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Posted on Sun, May 15, 2011 : 5:50 a.m.

Examining Ann Arbor's deficit: Parks over police? Golf courses or human services?

By Tony Dearing

One City Hall observer recently described the budget process in Ann Arbor this way: It seems every year, there’s a fiscal crisis, and then at the last minute, the city administrator pulls a rabbit out of the hat.

Last year, the rabbit was parking revenue steered into the city general fund to minimize what would have been deep cuts in the police and fire departments. This year, there is no rabbit. The Ann Arbor City Council faces nothing but hard choices in the budget it will vote on Monday, and the fiscal conjuring of the past has been used up. This is going to be painful.

The city faces a $2.4 million deficit in the coming fiscal year, and the proposed budget calls for the elimination of 48 positions, including 20 in the police and fire departments. Unpalatable as these cuts are, City Council has little choice but to make them. Past actions - or inactions - have burdened the budget with crushing operational costs and debt, which we don’t see being resolved in the current budget cycle.

Even as the city suffers brutal cuts, the time is long overdue for City Council, the administration, city employees - and yes, taxpayers - to make the tough choices and to determine what our true priorities are. Otherwise, future budgets will bring nothing but more of the same.

Public safety

For the coming fiscal year, the most untenable position we find the city in is facing deep cuts to the Fire Department without a clear understanding of what the impact of those cuts will be on public safety.

Not that we aren’t concerned as well about the 13 positions likely to be cut from the Police Department this year. But unwelcome as those reductions are, at least Police Chief Barnett Jones is offering City Council some assurance that he can reduce administrative positions and make other adjustments to keep the same number of “feet on the street.’’

Such is not the case with fire protection. The city is having a study done on “current and future deployment of staff and resources’’ in the Fire Department. But the results won’t be available until this summer, while seven firefighter positions are being cut now. We find it irresponsible for the city to be making such deep reductions in such an essential service without the information it needs to understand the full implications, yet that is the position City Council finds itself in. This study should have been undertaken sooner. At the very least, the upcoming budget should include some contingency for dealing with the possibility that the study finds fire protection being compromised in a way that is unacceptable.

Human services

The proposed budget calls for a 10 percent reduction in funding for human services, or about $116,000. This is really a matter of what a community values. Ann Arbor remains one of only two cities in Michigan that still provide funding for human services. One could argue that budget realities being what they are, it’s time for city government to get out of the practice of funding human services.

We’d argue the opposite. Now is a bad time to cut in this area. Given how serious the human need is in our community right now, and how cash-strapped local agencies are, a $116,000 cut does little to reduce a $2.4 million deficit, yet it would be a disproportionately heavy blow to local agencies and the needy people they serve. We’d look elsewhere for savings and retain the human services funding that reflects the kind of community that Ann Arbor is.

City golf courses

We cannot see anywhere where the city’s spending priorities are more out of whack than in the way it continues to lose $300,000 a year or more on its golf courses while it lays off police and firefighters and cuts funding for the needy. The two city-owned golf courses are wonderful assets, but even though their financial performance has improved, they continue to lose hundreds of thousands of dollars a year, with no potential of breaking even in the foreseeable future.

In January, City Council was presented with options for closing Huron Hills as a golf course and converting it to some passive use, such as walking trails or a nature area. But council seems to think that the costs associated with converting it would not result in enough savings to justify the move. To us, this is a prime example of past inactions continuing to tie the hands of decision-makers today. In 2007, a consulting study made a very clear case for shutting Huron Hills. If council had acted then, the city would be in a better position today.

We have nothing against golf or golfers. But let’s grasp reality here. While two golf courses continue to suck money out of the general fund, we’re already closing fire stations on a rotating basis, with more cuts in fire services to come. City Council should either commit to operating a single golf course that has the potential to break even, or get out of the golf business altogether.

Overall spending on parks

A more recent issue in budget discussions has been the concern raised by the Park Advisory Commission that if the city goes ahead with plans to cut some $270,000 in spending on parks and recreation, it would violate a policy approved by City Council in 2006. That policy, passed the same year that voters approved a parks millage, said the city won’t cut park funding by a greater percentage than it cuts general fund spending in any given year.

City Council members acknowledge that the cuts they are contemplating to parks operations, as well as to a separate parks and recreation budget, would violate the policy to the tune of $90,000. So they either need to cut $90,000 elsewhere or amend the policy. We recommend the latter. The policy, while well-intentioned, didn’t envision the kind of severe layoffs already being proposed in police and fire. What’s more, council members point out that the spending reductions are being achieved through cost-savings, rather than service cuts, so the policy in effect punishes the city for operating more efficiently.

As much as Ann Arborites cherish their parks, there’s a bigger picture here. City Council has got to have the flexibility to make spending decisions based on a weighing of all the city’s needs. To the extent that this policy constrains council from setting priorities and putting scarce resources toward the most vital services, it needs to be amended.

Employee benefit costs

The city desperately needs to get this one solved. It’s well-documented that the benefit packages for some employee groups carry costs that are no longer in line with what any employer, public or private, can afford to pay. Police, firefighter and AFSCME employees pay no co-insurance costs and no monthly contribution toward their insurance premiums. The city has been trying, without success, to get them on a less costly plan that other city employees are covered by - a move that, along with some other changes in benefits, would save an estimated $800,000, about a third of the entire budget deficit.

We urgently call upon city employees to recognize the severity of the budget distress, and negotiate concessions that reduce the city’s costs for providing health care. We hope this is what occurs, but if it doesn’t, then that only underscores the importance of the state reforming Public Act 312, so that the city has leverage to compel more reasonable benefit costs for public safety employees. We’ve previously called for revisions of PA 312, and renew our call for such reform. Lower benefit costs would not eliminate police and fire layoffs, but would reduce them, and saving even some of these positions can only benefit public safety. One way or another, this bleeding of the city budget cannot continue. Health-care costs have to be reduced.

The challenges ahead

When you look at the proposed budget for fiscal 2012, it’s alarming how deeply under water the city is. Even with harsh cuts in police and fire, it’s still only achieving a balanced budget by shifting just under $700,000 in current general fund expenses - such as forestry - into other funds, and by dipping into its fund balance for $1 million. These are not perennial solutions, and the more you shift out of the general fund to cover a deficit for one year, the more deeply you have to cut police and fire in the future to achieve the necessary savings.

With little likelihood for an economic turnaround in the near term, City Council will have to make some incredibly tough decisions on Monday, and yet even harder work remains ahead. The cost of employee benefits need to be brought in line, and the city has to tackle such basic questions as whether it can continue to offer health care to future retirees. But even addressing these issues would not, by themselves, balance future city budgets, and the city can’t keep slashing services year after year.

The time has come for this city’s elected leaders and its residents to engage in a discussion about what level of service we want, and what we are willing to pay for it. Simply put, it’s becoming increasingly hard to see how the city can climb out of a perpetual budget hole without additional revenue.

Any proposal for a tax increase would be complex and controversial - more so than we can address properly today, though we plan to devote an upcoming editorial to it. But it’s essential that City Council begin talking about it now, and not wait until the next budget cycle.

Either we as a community must have that discussion - and sooner, not later - or face the probability that city services will continue to shrivel to an extent that most residents would find hard to comprehend and even harder to accept.


Tony Livingston

Tue, May 17, 2011 : 1:51 a.m.

I agree that there is too much park land in Ann Arbor. We don't have the resources to maintain it. But, another area to look at is the retirements packages for city hall employees -- both union and nonunion. When we are paying people NOT to work at the same time as we are paying people to actually do the work, then there is going to be a problem. We cannot sustain the financial obligation to allow employees to begin collecting retirement pensions at age 50. EVERYONE should wait until age 62 to start collecting. If this one item was changed, it would make a huge difference. But no one wants to eliminate the golden parachute. It is frustrating.

Jud Branam

Mon, May 16, 2011 : 5:50 p.m.

Hi Tony, If the city could actually save $300,000 a year by closing Huron Hills, the course would be closed by now. Simple fact is that the golf courses make enough revenue to sustain themselves, but the city keeps docking them with internal charges and fees for IT and administrator retirements and such that create the "sucking" from the general fund that you reference. It's not a simple situation as you imply; simply padlocking the clubhouse at HH won't allow us to hire $300K worth of firefighters. More like none. Likewise, the promise to city voters not to cut disproportionately from parks funds in exchange for voter approval of the dedicated parks millage was a promise made and should be a promise kept. The promise was more than well-intentioned, it was in fact made to reassure voters that parks funds would be "bait and switched" to other needy departments such as police and fire.


Wed, May 18, 2011 : 1:42 p.m.

You miss the point Tony, the City will pay the IT and Admin services charges whether or not it can allocate them to the golf course. If the Golf course is closed will the city incrementally lay off IT / Admin people, probably not, it will just reallocate these costs to other departments, so closing the Golf course will not have savings to the city equal to its "net operating loss".

Tony Dearing

Mon, May 16, 2011 : 5:57 p.m.

Hi Jud, The issue of internal charges to the golf courses was something the consultant looked at in 2007, and concluded that the charges were similar to what other cities assess to their golf courses, and didn't make the difference in breaking even. However, it is time to reassess these charges, and that could potentially make a difference. That's something I want to take a closer look at. On the issue of parks, that's a bigger issue than I can address here, but the city has to come to terms with the reality that it has more parkland than it can afford to maintain, or even use, and we've reached the point where it has to be balanced against police and fire services in a way that wasn't true in the past. These days, everything has to be on the table. That's our point of view, anyway. Thanks for weighing in.

Jud Branam

Mon, May 16, 2011 : 5:51 p.m.

oops that should say 'not "bait and switched"...


Mon, May 16, 2011 : 12:34 p.m.

The choice between firefighters that serve 100% of the taxpayers and golf courses that serve less than 20% of the taypapers would seem to be an easy one. Every year the money losing golf courses are open adds to the legacy costs of retireree pensions and health care. It will take great leadership to make the decision to close the golf courses. It will either be done by city council or a state appointed emergency financial manager.

C. S. Gass

Mon, May 16, 2011 : 2:30 a.m.

To those of you so quick to say that public employees should be paid in line with private employees, remember that police officers and firefighters risk their lives every day so that you don't have to. They're finally being paid what they're worth. As to the rest of the city employees, sure cut their pay, benefits, whatever. What they do is not life and death. As to the Human Services, we can no longer afford to be a nexus for the huddled masses. Let them breathe free somewhere else. Or, let churches, temples and mosques play their part. They're better at it anyway. And for God's sake GOLF??? Over anything??? CLOSE IT!!! No brainer!


Sun, May 15, 2011 : 9:06 p.m.

What needs to happen in Ann Arbor, Is a re-negotiation of union contracts. Housing values in ann arbor have dropped so there is less tax revenue coming in. Parks and golf courses are important for tourism.


Sun, May 15, 2011 : 3:48 p.m.

@ Tom Swift By definition a deficit occurs when spending exceeds revenue. Further, the revenue base will continue to erode as property tax assessments far exceed actual valuations. This is particularly true on commercial properties. Once the assessor, or Tax Tribunal in Lansing, faces this reality - revenue will decline substantially. The City needs fiscal leadership immendiately or we will end up with an Emergency Financial Manager

Joslyn at the U

Sun, May 15, 2011 : 3:27 p.m.

Ann Arbor doesnt need more money. It has more money now than it has ever had. What Ann Arbor needs to do is learn to live in within A2s means. Ive said it before I will say it again. Mayor Hitfje, City council, and Tom Crawford the CFO as well as interim Admin can build that pretty new building they have sitting there on Huron for 50+ million but they cant pay for POLICE OFFICERS, or FIRE FIGHTERS. Something is screwy in Denmark people. I see a serious lack of judgement when it comes to priorities and its now effecting public safety. Shame on our city goverment and the EMPLOYEES WE ELECT. If people cant do the job they were hired to do they need to be FIRED or Removed from office at the least. Just my thoughts

Ethics Advocate

Sun, May 15, 2011 : 3:04 p.m.

"Police, firefighter and AFSCME employees pay no co-insurance costs and no monthly contribution toward their insurance premiums. The city has been trying, without success, to get them on a less costly plan that other city employees are covered by a move that, along with some other changes in benefits, would save an estimated $800,000, about a third of the entire budget deficit." I wish this had been included in the story about the possible reduction of firefighters by 12, along with the unmentioned fact that (the last I knew) our firefighters were the highest paid in the state. Given the city financial strain that cannot readily be cured, and there is increased danger for citizens, why are the firefighters union and its members not willing to provide some assistance? Why is it more important to them to see another 12 colleagues lose their jobs than to accept a relatively small salary and/or benefits reduction that would make them like other city employees, as well as those in a number of other organizations?


Sun, May 15, 2011 : 1:47 p.m.

Waterdipper: I agree, the bottom line is that city employees need to get in line with the rest of the working public sector and increase pay outs to cover benefits costs, if you were to look even closer I bet many of the former firefighters and police are also collecting disabilities along with those nice pensions and in many cases they exceed working salaries. Unfortunately this has been a growing change to help boost their pension earnings that have contributed to higher costs overall. Recent articles claim many city and government have raising disability claims when employees retire or shortly before.


Sun, May 15, 2011 : 3:50 p.m.

I won't speculate on facts I don't know (e.g. "I bet many of the former firefighters and police are also collecting disabilities..."). As far as "those nice pensions and in many cases they exceed working salaries", why shouldn't they have a nice pension - we'd all like to have a nice pension, the question is who pays for it, and my opinion is they should pay a reasonable share. The other consideration is that the concept of pensions and how they are structured and funded has changed, but that's not the fault of employees whose pension plans were structured years ago, so what they presently have is what was acceptable in the past, but may not be from now on, especially for new and future workers, who will have to adjust their own retirement approach The police and fire department provide a critical service to us, their working conditions are often dangerous and their professions require someone to be "on the job" 24 hours a day, 7-days a week (and no, I'm not implying they somehow work 24/7, only that they are required at various times, depending on shift, to work when most others are off; and to some extent they are "on" 24/7 even when they're on their own time, because if something happens, they're likely to be expected by their fellow citizens to take action even if they're not on-duty). I don't know what you mean by "exceed working salaries"? Working salary for what group(s)? I don't buy into the idea that our public sector employees are overpaid based on comparison with general averages.


Sun, May 15, 2011 : 1:30 p.m.

Until city council stops kowtowing to special interest groups (think "Mack Pool Closing" and a city council meeting overrun by people in swim goggles), nothing is going to change. The only special interest group they should be concerned with is the health and welfare of ALL the citizens.


Sun, May 15, 2011 : 1:27 p.m.

I was a Federal public sector employee for more than 40 years. The Federal workforce unions, in fact, have no collective bargaining power related to salary and benefits (not counting the Post office, as it operates under a separate structure), which are set by the Administration and Congress without Union consent (for example, the current freeze on Federal pay). The only collective bargain rights Federal unions have are associated with working conditions and implementation of management decisions (the latter meaning they can negotiate over how a management decision will be implemented, not IF it can be implemented). I always had to pay a portion of my health insurance benefits (most recently about 29% of the premium) and contributed anywhere from 7-18% (early career vs later career) of my salary towards retirement . So, while I'm willing to pay more in taxes to maintain important city government services and a good living environment, I won't be as willing to do so if all our city public sector employees are not sharing the costs for their own benefits. And I'm not anti-public's just that times have changed. If I'm going to have to pay more to maintain city government services, I feel all city employees should contribute also. And no, I'm not sure what a fair portion would be, but more than zero. And I'd like to see our politicians (also public sector employees) "do unto themselves what they would do to others."


Sun, May 15, 2011 : 1:05 p.m.

Smells like we are ready for an EFM. Run the city into a "blighted" condition by spending on golf courses and parks. Then, have an EFM take it over and sell off those assets to developers in order to balance the budget. At least, I think that is how it works. But, it is all so new to me.

glenn thompson

Sun, May 15, 2011 : 1 p.m.

The Ann Arbor administration is using the common political strategy of selecting two desired service departments and then asking which should we cut? This forces the citizens to accept unpopular cuts or agree to pay higher taxes. Meanwhile the spending continues as usual for the pet projects and favored departments. It is unfortunate that Mr Dearing did not look more carefully at the proposed budget. There is a more detailed analysis here: <a href="" rel='nofollow'></a>

Craig Lounsbury

Sun, May 15, 2011 : 10:56 p.m.

good link Glenn, thank you. Its an interesting read indeed.

Tony Dearing

Sun, May 15, 2011 : 2:14 p.m.

Thanks for sharing that link. Karen Sidney's analysis of the budget is interesting, particularly what she has to say about the fund for internal services. We'll take a deeper look at that.

Chip Reed

Sun, May 15, 2011 : 12:18 p.m.

Gosh Tony, I question the $300,000 figure for golf that seems as if it includes some unrelated costs. The U-M's failure to contribute to the fire department budget and their own private police force (unaccountable to the local citizens) would seem to be important factors in this mess. It is as if we lived in Hershey, PA and the big chocolate company didn't pay taxes. I guess if others can offer suggestions to help your struggling company, it's fair for you people to do the same. That's kinda like the pillowcase calling the hankie white, though.

tom swift jr.

Sun, May 15, 2011 : 12:15 p.m.

Please, let's not lose sight of the fact that the issue is NOT spending too much, the issue is not drawing in enough revenue to provide basic services. Let's hope that the City of Ann Arbor can make better decisions about how to balance a budget than the CEO of the State Michigan.


Sun, May 15, 2011 : 11:58 a.m.

skip the parks and golf courses take care of the basics i.e. police,fire and health care first.stop being so politically the things that are most important first and then take care of the less important FORE.