County Budget Recommendations Presented
(Oakland County Press Release, July 17, 2013)
Property assessments have finally stabilized countywide after five years of declines, Oakland County Executive L. Brooks Patterson said during his annual budget address to the Board of Commissioners tonight. Oakland County’s assessed value improved 1.16 percent with no change in taxable value for fiscal year 2013. The recommended budget estimates that taxable value will increase by one percent each in fiscals 2014 and 2015 followed by two percent in fiscal 2016. A one percent increase in taxable value represents approximately $2 million of additional general fund revenue. The additional general fund revenue will help ease the loss of Personal Property Tax revenue as it is phased out.
Patterson’s budget recommendation is balanced for all three years without requiring additional budget tasks from county departments. The general fund/general purpose estimated revenue and appropriations are $419,100,727 for fiscal 2014, $423,884,004 for fiscal 2015, and $428,634,764 for
fiscal 2016. The total budget for all funds amounts to $799,148,947 for fiscal 2014, $806,053,332 for fiscal 2015, and $813,406,699 for fiscal 2016. The budget is also balanced for fiscal 2017 based on the county’s five-year outlook.
Patterson’s budget proposes modest salary increases for employees over the next three fiscal years which will restore salaries to their fiscal 2009 levels. The current budget recommendation includes a two-percent general salary increase for fiscal 2014 with an additional one-percent increase each in fiscals 2015 and 2016. Full-time county employees’ salaries decreased a total of four percent in fiscals 2010 and 2011. There were no general salary increases in fiscals 2012 and 2013. In the first quarter of fiscal 2013, full-time employees received a one-time $500 lump-sum, non-recurring payment which was not included in the base pay structure. Since it was a one-time payment, there was no impact on future operating budgets beyond fiscal 2013.
“During the past 10 years, Oakland County’s general salary increase has clearly been conservative and since 2008 it has lagged behind both market increases and the consumer price index,” Patterson said. “Despite this fact, we have experienced tremendous support from employees in an effort to 
avoid layoffs. However, prudent long-term planning requires that we contemplate a bigger picture, namely, the need to recruit and retain a quality workforce in the future.”
There were some minor modifications to the county’s health care plan effective Jan. 1, 2013. Employees’ prescription drug co-pay increased from the prior levels of $5 (generic), $10 (brand), and $25 (non-preferred brand) to $5, $20, and $40. In addition, an emergency room co-pay of $100 was implemented for non-emergency conditions. These changes are designed to encourage the use of generic prescription drugs and the use of physician office visits and/or urgent care centers for non-emergency related care. The savings from these changes are estimated to be $850,000 annually.
“After several years of keeping expenditures flat for employee health care, it would be unrealistic to assume no increase in costs going forward,” Patterson said. “In fact, health care costs typically rise at a rate greater than general inflation. The recommended budget includes an annual increase of six percent for employee health care in each of the next three fiscal years.”
Substantial
uncertainty remains regarding the financial impact of the Federal Affordable Care Act on Oakland County’s employee health care costs when it is fully implemented. However, the Affordable Care Act’s new transitional reinsurance fee of $63 per insured person has an estimated annual cost to the county of $488,000 for active employees and $124,000 for retirees. It applies to eligible active employees and retirees and their family members who are covered by county-provided health care.
Oakland County continues to work towards the refinancing of the retirees’ health care certificates of participation (COPS). The call date of the COPS is April 1, 2014, at which time approximately $422 million will be outstanding and callable. A portion of the debt will be retired early as a result of the investment gains in the two retiree health care trust funds. The remainder of the debt will be refunded through the issuance of bonds in an amount currently estimated to range from $275 million to $300 million. The reduction in remaining debt service is estimated to result in savings of at least $14 million annually with potential benefit to the general fund in the amount of approximately $9.6 million annually. To be conservative, the recommended budget for fiscals 2014 – 2016 does not include any anticipated savings from the COPS refunding.
Finally, the recommended budget includes a $20 million increase in Water and Sewer Trust Fund 
operations for the recent acquisition of the Pontiac Wastewater Treatment Facility. Through the Oakland County Water Resources Commissioner’s office, a new drainage district was established under Chapter 20 of the State of Michigan Drain Code of 1956. The drainage district issued $57.5 million in bonds in 2012 to acquire the wastewater treatment facility from the City of Pontiac, backed by the full faith and credit of the county. The county will upgrade the facility, operate the wastewater treatment system, and charge the customers for the operations of the system to fund the capital debt service. Since the facility is currently underutilized, the county will work to secure new customers from neighboring communities, who have already expressed interest in using the upgraded facility. The expanded revenue base is expected to lower the overall cost to the current customers in Pontiac and future customers in Oakland County.
For Patterson’s complete budget message and recommended line item budget, go to www.oakgov.com/mgtbud/fiscal/ and click on the link for the recommended budget.
Following the budget presentation, the Board of Commissioners Finance Committee will hold budget hearings at 9:30 a.m. on Thursday, July 25; Thursday, Aug. 8; and Thursday, Aug. 22. The board vote to adopt the budget will take place at 9:30 a.m. Thursday, Sept. 19. These meetings will be webcasted and recorded. All meetings are open to the public.
