Monday, May 7, 2012

Higher Taxes do not guarantee a better government or better services

According to Clarkston News archives the village became a city on July 1, 1992. A letter sent out to village residents stated "The Village Council can unequivocally state that city hood will provide more revenue than it will cost." (Clarkston News August 25, 2010)

Somewhere around 2000, only 8 years after becoming a city, residents were being charged the maximum tax rate allowed by the still relatively new City Charter.  At around the same time, a ballot proposal was approved to put in city water and redo the city roads that would need to be torn up to install the water.  This was approved by the voters and raised taxes by about another 5 mills and adding a special assessment to all properties.

The summary meeting minutes for the June 10, 2003 City Council meeting has the entry, "Budget Hearing was held where City residents expressed concerns over the City Millage rates. Budget was discussed and Council agreed to continue to monitor finances" as contained in the Pubic Notices section of the Clarkston News. According to Oakland County tax records, city taxes were 18.4041 mills in 2003 and the highest they could legally be, as they have been ever since.  In 2003 the Independence Township millage rate was 7.222 mills.  Some will argue that this is an unfair comparison due to the added tax for roads and water but these are the rates one will pay depending on whether they live in the city or township.  It also seems to contradict the statements made only 11 years earlier that "The Village Council can unequivocally state that city hood will provide more revenue than it will cost."

In 2007 during my first year on the City Council, I told the council and public that the city was going broke because city revenues were declining faster than expenses (Clarkston News June 20, 2007).  If you keep this up you will eventually run out of money and it seems we now have.

On August 3, 2010 there was a vote on a 5 mill tax increase to the Village of Clarkston city charter that would have raised it to the maximum tax rate allowed by Michigan law.  This was presented by the city as something to save the local police department but the actual ballot language said nothing about police and the City Council would have been under no obligation, other than perhaps public outcry, to use it for police.  The proposal was narrowly defeated by only 8 votes.  Again it seems that city hood does not automatically provide more revenue than the city is capable of spending.

In a September 4, 2010 Oakland Press article, written when the city eliminated their police department, City Manager Dennis Ritter is reported to have said that with the change in police services, the city’s finances are now on stable ground for at least three years.  That was about 1 1/2 years ago.

On January 31, 2012, city council and finance committee member Richard Bisio placed a memo on Facebook and addressed to the City Finance committee, explaining in some detail that there would be an operating deficit of approximately $50,000 due to the city’s declining property values.  The city council took no action to resolve this problem and has gone on to approve over $32,000 in new unbudgeted and unplanned expenses from not only the current budget year but also from future budgets. 

Former Mayor Steve Arkwright was quoted in the March 8, 2012 Oakland Press as saying, The city, during this downturn in the economy, not only has managed its finances very efficiently, they are in better position today financially than they were a couple years ago.”

City council member Bisio released another memo on April 13, 2012 again defining in detail the pending operating deficit where revenues will not cover expenses in the next budget year and perhaps for many years thereafter.  He now estimates a $64,000 shortfall and gave some recommendations of cutting pay to elected officials and removing all funding for the Planning and Historic District Commission. His other suggestions included using the current .691 mills paid for Township library services for other operating expenses if the proposed District Library millage passes, effectively raising the city tax rate above the charter maximum.  My personal favorite is to charge a fee to pay your property tax bill.  Higher property taxes than our neighbors and we may have to pay a fee to pay taxes?  But according to Mr. Bisio, all of this would still not cover the estimated expenses and another $20,000 will be needed from the city reserves.

This apparently prompted the Mayor to make his first known statement about the city’s budget problem as reported in the April 25, 2012 Clarkston News where he says agrees with some of Mr. Bisio’s suggestion and states, “The finance committee continues to grapple with what appears to be a very significant deficit for next year.”  He was quoted again in the May 1, 2012 Oakland Press  and was even on the evening television news.  Even with all of this, the Mayor said if you added up the possible pay and other proposed budget cuts, it was only around $10,000 even though a budget deficit in excess of $60,000  has been estimated. To date, there are no known plans to deal with this.

The Mayor and other city council members should also know that this budget problem will likely last for many years if the city continues on the way it has.  Property tax revenues cannot by law rise fast enough to solve the deficit in the city’s budget and the finance committee, working in total secrecy, has yet to suggest any long or short term solution.  There is also no plan of any kind to increase or even address the drastically reduced city property values that are estimated to fall another 13.2% from 2011 to 2012.  Falling property values have been discussed regionally and nationally in much detail for the last several years, but not by the government of the City of the Village of Clarkston who have made almost no attempts to address city economic, development or value issues.

According to the newly amended budget that was approved by the City Council on April 23, 2012, the budget surplus for this year has declined from the original amount of $17,359 to only $1,737 and there are still more than two months left in the budget year. At that same meeting, the City Council approved that architectural plans be finalized for a new Department of Public Works building that is estimated to cost 80% more than originally planned, has no funding in place to build, and that there is no official record that the money has been allocated to pay the architect.  They also agreed to spend city funds to "digitize" city records and make them more easily accessible.  Up to now those records have been almost inaccessible even with a Freedom of Information Act (FOIA) request.  This may be a good thing but it still has to be paid for by a city that has no money.

Meanwhile, the surrounding township is considering a vote to raise the tax millage for fire service.  The city does not vote on this and is contractually obligated to pay whatever the township voters approve.  This could be an additional annual expense of from $18.000 to $22,000 which the city will have no control of and does not currently have the money to pay.  

But what about former mayor Arkwright’s statement only six weeks earlier that we, “...are in better position today financially than they were a couple years ago”?  Were we really in worse shape than this a couple of years ago?  What about the letter from the Positively Clarkston group whose 5 members include the present City Manager and Mayor as well as the two former mayors?  That letter says nothing about any financial problems even though it does say we pay greater taxes than the surrounding township and that if we were not a city, the reduction in taxes would be “significant” at almost 15%.  We would also not be facing a deficit budget for many years into the future.

Is there a possibility that we could actually pay less in taxes and avoid a future deficit?  It seems too good to be true, but it is possible if we were not a city paying for a city government that seems incapable of doing much of anything.

So what is the truth?  Are we a wonderful historic village with “many fantastic well cared for historical homes” and a “vibrant business district” as stated by Positively Clarkston, or are we paying significantly higher taxes for services we have no control of and a business district that is barely surviving, as some retailers have claimed?  Given that the city has lost most zoning battles and fails to enforce much of anything, is local control and the related cost really that important if nothing is done?  Do any of the wonderful things claimed by Positively Clarkston have anything to do with being a city?  We were part of the surrounding township for more than 150 years and that’s what established the historic homes and character we currently have, not our 20 years of being a city.  

Will any of this matter if the city goes bankrupt or taxes the residents out of existence to pay the ever increasing expenses that appear to provide little benefit to those that live here and yet must pay the taxes?

Were we told the truth 20 years ago that city hood will provide more revenue than it will cost?  Were we told the truth two years ago when the Mayor and City Manager said we were good for another three years? It doesn’t look like it.  

Do any of those that want cityhood at any cost have any plan for making it financially viable for any more than a few more months, perhaps a few years, at which time there will be nothing left to spend?  If they do, they aren't telling those that will have to pay the bill. 

If you are concerned about your taxes, how you are being represented, and if you are being kept informed about your government’s financial status, and yes the future of the Village of Clarkston, I recommend you contact your city representative and ask them why the story keeps changing.  Why is everything "positive" even as services decline and more and more control is lost every day? Is everything wonderful or are we quickly running out of money? Will they keep approving undocumented expenses and ignoring the pending deficit that they should have dealt with long ago?

If you think an average of about $500 per year in additional taxes is OK, even as the city goes broke, ask yourself if you would give someone $500 every year for no reason.  The total additional tax burden to the city residents is currently about $200,000 each year and that is at our significantly reduced property values which continue to decline.  In 20 years the potential savings in taxes could be more than 4 million dollars.  It has been 20 years since we became a city. Ask yourself if our city of only 880 people really wants to spend 4 million dollars over the next 20 years so that “city” can be in front of "village" in front of "clarkston".  It seems that may be all we get.  

There is a better way, it can cost less, there can be just as much control although it may be by a majority instead of a very small minority, and Clarkston can again be a better place to live.  Consider ending the 20 year experiment with city hood.  It has failed and not one person has brought forth even a suggestion of how being a city can work financially or for the good of all who are involved.   

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