The Budget – Round 1

April 11, 2006

This past Saturday, a special meeting of the Novi City Council was held to review and discuss the budget present by the City Administration.  This annual rite of spring is largely ignored by the vast majority of taxpayers and generally sparks few fireworks.  For those interested, the budget is posted on the City of Novi website. 

Some of the highlights of the proposed budget presented by Interim City Manager Clay Pearson include the following: 

• The total millage proposed is to remain steady at 10.5416, a rate which is below the maximum allowed by City Charter and has been in place for the past 6 years.  The General Fund millage would increase by .1249 mils.  This is offset by a matching decrease in the Debt Service.
   
• The General Fund Budget for 2006/07 is proposed to have revenue of $32,648,670, including an appropriation of fund balance of $2,751,580 which still provides fund balance at the targeted level above 14%.
   
• Total city expenditures are budgeted at $32,648,670 which is an increase of 20.4% from the previous budget year. This includes a number of non-recurring capital and transfer items.
   
• The estimated General Fund unreserved/undesignated Fund Balance in this budget is above 14% of General Fund Expenditures, or $5,282,782 of $32,648,670 in budgeted expenditures.
   
• $1,000,000 is proposed for the FY 2006/07 Budget to reduce unfunded Retiree Health Care cost.  The last actuary report (updated 2002) estimated the accrued liability for Retiree Health Care at $18 million; which indicates the fund is approximately 15% funded. The City has have recommended 70% as an adequate funding target.
   
• A recommend a one-time transfer in this budget to "forgive" the debt of $694,000 from the Novi Ice Arena that has been carried in the General Fund.
   
• The City has substantial Federal Drug Asset Forfeiture Funds - $3.64 million received with another $3 million expected.
   
• A storage/maintenance facility at the Community Sports Park ($152,000) and first phase renovations to the 23-year-old Powers Park facility, including design and engineering, consulting, irrigation installation, fencing renovations, and replacing the infield surfacing ($342,000).

A few general comments.  First, I like this budget a lot.  It attempts to address many of the area of concern that I had and aggressively addresses issues like unfunded retiree health care liabilities, road and park improvements, employee training, connecting sidewalks and many other issues. 

Second, the amount of money available this year points out what could have done without Sandstone debacle.  Millions of dollars of improvements to our roads, parks and infrastructure could have been done with the money used to settle the Sandstone lawsuit.  We can never allow our City to be put in that position again. 

Finally, there will be a vigorous debate regarding the increase in the General Fund millage without a specific corresponding need.  I view that as necessary and constructive.  We will soon be effected by Headlee and need to come back to taxpayers to rollback the effects to the City Charter limits.  This debate will prepare future voters for that discussion.

City Council had their first opportunity to comment on the budget after the presentation, unfortunately my video recorder decided to stop at the beginning of Council Member Paul’s comments and I have not had an opportunity to review them, Mayor Landry’s or Council Member Gatt.  However, the highlights from other City Council member’s comments I did see included the following:

• Support for a signage/way-finding programs for the City.
   
• The potential of eliminating one of the softball fields at Power’s Park to build a new gun range / training facility at the police station.
   
• Holding the line on the General Fund millage at the 2005 level, thus saving taxpayers about $400,000 and reducing expenditures accordingly.
   
• Various proposals regarding a COLA increase for City Retirees.
   
• Support of funding of training programs for City employees and planning commissioners.
   
• Using proceeds raised by the Library for General Operating expenses.

Until I view the special meeting in its entirety and have an opportunity to talk with various City Council members, I will withhold my commentary on their specific comments and recommendations.  The first budget meeting traditionally allows Council members an opportunity to hear the positions of their colleagues and access the feasibility for support for their individual initiatives.  They will work behind the scenes to build alliances and support, while discarding positions that lack the potential of moving forward.  The second meeting is when the differences of opinion become most evident and the real public negotiations to bring home a budget begin. 

Issues that I look forward to greater discussion during the next meeting include: 

• The impending request by the Library Board for a special millage to pay for Capital Improvements to the library facility
   
• The use of Federal Forfeiture Funds for basic budget items (vehicles, building improvements, debt reduction) vs. big ticket capital improvement items.
   
• The funding of the balance of the Gun Range/Training Facility at the police station, and the impact it will have on parking and Power’s Park.
   
• The City’s plan for encouraging and funding Economic Development initiatives.
   
• The effect of new labor contracts on current health care cost and future pension and heath care liabilities.

A recent Oakland Press article reported that Novi property values increased 8.56% during the past year.  The county overall posted a 5.56% increase in taxable value and a 4.06% increase in assessed value, up slightly from last year.  Overall, Oakland County property values are continuing to grow, but at a slower pace.  The Oak concludes that the market for existing housing is slowing even as new construction continues.
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The Novi Town Hall Series successfully concluded their first series recently.  They contributed over $5000 to the library fund raising efforts and brought an excellent new program to Novi.  I look forward to a bigger and better program for 2006/07.

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- Well done is better than well said.

Benjamin Franklin US author, diplomat, inventor, physicist, politician, & printer (1706 - 1790)

In the tradition of Ben Franklin, the Novi Post provides informed political commentary on current events in Novi, Oakland County and all of Michigan.