Officials Get a 'Higher-Level Look' at Hills Budget

Farmington Hills city officials see hard times ahead, and some think it's time now to look at raising revenues while trimming expenses even more.

During Monday night's budget overview—a "higher-level look at the budget"—City Manager Steve Brock proposed a plan that would require a .0964-mill increase, raising the city's total millage rate to 10.118 mills, which includes an increase in the millage for general operations from 6.3279 to 6.7148 mills, and a $2.63 million dip into reserves to balance out the difference between $68.7 million in revenues and $74.3 million in expenditures.

Also included in the overall millage are separate taxes for debt service and capital expenditures, which will be significantly reduced next year, and a public safety millage.

"It's not a deficit budget," Brock said. "It's a balanced budget."

Earlier this year, city administrators set a goal of cutting budgets 10 percent across the board.

Brock also proposed some accounting changes that drew tough questions from Mayor Jerry Ellis. Among other things, the Farmington Hills Ice Arena numbers have been moved into the general fund.

The arena is now listed separately as an "enterprise fund," a designation reserved for activities operated like a business, which are expected to be self-sustaining. The facility has run six-figure deficits in each of the two previous fiscal years.

Ellis charged the accounting changes were "smoke and mirrors" and questioned why expenditures were going up while revenues declined by more than $3 million. He pointed out the city has won awards for its accounting practices.

"If we keep drawing down $2.5 million from the fund balance, I predict we will be broke in two years," Ellis said. "We're knocking the can into the future in the hopes that we will get more money next year."

While he has announced he won't seek re-election, Ellis said officials should address the problem now, and they have two choices: cut expenditures even more or raise revenues.

"Or both," Brock added.

Council member Barry Brickner said that since the ice arena has been supplemented with general fund revenues the past two years, he doesn't have a problem with moving its accounting into the general fund budget. He also noted the city can work with a smaller reserve, because the budget's not as large as it was.

The phrase "smoke and mirrors" bothered council member Nancy Bates, who said officials need more information about the accounting changes.

"When I see us changing our accounting practices, it raises my hackles, so to speak," Ellis said, adding he was not questioning Brock's integrity or honesty.

"We know what's been coming," council member Randy Bruce said. "There's a structural problem. People's average tax bills have decreased, but our costs haven't decreased." He also suggested a combination of raising revenues and cutting costs. "You can't get something for nothing."

Brock said the impact on the average taxpayer for the millage increase would be about $8 a year; and even then, the average tax bill would decline by $66, due to falling property values. He said staff has cut $20 million from the budget over the past several years.

He also noted the number of employees has dropped again, by four full-time equivalents (FTE). In 2008-2009, nearly 400 people were Hills employees; in 2011-2012, that number will be 325.

"This budget is about as low as I think we can go on a staffing level," Brock said.

While he was unable to fully explain the accounting changes, Brock said the city's finance director, Dave Gajda, would explain them in detail at the next study session, to be held May 9 at 6 p.m. Officials reviewed the Department of Public Services, Central Services, Support Services and City Clerk budgets Monday.