City of Sylvan Lake State of the City

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City of Sylvan LakeState of the City

• Headlee amendment
• Proposal A
• Millage rate comparison
• Where are we financially today
• Where are we headed over the next 5 years
• Without charter amendment and with charter
  amendment
• Budget reduction actions taken

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City of Sylvan LakeState of the City

• Charter amendment
• Why A Charter Amendment?
• Impact to property owners
• What will this cost me?
• How Much Revenue will 2 Mills provide to City?
• Major Expenses Investigated
• Required Expenditures
• What More Can We Cut?
• Possibilities for Revenue

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Headlee Amendment
Passed in 1978

• The impact of the headlee amendment on taxes
• Limits the amount of income generated by taxes
  for the city
• Reduces the millage rate to maintain the same
  funding level as the prior year (with some
  variables)
• If at its maximum, does not allow the millage
  rate to increase without a vote
• There is no mechanism to allow taxes to be
  maintained if taxable values decline
• Will the city get more taxes when the housing
  values come back up

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Proposal A
Passed in 1994

• Changed the way property taxes were calculated
• Increased sales tax from 4 to 6
• Taxable value can increase the lesser of 5 or
  the rate of inflation
• Stabilized taxes
• Created a gap in taxable value and assessed value
• Values became uncapped when sold
• What is the impact of uncapped values?
• It increases the overall taxes paid for that
  property (only)
• Does that increase the amount of taxes the city
  receives?
• NO! It lowers the millage rate for the City
  (Headlee Amendment)

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Sylvan Lake has never had aGeneral Fund tax
increase
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Tax rate comparison
Mills
Even if the Charter Amendment passes, Sylvan
Lake will have a lower millage rate than almost
all of the surrounding communities.
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Revenue/expense History
Bottom line With all of the cuts that have been
made, Expenditures are outgrowing Revenues.
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City General Fundand Savings (Fund Balance)No
Increase in Millage
Assumptions 2 Inflation (put on most
expenditures) 2 Rate of return on investments 5
DECREASE in taxable value for 2010-11
optimistic No change in taxable value (rate of
inflation) for 2011-12 - optimistic 3 increase
in taxable value (rate of inflation) beginning
2012-13 optimistic 4-year rolling trend for
most remaining line items (Rev. and Exp.) 20
Decrease in State Shared Revenue in 2009-10
and 1.7 Reduction each year after
Time is running out.
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Revenue/expense History and Projection If the
the Charter Amendment Passes
Revenues
Expenditures
Current year Add/Reduction
Prior Year Fund Balance
Ending Fund Balance
Ending Fund Balance as Percent of Current Year
Expenditures
Assumptions 2 Inflation (put on most
expenditures) 2 Rate of return on
investments 5 DECREASE in taxable value for
2010-11 optimistic No change in taxable value
(rate of inflation) for 2011-12 - optimistic 3
increase in taxable value (rate of inflation)
beginning 2012-13 optimistic 4-year rolling
trend for most remaining line items (Rev. and
Exp.) 20 Decrease in State Shared Revenue in
2009-10 and 1.7 Reduction each year after
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Budget Reality

• The city of Sylvan Lake has been reducing city
  expenses for over 10 years to maintain a balanced
  budget.
• The City Manager explained the financial future
  in July of 1994 due to the low millage, which was
  decreasing due to Headlee amendment.
• Reduced State Shared Revenues and reduced taxable
  values are adding to our citys concerns.

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Reduced State Funding
Where State Shared Revenue should have been at a
5 annual increase
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Budget Reduction Actions

• In 2005 city finances were investigated by an
  outside source. The city was given an excellent
  review of spending practices.
• The city has maintained a minimum staff. Even
  with the increased demands of state and federal
  requirements, the staff has not been increased in
  30 years.
• The staff has actually decreased by two full-time
  employees.
• Eliminated Police Summer Park Patrol
• Mow lawns less frequently

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Budget Reduction Actions

• Eliminated Additional DPW Summer Employees
• Eliminated another full-time position in City
  Hall, reduced front desk hours by an additional
  12 hours per week.
• We have annually reviewed employee benefits to
  look for reductions and analyze budget spending
  to reduce costs.
• Over 100,000 per year is being saved by reducing
  benefits to employees.
• Non-Union Salaries frozen at 2008 level
• The total cost of Salaries of all 11 City
  employees is 543,059

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Budget Reduction Actions
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Budget Reduction Actions

• Minimized improvements and maintenance to City
  Hall, Community Center, Parks, and the Clinton
  River Trail.
• Saves the city 60,000 per year.
• Stopped annual repair of seawall.
• Saves the city 25,000 per year.

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Budget Reduction Actions

• Utilized funding from fundraising groups to make
  approved improvements in the city.
• Utilized outside agencies for maintenance and
  repair projects to reduce city internal costs.
• Leaf Collection (Reduced Millage Rate)
• Major Water/Sewer/Street maintenance
• Mowing

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Charter Amendment being placed on November 3rd
Ballot

PROPOSED AMENDMENT OF SECTION 13.5 OF
ARTICLE 13 OF THE CHARTER OF THE CITY OF SYLVAN
LAKE
This amendment will authorize the levy of new
additional millage in the amount of not to
exceed two (2.0) mills for 10 years, 2010 through
2019, inclusive, for municipal purposes including
but not limited to, police, fire, parks and
recreation and capital improvements throughout
the city. It is estimated that if levied, 2.0
mills would raise approximately 207,250.10 when
first levied in 2010. Shall the proposed
amendment be adopted? YES NO
Note After the ballot language was approved,
the City received notice that the taxable value
for the City had been reduced. Using the
projections obtained from Oakland County, the
projected revenue when first levied in 2010 will
be most likely be less than 190,000
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The Ballot Proposal

• Why a Charter Amendment
• Can be proposed as a renewable millage.
• A Headlee restoration cannot be proposed as a
  renewable millage.

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What will it Cost Me?

• There are two points that need to be made when
  looking at the cost to you.
• The millage for the construction of the Fire
  Department will come off your tax bill, reducing
  the millage by 0.3768 mills.
• If your taxable value and assessed values are
  close, or equal to each other, the reduction in
  taxable values (estimated to be approximately 5
  for the City overall) will reduce your current
  tax bill.
• the impact of the millage would be very minor.
  The net increase in your tax bill would be
  approximately 0.6 (see the following slides for
  examples)

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What Will It Cost Me?
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How much revenue will2 mills produce?

• The projected taxable value for real and personal
  property of 98,811,000 for the City at a 5
  reduction from 2009 for Fiscal 2010-11.
• 2 Mills would generate approximately 197,622
• Penalties and interest would generate
  approximately 14,900
• Total additional revenue is approximately
  212,522
• How It will be used
• The projected debt in 2010-11 is 181,122 leaving
  only 31,400
• If the taxable values continue to decline, the
  amount generated would be less from both the
  regular millage rate and the additional 2 mills.

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Major Expenses Investigated

• Investigated alternatives for Police services
  with County and other municipalities, no better
  alternatives found but we continue to explore.
• Oakland County Sheriff.
• West Bloomfield.
• Discussing possible shared services with Keego
  Harbor.
• Investigated city insurance benefit coverage. No
  changes were recommended.

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Major Expenses Investigated

• Alternatives for Fire and Medical protection
  using other municipalities, no better
  alternatives found.
• Waterford
• Pontiac
• Investigated outsourcing DPW with Cityworks,
  found alternative more expensive.

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The Decision is Yours

• Who wants to pay more taxes?
• Nobody
• Why pay more taxes?
• Attempt to maintain current city services.
• Who makes the decision?
• The registered voters of Sylvan Lake.

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Required Capital OutlaysBudgeted

• New storm water management required by law.
• 20,000 per year.
• Prepaid retiree health care.
• 35,000 per year.
• Fire Department.
• An annual increase of 5 per year. 12,000 FY
  2009/10

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Options if Millage Does Not Pass

• Reduce police department patrol to minimal
  coverage
• Outsource police department if/when the economics
  justify it.
• Eliminate park rangers.

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Options if Millage Does Not Pass

• Eliminate Code Enforcement Officer.
• Eliminate DPW and sub-contract for a minimal
  amount of services.
• Contract and partner with an alternative city for
  fire protection and EMS.
• Combine services with another city if it makes
  economic sense.

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Possibilities for Revenue

• Development of Whitfield and other property.
• Increases the propertys taxable value.
• Moderate impact
• Fund raisers
• Sell City Property
• Memorial Park
• Create and sell lots near the Community Center

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• Thank You For Your Time
• Questions