Budget Meeting #3 – April 6, 2011

Budget Meeting #3 – April 6, 2011

 

On April 6, 2011 The Ferndale City Council held its third official budget planning session.  Council meets every Wednesday starting at 6pm to discuss how to keep spending in line with revenue.  One factor is that an election on May 3 will determine if residents are willing to accept a temporary property tax increase to support City services.  If Proposal A passes, the shortage will be $700,000 in 2012 and $600,000 in 2013.  If Proposal B fails, the City must address a $2,300,000 ($2.3 million) shortage.

 

Each Department has been tasked with presenting a budget that is 15 – 20% smaller than last year.

“I’ve got this 15-20% idea in my head as these department heads come up. They can either make suggestions or they can rely on my non-expert opinion for how to do this,” said Mayor Dave Coulter.  He also described the process by saying “Right now we’re making a laundry list of ideas and we’ll vote on them later.”

 

General Fund Central Services –

 

Fringe benefits cost goes up from $7.3m to $7.7m.  Health care costs go up every year.  Jayne Marie Eubanks suggested that budget savings could be achieved by providing a six month incentive window for reimbursement of co-pays for employees and retirees switching from name brand to generic drugs.  Generic drugs can be as low as 20% of the cost of name brand.  Most retirees have a flat co-pay on their drugs so there is no incentive for them to use generic, although it does save the City money.  Drug use is the biggest cost of the benefits plan, particularly for retirees who are entitled to health benefits.  The City no longer offers retirement health benefits for employees, but is still obligated to pay for it for those who retired with it in their contracts.

 

The amount of savings is not known because it would depend on how many people took advantage of the discount.  Eubanks noted that a community Downriver saw a savings of about $50,000 from their program.

 

Another savings in Central Services would be to require employees to be paid through direct deposit.  This would save on administrative costs.  And another would be seen if pension payments were made monthly instead of twice monthly.  Although these are not huge dollar savings, the time spent on such activities could be reallocated, and it would reduce some bank processing fees.

 

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Legal Services

 

General legal consulting costs are pretty stable at just over $200,000 a year.  Arbitration costs vary by years depending on union contract negotiation activities.  The 2012 proposed budget includes $55,000 for arbitration, which is an estimate considering at least two union negotiations may go into State-mandated arbitration.

 

“I’ve not found much abuse in Departments over-using the city attorney,” said Interim City Manager Mark Wollenwebber.  “Some cities have employees that can’t do anything and they call the city attorney for just about anything.  That’s not the case here in Ferndale.”

 

City Attorney Dan Christ has worked with the city for over ten years.  He is a principal at Hafeli Staran Hallahan & Christ, P.C. He is the City Attorney for Lake Angelus, and also does work on behalf of the  City of Ypsilanti and the Charter Township of West Bloomfield.  Ferndale City Council discussed the possibility of renegotiating the contract with the Christ to reduce costs.  Councilperson Scott Galloway pointed out that it would be unlikely to find a comparative rate, stating that Christ has been working at a rate of $110 per hour for at least the past ten years.  Interim City Manager Wollenwebber also noted that Christ’s experience and knowledge of the City was an asset, and that changing attorneys would have the added cost of bringing them up to speed.

 

 

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Cable Television

 

Del Schmidt is the Cable Director. Schmidt had been a City employee until his position was eliminated last fiscal year, and he was asked to work on a contract with less money and no benefits. (http://www.ferndale115.com/20100430budget.html) Volunteers help with filming the City Council meetings and video of other City events.

modern tax

Cable Television is a special revenue fund and does not affect the General Fund.  It is funded by PEG fees and a cable advertising tax collected by the Cable companies as part of their agreements to provide service in the city.  The Cable Department budget breaks even, with $103,000 in revenue (PEG Fee $53,000, Advertising tax $50,000).

 

One new expense, Schmidt said, is that AT&T is requiring the City to purchase equipment to connect to AT&T’s U-Verse system, which will cost around $30,000.  Currently customers who have AT&T can’t watch the City Council meetings on television.

 

For those who don’t watch on Cable, City Council meetings are streamed live, then archived, on the City’s website http://www.ferndale-mi.com/.  The Cable Department works with the City Clerk’s office to provide the video and minutes from the meetings.  The minutes are searchable; so that viewers can click on the topic they want and be taken to the correct spot in the video.

 

 

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Financial Administration

The Financial Administration section covered Budget & Financial Analysis, Accounts Payable, Payroll, Labor Negotiations, Utility and other invoicing, General Liability & Workers’ Compensation Coverage, Taxation of real and personal property, and Cash recording including Receipting, Distribution, and Reconciling & Investing.

 

In 2011 the City got new Financial Software which provides better record keeping, and gives employees information on accrued time and balances on their checkstubs.

 

The department is working on cross-training employees to work in financial administration since cuts have been heavy in City hall, while workload has not gone down.  City Hall was recently remodeled to provide an efficient workspace and create one public point of contact, instead of the multiple counters that were there in the past.   (http://oaklandcounty115.com/2010/08/01/remodeling-city-hall/)  “It is notable that we have reduced our staff by half in the past decade,” Eubanks said.

 

The City is also hoping to provide electronically-readable tax and water bills in order to improve efficiency and reduce bank fees.  This will fully automate the water payment system.  They hope to have this in place by July.

 

They are recommending that the City close for an additional two days, leaving City Hall open just 2 days a week.  They’re also recommending that payments be sent to the lock box instead of having bills paid in person.  “This will be a radical change for us and for the public,” Eubanks said.  We could handle 9,000 less transactions per month if things are done online or mailing to a lock box.  “This would require us to re-train our customers how to pay their bills,” Eubanks said.

 

“If we have to cut everything by 20% then we’re going to have to reduce the staff and the hours we are here to help,” said Councilperson Scott Galloway.

Just 4 Us

They are also recommending that all City credit cards be replaced with purchasing cards and use those cards for as many purchases as possible to streamline records keeping within the City.

 

Another opportunity to save money would be to charge administrative service fee to funds which are not in the General Fund.  1% of the pension funds would be about $33,000.  1% of the Auto Parking Fund would be $7,400.  “Though you are basically taking it from one pocket and putting into another, it will cover the costs of this,” Eubanks said.

 

Other fees could be assessed, such as charging a $25 fee for residents whose unpaid water bills are added to their property taxes.  This would render about $25,000.  “Right now we charge 5%, so there are people who have outstanding bills and then end up with a $5 charge.  This is not reflective of the amount of time it actually takes.”  She also recommended setting up a Board to address water billing answers.  The Board would have three people on it and residents would be required to write a letter explaining their dispute and go before the Board.  This would save the DPW (Department of Public Works) the hassle and time of debating water bills with individuals, and it would give residents a body to complain to.

 

 

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City Council

 

“We need to be careful about making cuts that are purely symbolic,” said Galloway about the City Council section of the budget, which is $34,780.  He explained that expenses for training and travel were important because that is how members of Council are able to learn and make connections with other elected officials in order to accomplish things for the City.

 

A suggestion was made that Council take a pay cut.  The $5,000 per Council member stipend was voted in by the public and is set by The City Charter, so any reduction would have to be done either by vote or by voluntary donations back to the City.  Last year council voted to eliminate out of state travel and cell phone allocations.

 

 

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City Manager

 

The City Manger fund includes payroll expenses and the City’s memberships in organizations like Michigan Municipal League, National league of Cities, Michigan Suburbs Alliance, Ferndale Area Chamber of Commerce and others.

 

“Any cuts to this budget doesn’t help us balance the $2.3 million, and it doesn’t help us to cut a small amount of money when it brings money and value into the City,” Galloway said.  Memberships in the organizations give the city resources and networking opportunities that help the City in the long run, he said.

 

Currently there is one full time person and a part time employee under the City Manager budget.  The part time employee will be eliminated once a full-time City Manager is in place.  The plan is also to hire the new City Manger at a lower rate than the previous one.  Interim City Manger Mark Wollenwebber recently replaced Bob Bruner, and is expected to work for Ferndale for just a few more months until a long-term Manager can be found.  (http://oaklandcounty115.com/2011/01/23/what-will-wollenweber-do/)

 

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City Clerk

 

The City Clerk’s office has many duties as required by the State and the City Charter. They are responsible for licensing (tattoo, dog tags, sidewalk cafes, etc), issuing permits, managing elections, preparing Council packets, meetings, minutes, etc., and more.  This department has seen many cuts over the years, and is now functioning with a full-time Clerk, a Deputy Clerk and a part-time Clerical position.  City Clerk Cherilynn Tallman pointed out that with vacation schedules figured in, the department would only be fully staffed 18 weeks out of the year.

 

Tallman presented that $254,775 is the requested expenditures after revenues, and that 15% less means another $38, 216 would come off.  With a 15% cut it would be one employee and one half time employee.  If that were to happen, they would need Council and agenda & packet deadlines to be enforced with no exceptions.  “Minor changes take time and hassle for the employees,” Tallman said.

 

She proposed that the City eliminate proclamations because they take time. Tallman said it takes 30 minutes if someone provides the information, and up to two hours if they have to dig around for info, and that they are not required by Charter.

 

The City is also looking at what commissions don’t have much business and reducing the meetings.  Currently commissions must meet monthly, but if the public votes to change meeting requirements or to get rid of commissions, it could save time.  “There are a lot of meetings where the only item on them is approval of minutes from prior meetings,” she said. “But we still have to prepare them and it’s unnecessary.”

Tallman also suggested that special events could be turned over to the Dream Cruise Director instead of the Clerk’s office, and proposed that junk dealers/pawnbrokers, massage, and tattoo parlors have a less frequent permit process. If permits were eliminated for peddlers/concessionaires, canvassers/solicitors, valet parking, garage sales and handbills it could cut down on time as well, though the City would not have the revenue from them either.  Business registration alone would bring $20,000 in lost revenue.  They could consider transferring sidewalk café responsibility to DDA.

 

Another option would be to eliminate Liaison reports from the meeting minutes, saving the Clerk the time having to type those comments up.

 

Tallman said the Clerk’s office may have to extend FOIA requests to ten days.  “Right now we spend time calling people and talking to them to find out exactly what information is needed,” she said.  “If there is only one employee there will be more flat out denials of FOIA requests unless they are done properly.  We like to work with people to find out what they need, but we won’t be able to.”

 

Another option is to outsource election testing, although Council seemed generally opposed to the idea.  Tallman said that redistricting happens, the City may be able to redraw the districts from 8 down to 7.  The impact will be upfront costs and longer lines to vote, but savings in manpower.

 

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Woodward Dream Cruise

 

Michael Lary, Event Director, is a contractor and does not have any benefits.  He coordinates over 40 volunteers. The purpose is to support, promote and solicit funding for the Ferndale Woodward Dream Cruise.  Funding is through sponsorship dollars.  He handles all aspects of the cruise, including managing the website.  http://www.ferndaledreamcruise.com/

 

Beginning in 1994, Dream Cruise started to raise money for a soccer field, now one of the largest car events in the world.  The Woodward Dream Cruise has over 400,000 cars over the weekend.

 

Increase revenue by selling more official Ferndale Dream Cruise merchandise and an official Program Guide done through C&G Newspapers. They are also reducing the size of the celebration and containing events to just E. 9 Mile.

 

The event brings in $68,000 in sponsorships, $25,000 in merchandising and $15,000 in other revenue. This revenue totals $108,000, which equals the expenses for the event.  There are $26,736 for administrative, $39,000 for contractual agreements, $15,000 for merchandising, $9,000 for operations, $10,000 for promotions, $4,500 insurance, $3,764 for misc.

 

“This event happens whether we host it or not.  A million people are coming to Woodward and we have to clean up after them, police them, etc. whether we have an event or not,” said Councilperson Kate Baker.

 

“If we did nothing on 9 Mile, the masses would still be on Woodward that day,” Lary said.

 

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The purpose of the meeting was to gather and discuss information.  No decisions have been made.  The next meeting will be at 6pm on Wednesday, April 13, 2011 at Ferndale City Hall, 300 E. 9 Mile.

 

For more information about the City Budget and the process by which it is adopted, go to the City of Ferndale website at http://www.ferndale-mi.com/.

 

Also read our previous budget coverage:

 

Budget Meetings Have Begun – http://oaklandcounty115.com/2011/03/24/the-budget-meetings-have-begun

 

Budget Meeting #2 – http://oaklandcounty115.com/2011/03/31/budget-meeting-2-council-discusses-principles-internal-funds/

 

Time to Talk about the Headlee – http://oaklandcounty115.com/2011/04/06/time-to-talk-about-the-headlee/

 

Fire Department Merger Study in Progress – http://oaklandcounty115.com/2011/04/04/fire-dept-merger-study-in-progress-ray-riggs-explains/

 

SAFER Grant in Question – http://oaklandcounty115.com/2011/03/13/safer-grants-in-question/

 

Government News – http://oaklandcounty115.com/category/politics/

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