Major cuts to township services and staff to cover a $65 million shortfall in benefits funding may be staved off for the time being under a proposed budget presented at a study session of the Bloomfield Township Board of Trustees on Tuesday, February 26.
The township in December 2018, announced that changes to the state's accounting laws require municipalities to fund at least 40 percent of their unfunded liabilities, including other post-employment benefits (OPEB), which include benefits such as medical, dental, vision and life insurance for retirees and spouses. Prior to the changes the township was a “pay-as-you-go” community, meaning it paid for related expenses as employees retire and accrue actual costs.
Under the new rules, municipalities must fund at least 40 percent of those liabilities, with the township's current level at about six percent. The $65 million shortfall equates to a structural deficit of about $5 million to $7 million each year in the township's annual budget.
The township subsequently needs potential cuts and revenue boosting measures totaling between $6.7 million and $7.4 million annually. Those measures include eliminating the township's animal welfare division, outsourcing police and fire dispatching services, as well as cuts to police, fire, assessing services, hazardous waste disposal, gypsy moth control and potential fee increases. Additional options include a potential bond issue to meet OPEB liabilities, which would require voter approval, or a combination of cuts and bonding. The township is now conducting a public survey to determine what residents prefer as a solution to the funding problem.
Bloomfield Township Supervisor Leo Savoie said at the board's February 26 budget study session that the proposed budget would forgo any immediate cuts and essentially maintain the status quo until after the public votes on the issue in August. The budget could then be amended based on the public's response.
“We are going to approve the budget knowing we can take the funds out of reserves, then we'll go through with the strategic plan and figure out what this board wants to do based on the survey,” Savoie said. “Once we approve the budget, we will have study sessions to see what direction the board wants to go and then take the necessary action.”
Savoie said survey results indicated that residents don't want cuts to public safety, dispatch services or road funding. He said the remaining options would likely produce less than a million in savings, excluding increased fees.
“That doesn't take care of the problem,” he said. “I think we need to have that conversation completely separate from (the proposed budget). We have the reserves to get through this and the ability to amend the budget. Then we haven't made cuts until the community has spoken.”
Trustees David Buckley and Dani Walsh took issue with the proposed budget for not including any proposed cuts to staff or services in advance of requesting a bond proposal from the public.
“We need to cut the budget before we raise taxes or we are like the federal government,” Walsh said.
Buckley expressed his frustration further, calling the proposal “the most irresponsible thing I've ever heard,” labeling the plan as “deficit spending.”
Under state law, municipal budgets must be balanced, meaning that total expenditures can't exceed total revenues, including fund balance contributions.
The proposed budget includes about $21.3 million in total general fund revenues, and about $20.7 million in general fund expenses. The township has a general fund balance of about $13.8 million, meaning there isn't a proposed deficit in the budget.
Bloomfield Township Treasurer Brian Kepes said the township remains fiscally sound, and that the proposed budget maintains services important to township residents.
“I think what the resident survey distinctly said was one of the things that they value was the services they receive,” Kepes said. “I would suggest the election isn't about cutting taxes, it's about raising taxes. It's about what kind of community we want to be. We are operating fiscally sound, and all of the agencies that look at us respect us on that. To say anything less is disingenuous and completely counter to any financial basis you would evaluate this community.
“Let's think about what is being suggested: we are going to cut services before we have an election. For people who said they like services the way they are and the direction the community is going, we are going to cut it before we give them the choice to make the kind of community they want to live in. I'm not sure that makes sense. It doesn't make sense.”
Walsh said she would prefer township departments to look for possible cuts, no matter how small, to show residents that the township has already looked for ways to cut before requesting additional taxes.
“We aren't cutting anything,” she said. “Even if its $900,000, that's almost a million dollars we wouldn't have to raise taxes on.”
Township Clerk Jan Roncelli said the township is already maintaining cuts it had several years ago to staff. And, that an overall two-percent increase in pay is on the heels of several years of pay and hiring freezes.
“We made drastic cuts about eight or nine years ago, and we have continued those. We went five years without pay increases, so when you talk about not giving employees a two-percent increase, they won't catch up with five years without increases,” she said. “We haven't done a salary study in years, but we are behind other communities. That two percent, if you cut it, we will lose employees. We don't match up to what other communities are paying.”
Savoie said the largest portion of the proposed measures would need to come from police and fire services if voters were to reject a bond proposal.
The township outlined potential cuts in December, which included but weren't limited to about $1.3 million to $1.6 million from reduced police patrols; $800,000 to $900,000 from ceasing fire services at Fire Station No. 4; and $375,000 to $700,000 in dispatch services. Elimination of the township's animal welfare division would provide between $170,000 to $200,000 in savings; and cutting the township's general fund support for its road division would provide about $1.4 million in savings.
“We've been through the numbers backwards and forwards, and this comes down to public safety,” Savoie said. “I'm not saying that to disparage public safety and I'm not saying that as a scare tactic. It is what it is, and it's the reality of it.”
The township must pass its fiscal year 2020 meeting by April 1. The study session ended without any formal motion or votes.