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Posted on Sat, Apr 21, 2012 : 1:50 p.m.

Plan to reduce Water Street debt retirement millage could force Ypsilanti to dip into emergency savings

By Tom Perkins

A plan to cut a proposed Water Street debt retirement millage in half in order to make the idea more palpable to voters would leave the city with only $160,000 in non-earmarked funds over the next five years.

That means there would be no money in its savings for any new road projects, grant matches, new equipment or anything else that hasn’t already been built into the budget.

Moreover, the figures don't include other expenses that could leave the city with no uncommitted savings and force it to use its emergency savings for any new projects.

That’s according to new figures developed by city staff after City Council approved a resolution to include the millage reduction in its five-year plan.

Peter Murdock.JPG

Pete Murdock

But the resolution was approved without first examining the numbers. Still, Council Member Pete Murdock, who proposed the resolution, said he isn't concerned about not having any extra savings.

He said the city budgets each year and it could still find savings it needs for new projects.

The city is asking voters to approve a Water Street debt retirement millage and personal income tax on May 8. The measures are essential components of a five-year financial plan aimed at keeping the city solvent and avoiding deep cuts to city services.

The latest numbers don’t include the paving of Grove Road, Michigan Tax Tribunal property value adjustments or charges back from the county on property taxes it cannot collect.

The city keeps a figure approximately equal 10 percent of its budget in its emergency reserves.

Ypsilanti’s improving financial picture prompted City Council to approve lowering the millage rate for the Water Street debt. Because the ballot language for Water Street was already approved, residents will vote on a full millage set at 4.7085 mills. But under the new plan, council is essentially promising to cover half of the tax out of its savings. That would likely lower that millage to 2.3543 mills. A resident with a home with a market value of $100,000 would then pay $127 in taxes instead of $235 in 2013. By 2017, that millage would grow to 3.5 mills, or $178 annually for the same home.

The city has $9.3 million in savings. Of that, $5.8 million is committed and $1.32 million is reserved for cash flow. That leaves $2.2 million of uncommitted funds for the next five years.

Some of that money is already earmarked for Cornell Street and Depot Town street paving projects, and the city is projecting to spend $231,000 of its fund balance.

If the city reduces the millage by half, it would pay $1.21 million toward its Water Street debt payments that taxpayers would have originally shouldered.

That leaves the city with only $160,000 prior to extra costs that have yet to be determined.

Murdock previously said the package of cuts and new taxes has a better chance of receiving voter approval if the city services half of the Water Street debt.

Council approved adding the reduction to its five-year financial plan by a vote of 5-1. Council Member Brian Robb was the lone no vote. He said at the time that the plan would leave the city with no money, and later reiterated that point.


Paul Schreiber

"The reason the income tax plan was screwed up in 2007 was because they created a plan that runs out of money. And here the city is doing it again," he said.

Murdock said he isn't concerned because the city could realize some savings in operating costs this year. He also pointed out that the city has $9 million in reserves right now because it has been saving up to pay for Water Street debt.

"(The fund balance) isn’t necessarily a piggy bank to be used indiscriminately," Murdock said. "In normal days, it shouldn’t be that high anyways."

"Next year we'll crunch all the numbers and budget everything in and see what we have," he said.

Mayor Paul Schreiber said City Council will have to decide how to work with the finances it has available when the time comes, but he is focused on passing the Water Street and income tax proposals before that happens, which he said is the most important task at hand.

"Are we going to get more revenue or we going to keep cutting?" he asked.

Ypsilanti must pay $30 million on its Water Street bond debt and continue to make payments through 2031. Its annual payments will grow to $1.7 million annually by 2015, and the city currently has $2.6 million set aside to pay down the debt.


Ypsilanti City Resident

Mon, Apr 23, 2012 : 10:55 a.m.

Galileo2000: Right on the money


Sun, Apr 22, 2012 : 4:34 p.m.

Continued from above ... 4) Next we have a very nice but very inexperience interim City Manager. The City is asking us to vote for these new taxes and to then trust them to manage this money properly when we don't even have a capable City manager in office? WHAT ARE THEY THINKING? Isn't this putting the proverbial cart before the horse? We have a VERY GOOD police force and fire department that many would love to keep but unfortunately City Hall isn't up to their or our standards and until City Hall starts doing much better with what it has, and until we get better people in the key positions, the vote should be NO in both cases. Dump the under-performing assets, cut the obvious waste, hire an experienced City Manager, get the Mayor to resign and replace him with a fresh, smart LEADER and then come talk to us about more taxes. AND FINALLY, an all-court press should be on NOW to move the Water Street property. A "war room" should be created and WEEKLY meetings should be held in an effort to get his property sold for whatever we can get for it. Invite the Governor down to see it since he is Michigan's best sales person, get EMU involved as they have experts in all kinds of applicable fields, get our brightest citizen marketing people involved, DO SOMETHING proactive now!


Sun, Apr 22, 2012 : 10:20 p.m.

Galileo2000 is RIGHT ON! Well, except I'm a little less worried about #4. The interim seems to be doing good so far. At least from the little we've seen. But your first three took the words right off of my keyboard.


Sun, Apr 22, 2012 : 4:34 p.m.

Cudos to Mr. Murdock for coming up with a plan that has generated all of this good discussion on Facebook and here. It is indeed a tough situation. After all, who would ever want to pay more taxes. Sometimes we have to do what is necessary BUT it would be a whole lot easier to support these taxes if: 1) We didn't have such an inept Mayor, one who seems incapable of using the position of his office for more than political needs. Does he ever do much to promote this City? Has he taken any kind of a lead role in marketing the Water Street property or in bringing in new businesses? Does he do much of anything other than protect his political base? 2) The City would show that it is serious about its budget by selling the Riverside Art Center for which is gets $1.00 (yes a single buck) per year in rent and selling the Freight House which is still a long way from opening after the City had to put in more money ($100K or so) last year for a roof. What about the Rutherford Pool , can the City afford this anymore? Perhaps the YMCA would be interested again. There are other properties as well. What would selling the collection add to the coffers? Some where around a million? 3) Then we have the Ypsilanti DDA which spends over $100K per year in staff costs for an organization that basically got nothing done in the first quarter due to absences and vacations, which is a recurring problem to go unaddressed. Two of the members have resigned and more should go (the Mayor's political appointees) if this organization is to be taken seriously. In fact, there is growing desire to just close it all down which is probably the best solution since we can no longer afford any waste whatsoever. There is easy $100K to be had in just saved staff costs alone! To be continued ...

Lloyd Payer

Sun, Apr 22, 2012 : 4:08 p.m.



Sun, Apr 22, 2012 : 3:10 p.m.

For the ill informed a yes vote adds 6000 tax payers to the Ypsilanti tax base and solidifies the City. A No vote and elimination of police and fire will cause your home insurance to sky rocket, and crime will increase. The tax millage passing is a no brainer....if you have a brain. Make value judgements based on fact......not becuase you are a tight wad.

jim ralston

Sun, Apr 22, 2012 : 2:05 p.m.

VOTE NO!!!, VOTE NO!!! And when in doubt, VOTE NO!!!!!!!!!!!!!

Pete Murdock

Sun, Apr 22, 2012 : 1:04 p.m.

The quickest way to burn through the reserves, reduce services and default on our debt obligation is to not approve the two ballot proposals on May 8th.

Pete Murdock

Sun, Apr 22, 2012 : 1:02 p.m.

This story is two months old. The proposal to use reserves to reduce the Water Street millage was developed with staff input and vetting and fully discussed at City Council. There is no "new" information. The ability to use reserves for this purpose without "dip(ping) into emergency savings" is clearly possible as we have outlined and adopted in the five year plan in February.

j hampton

Sun, Apr 22, 2012 : 12:20 p.m.

Ypsilanti sounds like a model city for the Republican Party's vision for America. Starve governement until it cannot deliver any services. The Tea Party shoud showcase Ypsilanti to demonstrate how well things work out for the citizens when we eliminate most essential services traditionally delivered by government. Look out Mississipi and Alabama. We will beat you in the race to the bottom.

The Black Stallion3

Sun, Apr 22, 2012 : 12:41 p.m.

Would you suggest we vote to have it mirror what Obama is doing to our country? Spend, spend, spend and vacation on our money? Sorry I will vote NO on this. Take away pensions for these employees and I may look at it different. Why should tax payers pay for these pensions when they do not have them for their retirement?

The Black Stallion3

Sun, Apr 22, 2012 : 12:20 p.m.

What is going on here in Ypsilanti is a mirror image of what Obama is doing in Washington DC. Now if you look at how that change is working out you must decide to vote NO.


Sun, Apr 22, 2012 : 4:17 a.m.

"Mayor Paul Schreiber said City Council will have to decide how to work with the finances it has available when the time comes, but he is focused on passing the Water Street and income tax proposals before that happens, which he said is the most important task at hand." ARGH! Knee jerk reaction with no future plans...I'm getting sicker with each paragraph.


Sun, Apr 22, 2012 : 4:12 a.m.

Did I read this right... "But the resolution was approved WITHOUT FIRST EXAMINING THE NUMBERS. Still, Council Member Pete Murdock, who proposed the resolution, said he isn't concerned about not having any extra savings." Who makes a decision like this without examining the numbers? This literally makes me sick to my stomach. How in the world can I trust that council knows what it is doing around these votes? I'm willing to do what it takes for the City, but I genuinely do not think council has a clue what they are doing.


Sun, Apr 22, 2012 : 3:38 a.m.

I think the word you want is "palatable" rather than "palpable."


Sun, Apr 22, 2012 : 12:45 p.m.

I'm not sure why the comment is being voted down. The writer clearly chose the wrong word. "A plan to cut a proposed Water Street debt retirement millage in half in order to make the idea more palpable to voters..." palpable: (1) capable of being touched or felt; (2) easily perceptible palatable: agreeable or acceptable to the mind

Steve Pierce

Sun, Apr 22, 2012 : 3:06 a.m.

If someone is going to claim credit for eliminating the Ypsilanti Recreation Department nearly 10 years ago as a sign of prudent fiscal management, then they must also accept responsibility for the Water Street fiasco. You can't claim the first and run from the second. Voting No on both of these tax increases is incredibly important to the future of Ypsilanti.


Sun, Apr 22, 2012 : 4:04 p.m.

What is incredibly important to the future of Ypsilanti is that both millages pass....Period, No Brainer!! The only reason Water St. is a fiasco is because the economy tanked and developers backed out. One day, when this is developed, it will be a crown jewel of the revitilization of Ypsilanti. it will be less so without the fire department and city police there to insure safety. A no vote to the millage is a YES vote to double your homeowners insurance and double the chance you get mugged walking to your car in the morning to go to work.

The Black Stallion3

Sun, Apr 22, 2012 : 12:44 p.m.

What "side" are you talking about Glen?

Glen S.

Sun, Apr 22, 2012 : 12:28 p.m.

"incredibly important" HOW? If this goes down, what's YOUR plan to pay for Police and Fire? Oh, that's right, I forgot ... your side doesn't respect Ypsilanti voters enough to debate these important issues.


Sat, Apr 21, 2012 : 11:06 p.m.

Voting yes on both of these measures is incredibly important to the future of Ypsilanti. These two proposals provide a solid, well researched plan. Suggesting that the city can't or won't halve the millage as resolved is disingenuous. Distracting from the issue by suggesting this is some sort of a referendum on council or the mayor is a waste of everyone's time. Looking at the facts and understanding our city's budget makes it clear that these proposals are the best course of action. Vote yes twice on May 8th!

Martin Church

Sat, Apr 21, 2012 : 9:07 p.m.

I am voting NO on both. I don't believe this council or Mayor have any idea of how to run a city. They were told if we bought and destroyed all the jobs in the water street area, we would be broke. now it has happened. and what if the water street is finally sold off and developed. where is the guarantee that the excess funds will be returned tp the tax payers. Our past city council have made this city impossible for business to grow and develop. I don't want to loose the protective services we currently have but I also do not believe this leadership to provide as promised. too many broken promises to little return.


Sun, Apr 22, 2012 : 3:59 p.m.

So exactly who told the City about your alleged forecast of Water Street doom before they bought it. And how many jobs were "destroyed"? business relocated that had a total of 14 jobs. No jobs were destroyed!! Water Street was a waste land and the development of it was aa bold stroke to revitalize the City and ad to the tax base. Who knew the US economy would crash and burn. You sir are delusional.

Mark Hergott

Sat, Apr 21, 2012 : 7:58 p.m.

I am going to vote for the Water Street Millage, and I am going to vote no on the income tax. I am going to do that with the full knowledge that essential services must be cut. I am not anti-tax. I just think that it is time to pay the piper.

Glen S.

Sat, Apr 21, 2012 : 8:53 p.m.

The general trend for crime in Ypsilanti, as well as nationally, has been down for several years. However, as I'm sure you've noticed, we've recently had a noticeable increase in residential and commercial break-ins, and several shootings -- including a high-profile shooting adjacent to the EMU Campus. Gladly, in a sizable number of these cases, Ypsilanti Police were able to solve the crimes, and even catch the criminals. As a long-time resident who has seen just how much the perception (and reality) of crime has hurt our City, I just can't imagine why anybody who lives here would seriously want to risk making additional cuts to the Police Department.

Mark Hergott

Sat, Apr 21, 2012 : 8:26 p.m.

Police coverage has already been cut since 2007. Crime decreased. Your statement is empirically false.

Glen S.

Sat, Apr 21, 2012 : 8:05 p.m.

@ Mark Cutting essential services (Police and Fire) will surely cause more crime, and more blight. That, along with having Ypsilanti constantly in the headlines for being in "fiscal crisis" sends a terrible message to potential new residents and businesses. And - that can only mean even worse news for *existing* residents and businesses. I understand not wanting to pay more in taxes -- or, in your case, not wanting to pay an income tax. What I can't understand is what you think the end product of that "strategy" can possibly be -- other than continuing to cut services and watch Ypsilanti wither away ...

Glen S.

Sat, Apr 21, 2012 : 6:29 p.m.

Over the past decade, Ypsilanti has eliminated its Recreation Department, and consolidated other departments and positions. It has outsourced functions like waste pickup, IT and Police Dispatch. Administrative salaries have not increased in several years, and because of "furlough" days - they have actually fallen. All City employees are now required to contribute 20% of the cost of their health insurance. Union employees have agreed to concessions in recent contracts, and are being asked to consider further cuts. Bottom line: A decade ago, Ypsilanti had 141 City employees. After years of cuts, the current total is 91 (a decrease of 35%). On our current course -- without an additional source of new revenue -- that number is set to fall to 41 (a decrease of 71%) within 5 years. (At these levels, there is NO way we will be able to maintain a fully-functioning Police department, nor make sure our Firefighters have the resources they need to fight fires effectively, or safely.) The May 8 election is not about "trimming the fat," or "finding efficiencies." We've spent more than a decade doing that, already. At this point, we have cut so deeply that the *only* thing left to cut is essential services, like Police and Fire, that keep Ypsilanti safe for current residents -- and attractive to new residents and new businesses. A "no" vote on May will not punish past City Council members for decisions some didn't like. It is not a "rebuke" for Water Street. Nor will it do anything to punish "greedy" public employees. The only people who will suffer from a "no" vote on May 8 are thousands of hard-working Ypsilanti residents, homeowners, and business owners who will have to contend with increased crime and blight -- and falling property values. The May 8 ballot proposals represent a solid plan -- and our best opportunity to keep Ypsilanti financially solvent, and able to preserve core services. Please vote "Yes


Sat, Apr 21, 2012 : 6:10 p.m.

Vote for the millage. The city will pay half of it for you. Maybe. If they have the money. Or if nothing else comes up. If not, you'll pay the full amount. After all, you voted for it.