,200 streetlights — or a total of one in six lights around the city — are being turned off to save an estimated $120,000 in energy costs.

Lesko and Hieftje, both Democrats, will face off in the Aug. 3 Democratic primary. The winner likely faces two independent challengers in November, including Steve Bean, head of the city's Environmental Commission, and William Bostic Jr., a recent University of Michigan graduate.

Lesko argued throughout the debate that the city doesn't have a revenue shortage problem, but rather has an overspending problem.

"We have a city government that has been allowed to overspend and run up debt for years," she said. "Instead of reining in spending, taxpayers are asked to pay more and accept fewer services. We're being nickeled and dimed to death with fees and fee increases. I'm committed to putting services center stage, and I have the political will to say no to nonessentials and rein in overspending."

The debate, which lasted only 30 minutes, was hosted by the League of Women Voters of the Ann Arbor Area. It was aired live from inside CTN's television studios and taped for rebroadcast.

Hieftje once again hammered on the fact that cities across Michigan are suffering from falling property tax revenues and deep cuts in state funding.

"Highly regarded cities like Grand Rapids, Troy and Royal Oak have recently been forced to close facilities, raise taxes or make deep cuts in staffing," he said. "In Grand Rapids, they opened only three of their six swimming pools this year. But in Ann Arbor, the millage is lower now than it was 10 years ago, the swimming pools and the senior center are open. This is despite the fact that on July 1, the city lost nearly 5 percent of its property tax revenues from the former Pfizer."

Hieftje said the city continues to move forward, though. He said Ann Arbor is on the road to "ever greater efficiency" that started nearly 10 years ago when city officials began working on restructuring city government.

"There was a time when we had close to 20 people heading up departments in the city," he said. "That's been cut down to five areas, what we call 'bubble heads,' because it's a bubble chart. Those types of changes have streamlined city government ... and I think it served us very well."

Hieftje estimated the reorganization done this past decade is now saving the city $15 million a year. "And that continues every single year," he said. "Actually, our CFO puts it quite a bit higher than that, but I'm being very conservative with these numbers here."

Lesko said a lot of cutting still needs to be done in the city's budget because there's still a lot of what she considers "nonessential spending."

"We've made some decisions in our city government to fund, for example, a new underground parking garage," she said. "We have allocated money to the IT, fleet and solid waste departments for, in essence, nonessential spending. We need to go through our budget with a fine-tooth comb and identify areas where we are funding nonessentials."

Lesko said Hieftje's argument that the city hasn't raised taxes in the last decade is "almost a red herring because fees for water, sewer and solid waste have been raised dramatically."

"It's not accurate to say we've lowered the millage without saying we raised your fees," she said. "The raise in fees was how the overspending in city government has been supported."

Hieftje said the city's water and sewer rates have gone up, but at lesser rates than surrounding cities and other peer communities in the state.

"At the same time, we're preparing to build a huge new addition — a replacement, actually — at our sewage treatment plant," he said. "Something that is well over $100 million. And yet our rates have been going up less than 4 percent, for the most part, while peer communities are going up sometimes in double digits."

Lesko offered a critique of the business climate in Ann Arbor. She said she has spent a lot of time talking to individual business owners up and down Main Street and throughout Ann Arbor and doesn't like what she's heard.

"The word on the street is that our city government is unhelpful, if downright arrogant, that our city government is cumbersome to deal with, that our city government is nonresponsive, and our city government, in essence, makes it difficult for folks to do business in Ann Arbor," she said. "No city can afford to have that kind of a reputation amongst its business folk."

Lesko also criticized the city's investment in Ann Arbor SPARK, the area's public-private economic development corporation.

"Our city has experienced a net loss of jobs," Lesko said. "The Detroit Free Press did an expose, in fact, on SPARK and the reporter told us that, in the state of Michigan, only about 900 jobs, real actual jobs, have been created. We need to look at other kinds of economic development engines. We need to bifurcate that process. SPARK underscores startups. We need to support existing small and medium-size businesses that we already have."

SPARK recently reported it had seven project successes in Ann Arbor in 2009 that resulted in 265 new job commitments and the retention of 450 jobs the city faced losing. Overall, SPARK assisted 61 innovation startups in Ann Arbor last year using tax capture funds from the Local Development Financing Authority.

SPARK also reported working on six pre-seed investments that translated to 27 jobs and $1.5 million of investment. SPARK also reportedly assisted six companies in Ann Arbor with micro-loans that led to 15 jobs and $204,000 of investment.

According to U.S. Department of Labor statistics, jobs in the Ann Arbor metropolitan statistical area have dropped from 178,794 to 164,720 from May 2000 to May 2010 — a nearly 8 percent decline.

While jobs are being lost at a quicker rate than they're being replaced, Hieftje argued SPARK has been successful at attracting jobs to Ann Arbor. He said the city continues to have the lowest unemployment rate in Michigan.

"When I'm in Lansing and talking to other mayors, one of the things I hear from them is 'we wish we had a SPARK,'" he said. "Because SPARK is renowned around the state for an organization that is bringing new business to our city, that is bringing thousands of jobs to our city."

At another point in the debate, Lesko went on the attack against tax abatements, which Hieftje defended by saying the city doesn't give out many of them.

"Tax abatements are a bit like junk food," Lesko said. "We gave Google some tax incentives when they said that they would create 1,000 jobs. We gave them parking spaces. That money came from our general fund."

Lesko said Google ended up creating "nowhere near 1,000 jobs, but we gave them the parking spaces." Instead of tax abatements, she said, the city would be better off to have sound infrastructure, provide excellent services and attract businesses organically.

Hieftje argued Ann Arbor has been "judicious and stingy" about handing out tax abatements.

"Sometimes, however, an incentive is necessary," he said. "Certainly Google didn't grow to 1,000 jobs, but not very many companies have been growing jobs in this economy in this past decade."

Nonetheless, Hieftje said, the presence of Google in Ann Arbor has made a big difference and has helped attract other startup companies like Barracuda Networks that are "hiring a person every week right now."

Lesko, who runs a home-based publishing company, said she would bring two decades of real world experience in management and finance to the city as mayor. She said she would get city government refocused on the basics: responsible spending, services, infrastructure, and neighborhoods.

"We talk about wanting people to move here," Lesko said. "We have to provide them with superior services and excellent infrastructure, superior schools. Those are some challenges that face us as a community. The incumbent has made some claims with respect to lost revenue. We've lost, he said, almost 5 percent of our revenue. That leaves us with 95 percent left. We're not facing any great revenue shortage. We've lost state revenue sharing, about $500,000 a year since 2006. Loss of revenue is not a problem in Ann Arbor. Fiscal management and prudent management is the challenge."

Responding to a question about the role of the mayor, Hieftje said there's more to it than being a voice on council and hiring and firing the city administrator.

"It certainly is being the leader of the council, being the ceremonial head of the city in all sorts of ways," he said, "meeting with people who come in from out of town, meeting with business leaders and other governmental leaders, and there's certainly a role to play in Lansing as well."

Hieftje and Lesko shared similar views on historic districts. Both agree they should be evaluated on a case-by-case basis. Lesko added the city also needs to make sure it continues to grow and see investment.

"Development is inevitable," she said. "We need it. We need the investment. It's how we go about it that needs to change. We need to have much more transparency, open and honest discussions."

Lesko said one of her goals as mayor would be to reopen the city's capital improvement plan and dedicate funding to fix roads, water mains and other infrastructure that is crumbling right now. She called the city's record on maintaining its infrastructure "abysmal," citing reports that say Ann Arbor had the third worst roads in the state and referencing the Stadium bridges.

"Is it foolish to fix the bridge our fire trucks can't go over but must go around to reach our homes and families?" she said. "It's easier to talk about Royal Oak, Troy, and Grand Rapids than to explain to voters why a bridge that carries 20,000 vehicles daily wasn't fixed in 2005."

Hieftje said the city was behind on maintaining its infrastructure when he came into office a decade ago. He said water and sewer infrastructure, particularly, were being neglected and that has changed.

He noted the city, under his watch, also has undertaken projects to build a new maintenance center to replace aging facilities at 415 W. Washington and on North Main Street. He said he's also proud to be completing the new police-courts building next to city hall and to fix the Stadium bridges next spring.

"Our city may be in the best financial condition of any of the major cities in our state," he concluded toward the end of the debate.

Lesko used her closing comments to reiterate why she's running. She called this year's mayoral race a referendum on the direction of city government.

"It's time to stop talking about Troy and Grand Rapids," she said. "Why were our roads and our Stadium bridge allowed to crumble? How do we keep the same thing from happening in the future? That's the more important question. In our city, do we save a buck by slashing public safety? Do we want reactive or proactive government?

"Let's ask why our city government charges itself $4,000 per acre per year to mow our parks," Lesko added, concluding that, as the next mayor of Ann Arbor, "I'll refocus city government on the basics."

Ryan J. Stanton covers government and politics for AnnArbor.com. Reach him at ryanstanton@annarbor.com or 734-623-2529.