Ypsilanti City Council begins discussing 5-year plan to eliminate projected budget shortfall
The Ypsilanti City Council emerged from a third and final budget meeting with the goal of developing a five-year financial plan to avert a $10.69 million budget shortfall projected for 2017. The plan would balance the city’s expenditures and revenues.
Under consideration are a range of options that include tax increases and spending cuts, and several measures will end up in front of voters.
However, which measures Council moves forward with won’t be determined until its February 6 goal-setting meeting.
An income tax and Water Street debt retirement millage that would go before voters is gaining the most attention publicly, and Council Members Brian Robb and Pete Murdock had previously pushed for for the inclusion of more significant budget reductions. Without that, they said, the city shouldn’t be going before voters to ask for tax increases.
Among other options gaining some traction are a stormwater utility fee, placing a special assessment district around streetlights in the city, asking for concessions in collective bargaining agreements and selling some city property.
The city is also targeting $650,000 in budget reductions.
At a November budget meeting, Robb gave an impromptu presentation that demonstrated how much the city must reduce from its budget and generate from new taxes to achieve solvency in five years.
According to the calculations now guiding council’s discussions, the city must cut $1.3 million over the next two budget cycles. That would provide $2 million in additional reserves if the income tax and Water Street millage are approved and the cuts are made.
The special assessment district around the city’s streetlights has been discussed more in the last month. The city can create tax districts around public services it provides, and it is a measure most commonly used in new residential developments where municipalities charge for water mains or sewers that are extended into new subdivisions.
Creating a special assessment district around streetlights could be done one of several ways. The city could split the cost of operating them with residents. Mayor Paul Schreiber said rough estimates from city staff have the proposal generating around $500,000 and costing most residents an additional $85 annually.
Another option that has been discussed is replacing the bulbs with LED lights and paying for it with a special assessment district that lasts a set number of years. That would then result in significant utility savings.
Some council members, such as Robb and Murdock, consider a special assessment district around streetlights revenue because it taxes residents to generate funds, but other council members and City Manager Ed Koryzno see it as a budget reduction because it would save the city utility costs.
Whether a special assessment is classified as revenue or reduction is important because the city is trying to find $650,000 in cuts as part of its five-year plan. If it is considered a cut, then the city only needs to find an additional $150,000 in reductions this year. If it’s considered revenue, then the city still must look for $650,000 in reductions.
Either way, Council is asking city staff to recommend $650,000 in additional cuts. Murdock pointed out that the income tax and Water Street debt retirement could fail and force the city to make cuts no matter what the special assessment district is considered.
“I’d still like to get some recommendations on the cuts,” he said. “There are going to have to be some expenditure reductions no matter what we propose. If we can't get some of the major revenues we want, then we’ll be talking about a lot more in cuts than $650,000.
“We need a reality check.”
But Murdock said he didn’t want the lighting district debate to become a “sideshow.” He said the city ultimately needs to figure out a five-year plan that solves the budget problems and will be palatable to voters.
Council also discussed selling the former Boys and Girls Club building it owns on North Grove Street, as well as the timing of the tax increase ballot measures. No direction to staff was given after either discussion.