SAD necessary tool to preserve services

July 23, 2019

Bloomfield Township voters on August 6 will be asked whether to support a 2.3-mill tax dedicated to public safety departments in the township through a 15-year special assessment district (SAD) that will generate about $9 million per year. If approved, the township would cease to collect a current general millage of 1.25 mills, resulting in an overall increase of current taxes by 1.05 mills. 

 

One mill is equal to $1 per every $1,000 of a home's taxable value, which is typically half as much as a home's market value. The average taxable value of a home in Bloomfield Township is $215,234 ($430,468 market value), meaning the average homeowner would pay about $226 per year for the SAD.

 

The genesis for the proposed SAD comes from a recent change in state law requiring municipalities to change the way they fund retiree benefits, specifically Other Post Employee Benefits (OPEB), such as health care and life insurance. Those benefits include current retirees who negotiated benefit packages with the township over the past several decades – of which about 70 percent in the township are former police and fire employees. The law, known as Public Act 202 of 2017, requires communities to have at least 40 percent of total OPEB obligations paid in full if the annual payment totals more than 12 percent of the municipality's total revenues.

 

Prior to the law, all communities could pay OPEB premiums as they came due each year. The previous process wasn't an issue for Bloomfield Township, which has always made annual payments without fail. However, state legislators, pointing to cash-strapped communities that defaulted on promised retiree benefits, decided it's best to protect government employees by upping the equity in those accounts. 

 

For Bloomfield Township, the new law means coughing up $65 million – or 40 percent of the total $164 million OPEB liabilities. While the township has some 30-years to pay down the balance, retiree health care costs alone will total about $2 million per year. Additionally, the township is on the hook for $3.5 million to $4 million a year for its defined benefit plan for active employees and retirees. Again, at least 70 percent of those stem from public safety. In total, the township now faces a "structural" budget deficit of $5 million to $7 million each year, meaning that one-time fixes won't remedy the problem.

 

The SAD would provide about $1.5 million annually toward OPEB and defined benefit obligations owed to police and fire employees and retirees. Another $500,000 from the general fund would be used to cover the cost of other staff and retirees. Currently, the general fund contributes about $6.6 million to public safety which would be eliminated, because the SAD would cover it.

 

Despite allegations from a vocal group of naysayers, none of this was the doing of current board members or administrators. The bill has come due from the days of rich benefit packages when, prior to the Headlee Amendment in 1978, Michigan residents saw their home values and property taxes skyrocket year after year. Rather than ask voters for higher millage rates, municipalities across the state offered up retiree benefits in place of wage increases. With the bill not expected to come due for decades, those retirement packages became the standard for generations of employees, with Bloomfield Township being no different. Now the piper has to be paid.

 

Addressing the debt requires a meaningful, long-term solution on the part of the township, which is being done. Nickle-and-dime cuts to the annual budget won't do it, as some folks have suggested. Nor can the township get there by slashing the level of services residents have come to expect. 

 

Such considerations should be taken into account by voters who have been bombarded with misinformation and claims of fiscal irresponsibility made by obstructionists who have opposed the proposed SAD, along with nearly any other action taken by the majority of the township board.

 

Whether or not the proposed SAD is supported, OPEB and defined benefit obligations must be paid. That means rejection of the SAD in August will lead to numerous cuts, including the elimination of 10 police officer positions and eight firefighters and paramedics. To keep road patrols at current levels, support for school liaison officers, joint task forces and other assignments would be pulled.

 

Additional cuts to service would include eliminating $1.4 million from the general fund to the road department, meaning less road maintenance, and the elimination of the township's animal welfare division. Property owners would still pay more each year, as a one-percent administration fee for property taxes would be assessed, on top of cuts to services.

 

We recommend a YES vote for the SAD. The township has done its due diligence to find a responsible solution, with the state approving their plan. The average cost to homeowners is reasonable to maintain the quality of life for residents. 

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