Washtenaw County Administrator Bob Guenzel tells nation about county's budget challenges
Washtenaw County Administrator Bob Guenzel says the county's budget woes will get worse before they get better.
New projections estimate a $30 million budget deficit by 2011, equal to more than 25 percent of the county's general fund. For the first time in half a century, the county's overall taxable value is on a decline - and further reductions are expected.
"We've looked at this and we don't think we'll return to our 2007 tax base until 2018. I know that's pessimistic," Guenzel said. "It's been a pretty quick slide. ... I think we'll level off in three to four years, but then it'll take a long time to get that tax base up."
Guenzel relayed the tale of Washtenaw County's budget problems during a live conference call this afternoon with other government leaders across the country. The event was part of a research initiative led by the Phoenix-based Alliance for Innovation, which is examining the steps 12 communities across the country are taking to meet the challenges of the current economic recession.
Joining Guenzel by phone were city leaders from San Antonio and Overland Park, Kansas, two other communities that have seen hard times.
"Our revenues are down substantially and so we're making reductions in our budget," Sheryl Sculley, San Antonio's city manager, said of a potential $75 million budget shortfall there.
San Antonio, the seventh largest city in the nation, has a city budget of $1.5 billion and more than 11,000 employees. Sculley said the city has had a hiring freeze in place since January.
Guenzel said Washtenaw County leaders long believed the county was recession-proof, but it's certainly felt the effects of a slumping Michigan economy. With about 340,000 residents, Washtenaw is the sixth-largest county in Michigan, operating on a $153 million budget with 1,412 employees.
"We're really being tested now about how we can meet the needs of our community," Guenzel said, outlining four major approaches the county is taking to balance the budget. That includes $7 million to $10 million in department reductions, $3 million to $7 million in savings from major organizational changes, $3 million to $5 million in increased revenue generation, and $12 million to 14 million in cuts to employee compensation and benefits.
Washtenaw County's general fund revenues have dropped from about $110.8 million to $102.9 million in the last two years. The numbers are projected to drop even more in the years ahead.
Guenzel said one of the challenges in cutting costs is the fact that 81 percent of the county's employees - more than 1,000 - are protected under 17 bargaining units.
"We're in the process of negotiating with all of our 17 bargaining units to attempt to get some changes in contracts," he said.
Several factors came together over the past year to create the perfect economic storm, Guenzel said. That includes the highest unemployment rate in a generation, foreclosures that have grown from 231 in 2002 to 1,366 last year, the closure of Pfizer and the General Motors Willow Run plant, and further losses of state revenue sharing.
Making matters worse, customer needs - especially in the area of human services like mental health and substance abuse - have increased due to the economy, Guenzel said. The county is now considering cuts in those areas.
Guenzel said the county will benefit from what it learns and how it compares with other places in similar circumstances as one of 12 communities in the nation to be a case study during the recession.
The Alliance for Innovation believes the current economic crisis is deeper and more severe than anything seen in the past 50 years, but there's hope for a silver lining by sharing success stories.
A report by the Alliance for Innovation called "Navigating the Fiscal Crisis" is available at http://www.transformgov.org/FiscalCrisis.aspx?id=2128.
For more information on the county's 2010-2011 budget planning process, visit http://www.ewashtenaw.org/government/administrator/budget/2010-2011/index_html.
Guenzel plans to present the second phase of the 2010-11 budget adjustment recommendations to the County Board of Commissioners on Sept. 16.
Ryan Stanton covers government for AnnArbor.com. Reach him at 734-623-2529 or ryanstanton@annarbor.com.
Comments
Umich2008
Fri, Jul 31, 2009 : 12:28 p.m.
This story is inaccurate. Not all of the 17 unions are in negotiations. It's easy to blame the unions for not taking cuts. The non-Union people can afford the cuts that were approved by the BOC a lot more then some who will be near poverty level if the cuts are accepted. And how about that BOC? Are any willing to give up funding for their pet projects. Someone ask them about the ridiculous amount of money they spend on travel, training, and subscriptions. How about the goofy stipend they get paid on top of their regular salary for attending the BOC meetings they were elected to do in the first place. Someone ask about Aerotropolis? Should we be throwing money away for initiatives that may or may not bring the economy back in the next decade? We have a financial crisis. Why should the union, and non-union for that matter be the only ones that tighten their belts. Come on BOC, lead from the top down.
JoelReinstein
Fri, Jul 31, 2009 : 9:05 a.m.
If the Alliance for Innovation is covering the steps communities are taking to deal with the recession, and one of their twelve communities was Washtenaw County, I'm wondering why there's no mention of Transition Ann Arbor or the "Transition Towns" movement. Supporting local farmers and reducing energy usage are just a couple examples of how the Transition movement offers tangible economic solutions without any of this vile Union-busting nonsense.
used
Fri, Jul 31, 2009 : 8:44 a.m.
Bob Guenzel and commisioners began shaving salaries and benefits 2 contracts ago, when times were good, the unions have been giving long before it was trendy, we've been giving for a long time, Commisioner Quimmet was heard, after shaking hands, kabitzing and sharing pizza with the union members as vowing to reduce the salaries of the employees, the union members need to say "no". Quimmet has a background in banking, University bank, which is now serving the Muslim community with the sharia lending. We at the county often touch peoples money and in my department there children, we visit ugly everyday and earn our very small salaries. Macomb has a retirement multiplier of 2.3 as opposed to 2.0 in Washtenaw, Wayne and Oakland employees are paid far better than Washtenaws, again, we've given over the last 2 contracts. Use your rainey day fund, it's pouring and Quimmet, stay away...
Bob Martel
Fri, Jul 31, 2009 : 7:08 a.m.
Whatever the motivations, the bottom line is that the County payroll related costs (union and non union) will have to be reduced by 25%. That mean a lot of folks are going to be taking a hit, and a lot of services will be gone.
ShadowManager
Thu, Jul 30, 2009 : 7:29 p.m.
Or...to look at it differently...Kudos for Bob for demonstrating a guileful sense of timing and manipulation, particularly as the County government moves into a period fraught with heated negotiations with and requests for concessions from...those selfsame Unions. Nothing like going national to the media to bring the P.R. heat. I say the adminstration salaries should be looked withe selfsame sense of maturity.
Bob Martel
Thu, Jul 30, 2009 : 6:34 p.m.
Kudos to Bob for coming out with the straight story. I fear that he may even be a little bit optimistic on the time frame needed for recovery. I hope the union leaders can demonstrate the realistic maturity that is needed to get the County and their members through these most difficult times.