Like every other municipality in the state, the Village of Oxford is facing some extremely difficult budgetary issues as officials wrestle with how to combat declining revenues.
‘These are really tough decisions,? said village President Teri Stiles. ‘We have had some serious revenue cuts and we’re all going to feel it one way or the other. We’re going to feel it in services or we’re going to feel it in our pocketbook.
According to village Manager Joe Young, the municipality is facing a potential deficit of between $400,000 and $500,000 ‘if we kept everything the same? for the 2010-11 fiscal year, which begins July 1.
At this moment, council is considering a variety of proposed budget cuts, sharing costs and resources with other municipalities and even the possibility of increasing its 10.12-mill tax rate.
‘We’d be cutting off the taxpayers? noses to spite their faces if we didn’t look at everything,? Stiles said. ‘We have to look at everything, not just cutting people and not just raising taxes.?
Officials will discuss all of their budgetary options at a special meeting 6:30 p.m. Tuesday, April 20.
‘I am a realist,? said Councilman Tony Albensi. ‘I understand that everything needs to be on the table and I’m willing to debate things and discuss things.?
But that doesn’t mean he’s in favor of a tax increase.
‘As of right now, I cannot support a tax increase,? Albensi said. ‘In my opinion, we need to cut where we can cut and cut as much as we can cut without raising taxes.?
Stiles wasn’t thrilled about the possibility of raising taxes, but to her, the village might not have a choice if residents wish to maintain the services they currently enjoy.
‘I’m not for increasing the taxes,? she said. ‘I was adamant about not wanting to do that, but if we have to, I would rather increase the taxes than cut services.?
The choice between cutting services and increasing taxes ‘is a tough decision for a council to make,? Stiles noted. ‘I think we have some options, I really do, and they’re not going to be pleasant. No matter what we do, it’s not going to be pleasant.?
Last year, the village council voted 3-1 to reduce property taxes by 9 percent, from 11.12 to 10.12 mills, for the 2009-10 fiscal year.
‘I didn’t want to decrease it last year because I didn’t want to be faced with this decision this year,? said Stiles, who cast the lone dissenting vote back then. ‘I want to look at all the options we have first before we increase it again.?
If council were to decide to increase the tax rate, it could raise it up to 14.247 mills without a vote of the people. Anything more would require a vote.
As it stands right now, 1 mill is equal to approximately $104,000 in revenue for the village. For the individual property owner, 1 mill is equal to $1 for every $1,000 of taxable value.
Young made the point that increasing the millage rate back to 11.12 mills would still result in property owners paying less in taxes.
‘Most residential properties went down (in taxable value) between 15-to-20-plus percent this year,? he said. ‘So, if we were to put that 1 mill back, which is about 10 percent, they’re still going to be paying less taxes than last year.?
Revenues: Going Down
The revenue situation for the village doesn’t look very good at this point.
Subject to final board of review adjustments, taxable values are expected to decrease 11 percent for the 2010 fiscal year (FY). Projections from Oakland County show taxable value declining by 13 percent for FY 2011, 12.5 percent for FY 2012 and 5 percent for FY 2013.
That’s a cumulative taxable value decrease of 41.5 percent over a four-year period.
Revenue sharing funds from the state were cut by approximately $20,000 for the current fiscal year and are expected to decrease another $10,000 for 2010-11, according to village Manager Joe Young.
The village could also face a revenue cut from the Oxford Township Board.
The township is considering terminating its contract with the village police for fire/EMS dispatch services and instead, utilizing the Oakland County Sheriff’s Department.
Should this occur, it would be a significant blow to the village police communications budget.
Currently, the township pays the village $58,428 annually for dispatch services.
That fee is expected to increase to $60,180 for 2010-11.
The village communications budget is $268,829 for the current fiscal year and is projected to be $303,260 for 2010-11.
In essence, the township’s contribution to that budget ranges from 19.84 to 21.7 percent.
According to township Supervisor Bill Dunn, the sheriff’s department has quoted him a price of $30,000 to $35,000 for dispatch services.
‘We haven’t made any decisions yet,? he said. ‘We’re just looking into things. We’ve got to do what’s best for our taxpayers, too.?
Proposals
To combat all of these revenue reductions, both certain and potential, the village is considering a number of cost-saving measures.
Young is talking with the police and Department of Public Works (DPW) unions about opening their contracts for potential concessions such as wage freezes, increased employee contributions to health insurance, and ways to reduce overtime and save money on clothing allowances.
‘I met with them last Thursday (March 18) ? one in the morning and one in the afternoon ? and I’ve already got a list of concession and discussion items from the police union,? Young said. ‘We’ll be setting up negotiations with both groups.?
Right now, per their union contracts, police and DPW employees are scheduled to receive a 2 percent wage increase for 2010-11.
A wage freeze would save the village approximately $17,000, according to Young.
The manager’s also proposing union employees start paying 5 percent toward their retirement, which would save the village approximately $30,000.
‘Right now, they don’t pay anything towards their pension,? Young said. ‘They could pay 5 percent, which is what the average is. That’s one of the things we’ll be asking them to consider.?
Although she greatly values the daily work of village employees, as an elected representative, Stiles said she can’t put them above everyone else.
‘As much as I really want to keep people employed in this community . . . our fiscal responsibility is to the taxpayers,? Stiles noted. ‘We are not obligated to keep them employed at the expense of the taxpayers.?
The village manager is proposing that he take an $8,536 reduction (or 8 percent) in salary and benefits.
Included in that is a $3,850 (or 5 percent) pay cut, which would reduce Young’s earnings from $77,000 to $73,150 per year.
He’s also proposing to increase his health insurance contribution to $1,500 (or 12 percent) per year.
Young noted that DPW Superintendent Don Brantley, Police Chief Mike Neymanowski and Clerk/Treasurer Dan Luick have all verbally agreed to a wage freeze.
The possibility of initiating some cost-sharing ventures with neighboring municipalities is also being considered as a way to reduce expenditures.
Young plans to meet with Lake Orion’s village manager and police chief to discuss sharing resources and other options.
‘We’re looking at all possibilities ? equipment, dispatch, DPW,? he said.
For instance, if one DPW has a piece of equipment the other village doesn’t have, they could share its use, instead of buying or renting one of its own, Young noted.
Also on the table is the option of Oxford Township handling the village’s annual property tax billing, something it has offered to do in the past.
To help deal with retirement costs, Young met with a representative from the Municipal Employees? Retirement System to discuss options such as switching from a defined benefit plan (which the village currently has) to defined contribution plan for new employees.
Converting existing employees from a defined benefit to defined contribution would not be cost-effective in the short-term because the village would have to pay approximately $150,000 to make it happen and the municipality wouldn’t realize any savings for 18 years, according to Young.
A defined benefit plan promises a specified monthly benefit at retirement. The plan may state this promised benefit as an exact dollar amount or it may calculate a benefit through a plan formula that considers such factors as salary and years of service.
A defined contribution plan, on the other hand, does not promise a specific amount of benefits at retirement. In these plans, the employee or the employer (or both) contribute to the employee’s individual account under the plan, sometimes at a set rate, such as 5 percent of earnings annually. These contributions generally are invested on the employee’s behalf.