Politics & Government

Ferndale Officials See Tough Road Ahead with Governor's Budget Proposal

Gov. Rick Snyder proposed a budget Thursday that could cut deeply into schools and cities.

Problematic, challenging and aggressive were the words Ferndale officials used to describe the proposed budget cuts to statewide municipalities and schools Gov. Rick Snyder presented Thursday in Lansing to try to balance Michigan's $1.4 billion deficit.

Among the cuts, Snyder announced a $300 reduction in per-pupil funding for public schools K-12, which comes on top of the $170 that was enacted just last year. He said this would save the state $452.5 million. He also said he would reduce statutory state shared revenue by $92.1 million and tie the remaining $200 million to an incentive plan in which municipalities would need to adopt "best practices" and "meet specific standards." Counties will also see a 34 percent decrease in revenue sharing, or about $51.8 million.

The effect on Ferndale

"(We're) talking the elimination of services," said Rep. Ellen Cogen Lipton, D-Huntington Woods. "Local governments have already cut to the bone and there are already cities and schools on the watch list. This could mean receivership, or worse."

Lipton's district covers Ferndale as well as Berkley, Oak Park, Pleasant Ridge, Huntington Woods and part of Oak Park.

"In my district, we're talking about cities that have already made cuts, that are already fiscally responsible. Any further cuts and I think it is going to put serious pressure in terms of performing our services," she said.

"Statutory revenue sharing once helped level the playing field between wealthy and poor communities.  For example, Birmingham receives less than $300,000 and Ferndale receives more than $1 million annually although they are of similar population and size," former Ferndale City Manager and current Birmingham City Manager Bob Bruner said. "Further reductions in statutory revenue sharing will cut the legs out from under the poorest communities in the state at the time they can least afford it."

Under the statutory revenue sharing plan, the state will distribute $200 million to cities, villages and townships. Counties will receive $100 million. This is down from $292 million for cities and $150 million for counties. State revenue sharing makes up about 13 percent of Ferndale's general fund. In 2010, Ferndale's statutory state revenue sharing was an estimated $1.2, while $1.4 was constitution, which the state legally has to distribute.

"In terms of our budgeting, this adds insult to injury," Ferndale Mayor Dave Coulter said. "Property tax revenue has already taken a hit."

Ferndale is facing a $2.2 million deficit in the next budgeting cycle. Ferndale City Council has approved a May ballot proposal for a Headlee Override, a five-year tax increasing, revenue generating measure to help fill the deficit. The Headlee Override, if passed by the voters, will raise the city's generally operating millage 3 mills the first year and 5.45 mils for the next four years, or about 11 percent.

Ferndale Mayor Dave Coulter said that there is a silver lining to take away from this.

"We anticipated this, it's not a shock," he said. "But the silver lining is that communities that share services or have reduced defined contribution plans get financial incentives and Ferndale has done both." Coulter said former City Manager Bob Bruner had anticipated this and removed the statutory shared revenue from the budget.

As for the financial incentives for "best practices," they were not laid out in Snyder's proposal.

Find out what's happening in Ferndalewith free, real-time updates from Patch.

Cuts called 'aggressive' by Ferndale school superintendent

Ferndale Public Schools Superintendent Gary Meier said that it is their approach to always balance the budget, something they've done for the past 10 years. Ferndale Public Schools are also one of a few schools in Oakland County which are running in the black. But, with these new cuts, Meier said the road will be difficult.

"These are very aggressive state funding reductions," Ferndale Superintendent Gary Meier said. "It will be difficult to balance the budget, but it's still too early to tell."

Though a reduction of $300 per pupil on top of the already $170 reduction would be a million-dollar hit on the schools revenue, Meier said there are a lot of other factors that will cut into the public schools budget, such as an increase in retirement rate and potential increases in healthcare costs.

State Budget Director John Nixon, however, said these cuts won't have to affect the classroom. Specifically focusing on K-12, he said districts could avoid instructional cuts if they adopt an 80-20 employer-employee split on their health care contributions. He said that would generate $300 million in savings. In addition, if districts cut 10 percent non-instructional costs by following "best practices," it would generate another $300 million in savings.

"We feel this a very defensive plan that doesn't have to impact the classroom," he told lawmakers. "We know that's the critical area that needs to be maintained in school funding."

Still, as far as Ferndale Public Schools budget, which the district is putting together now, Meier said it'll still be challenging.

"It's problematic at best but at the same time we have to do our best to influence the final legislation," he said. "But when it's finalized, signed, sealed and delivered, we'll do the best we can."

Snyder also proposed removing the tax-exempt statues from private and public pensions, removing tax credits for low-income people, ending tax credits for the film industry, while cutting business taxes by $1.8 billion to invigorate job growth.

"This (budget) is going to be cause enormous, enormous financial pressure to our communities," she said. "I'm very, very concerned."

The budget now goes to the state House of Representatives and Senate. The state is hoping to have the budget finished by May 31.

Find out what's happening in Ferndalewith free, real-time updates from Patch.


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