Why Ferndale Might Have to Cut 15 Percent to 20 Percent

Ferndale is facing a money hole, basically.

The city is looking at a projected shortfall of $2.3 million in the general fund, after closing a more than $3 million hole in the prior year's budget.

At 6 p.m. every Wednesday at City Hall, the Ferndale City Council convenes for a budget review process to figure out ways to balance the general fund.

The two largest contributors to the general fund are property taxes, at about 49 percent, and state revenue sharing, about 15 percent. In Ferndale, property tax revenue is expected to decrease from more than $9.2 million in 2009 to an estimated $7.5 million in 2013.

Ferndale received about $1.2 million last year in statutory state revenue sharing, but Gov. Rick Snyder has proposed cutting statutory revenue altogether.

To attempt to fill the gap, the council has put a millage on the May 3 ballot, based on a recommendation by a resident-driven Financial Planning Committee, to increase city revenue through taxes.

The millage is a Headlee Override that, if voted in, would increase the general operating tax by 3 mills the first year (about a 6 percent increase in your overall tax bill) and an additional 2.45 mills for the next four years (about an additional 5 percent increase in your overall tax bill). The increase would generate about $1.7 million this year.

If that passes, there still would be an imbalance, however. Ferndale Interim City Manager Mark Wollenweber has said the council will use some of its emergency fund to close the gap, and services should stay about the same.

If the Headlee Override millage does not pass, the council will have to find a way to close the $2.3 million gap. That could equate to about 20 to 24 layoffs, Wollenweber said.

On Wednesday, the council went through various parts of the general fund, looking at scenarios — in the event that the Headlee Override does not pass — that would cut city expenditures by 15 percent and 20 percent.

The general fund consists of funding for public safety, general government, District Court, City Council and parks and recreation. The bulk of the general fund, about 60 percent, goes toward public safety.

Essentially, the council is figuring out four budgets: a budget with the Headlee Override passing and one without, as well as running a projected budget for the next year, with and without the Headlee Override.

"Realistically, we have to talk (about) what this budget with 20 percent cuts would look like," said Mayor Dave Coulter.

But the council also made it clear it wasn't going to cut, just to cut.

"We shouldn't make cuts that are purely symbolic," Councilman Scott Galloway said. "We need to make cuts that will get us to $2.5 million."

Council members went through costs of general fund central services, legal services, the city's cable television, financial administration, City Council, city manager, city clerk and the Woodward Dream Cruise.

Discussion of cutting each component ranged from great to small. From cutting City Hall down to only two days of operation (it's currently at four days of operation) and cutting out over-the-counter payments of tax and water bills to cutting proclamations – or award ceremonies – from council meetings.

Last Wednesday's meeting was exactly that, however. It was a little here and a little there.

Click to read a blurb from each presentation.

The next budget review meeting is at 6 p.m. Wednesday at City Hall.

Find Ferndale city budget documents here.