A Letter to the Bloomfield Township Community
Dear Bloomfield Township Neighbor,
Perhaps you’ve been following the news relating to our community’s government. If you have, you are likely frustrated with the anger and vitriol coming from all sides of the debate. I share your frustration with the current state of affairs and am ashamed that our wonderful community is gripped in such turmoil.
You may also know that we have an election coming up on March 10th that includes several property tax millage requests; though only one is for the township.
The Board of Trustees of Bloomfield Township voted unanimously to place a millage renewal request on the March 10th ballot.
I believe that this renewal provides critically important funding that will keep our community safe and prosperous.
The request is for 1.2401 mills, or $1.24 on each $1,000 of taxable value. This results in roughly $225 per year in tax on the average house in the township[1].
“Let me be clear: this is a renewal. Your tax rate will not go up versus your rate last year. Your tax may go up slightly but that would happen anyway as a result of your assessment increasing due to property values increasing. But the rate you are charged (the millage) will not go up as a result of this renewal passing.”
Let me give you some background on this millage. It is a general fund millage, which means the funds can be used for any lawful purpose in the township. I will demonstrate how those funds are used in a minute. But this millage was first approved by the voters 10 years ago as a response to the Great Recession and the precipitous decline in property values that would have left the township budget in tatters. However, contrary to what you may have heard, it was never intended to be a temporary solution. Because of a state law called the Headlee Amendment and the voter-approved Proposal A of 1994, a municipality cannot increase its tax collection at rate greater than the rate of inflation. So while property values could decline without limitation, they can only go back up effectively by the rate of inflation each year. Only now, 12 years later are we back to our pre-recession taxable values.
Bloomfield Township State Equalized Values vs. Taxable Values last twelve years.
Given that, we should be able to go back to our pre-recession tax rates right? Unfortunately, while property values increased which increased taxable values, two countervailing things happened. First, since the increase in taxable values was greater than the rate of inflation, millage rates had to be rolled back because of Headlee[2]. Secondly, all of the other costs of operating the township, including labor, insurance, utilities, and especially healthcare and benefits, increased at a much higher rate. So what we really should be looking at is the following chart, which shows what the average township resident actually paid:
The net result is that actual tax paid is only 9.1% higher today than 13 years ago, or only a 0.7% compounded annual rate of growth. While the township has been good at keeping costs in check, that’s a tall order for anybody.
To make matters worse, Lansing passed Public Act 202 of 2017 which requires the township to pre-fund its retiree healthcare obligation, which previously was not required and was funded as the costs came due[3].
The net result is that the millage renewal is needed now just as much as 10 years ago.
Let’s review how the Township budget comes together.
For every dollar you pay in property tax, only about 27 cents stays in Bloomfield Township; the rest goes to Oakland County, your school district, the DIA, the library, the metroparks, etc. Of those 27 cents, the bulk of the money is allocated between our three “major” funds: General, Roads, and Public Safety. Those three funds aggregate to a budget of about $50 million per year[4]. 72% of that amount, about $36 million, comes from property taxes. The sources of Township revenue are detailed in the chart below.
Revenue Sources
In terms of spending, the biggest categories are active labor (wages & benefits) that amounts to $29 million (58%) and retiree costs (pension & healthcare) of $11 million (22%). Not surprisingly given that government is a service industry, 80% of our budget is dedicated to labor-related costs. The spending categories are detailed in the chart below.
Spending by Category
Finally, I can allocate the budget by fund so you can get a sense as to where the spending occurs: 67% of the budget goes to Public Safety, 23% to General operations, and 10% to Roads. And for additional insight, of the $40 million spent on active labor and retiree costs (from above, $29 + $11 million), $30 million are attributable to the Public Safety fund.
I provide this detail to illustrate that those folks who are campaigning against this millage renewal with a slogan “cut costs, not cops” are not connected to the reality of the situation. 60% of our budget ($30 of $50 million) is spent on Public Safety labor and retiree costs. The remaining $20 million covers all other labor and necessary township operations. When you exclude all of the services the township provides because it must do so by law, and the retiree costs which cannot be altered outside of bankruptcy, there just isn’t any “fat” to be trimmed. If the millage renewal fails, the administration will be forced to make cuts that will affect the “bones” of the township.
Some additional insights:
Township employment levels are down 31 FTE’s from pre-Great Recession levels, this equates to 12% of its total 2008 workforce.
The “low-hanging fruit” has been cut already. New cuts will be felt by the community in a meaningful way. Police and Fire headcount is already down to lows not seen since the 1970’s and 1980’s.
Employees by Department
Since last summer, the administration has cut the budget by $4 million.
This savings has been realized in healthcare spending ($1 million), elimination of staff positions ($2 million), refinancing of pension bonds ($300 thousand), elimination of road projects ($400 thousand), and other general programs/projects ($300 thousand). The argument that the Board has not reduced spending is patently false.
The Township maintains a AAA credit rating from S&P and Aa1 from Moody’s.
The rating agencies regularly laud the Township’s financial management and strong fiscal outlook. Those ratings, rare for a municipality of our size, allow us to borrow at extremely low rates saving taxpayers hundreds of thousands of dollars in interest; but those ratings are certainly in jeopardy with this vote.
However, this Administration continues to be pilloried online and in public comment.
Another common refrain of the opponents of the renewal is that Township employees have “lavish” and unwarranted benefits. While Township employees receive a generous healthcare benefit, these opponents fail to look at the total compensation of our employees. It is generally understood that public sector workers make less pay than private sector workers but receive better benefits in return. When I worked for Wayne State University this was certainly the case. However, to ensure that our total compensation is fair and equitable to all, employees and taxpayers, the Board has commissioned a comprehensive market-driven compensation, classification and staffing study. This study is underway and results are expected in June. I am personally overseeing this project and can vouch for its thoroughness.
If this millage renewal does not pass, the Board will be forced to cut $5 million from our annual budget.
This will require meaningful staff reductions across the Township, most heavily in police and fire (where 75% of our labor costs reside—see above). This will affect response times across the board, force our police into a reactive posture instead of being proactive, and necessitate the outsourcing of EMS services. In turn, our homeowners’ and auto insurance rates will suffer and indeed lives will be jeopardized.
Other options might include outsourcing our local assessing office and/or the treasurer’s tax collection duties—both of which would require township residents to go to Oakland County in Pontiac to transact business. Note, by state law, we must still have a Treasurer, Clerk, and Supervisor.
The Board would do everything it could to mitigate losses to public safety, but we fear that the failure of the millage could cause an exodus of employees to leave voluntarily for other communities.
This is not hyperbole or a “scare tactic”, but just sober fact. Voters should be fully aware that there is no other way to make up a $5 million shortfall (10% of the budget) if the millage renewal should fail. Click here to listen to Fire Chief Mike Morin address this point and the overall morale in the department. Click here for a recent WXYZ-TV story on the vote.
I want to conclude with a couple thoughts.
One of the most charming and valuable attributes of our community is our age – we have beautiful old houses and historical neighborhoods and buildings around town. This gives our community a sense of history and character. However, the older the infrastructure, the more costly it is to maintain.
Lastly, the median age of township residents is 50. We have a mature community. This makes our property values more stable with less turnover, but is also a greater burden on our emergency response services. We must not cut our police and fire which are lifelines for many of our residents. Unfortunately there is just no other way to recover $5 million in the budget; I’ve been over it every which way since joining the Board 4 years ago.
For all these reasons, all seven Board of Trustees members voted to place this millage renewal on the ballot. There is too much at stake for our community.
Thank you for reading through this and giving my thoughts an audience. I hope you will vote on March 10th (or before with no-reason absentee) and I hope you will vote to preserve the outstanding community that is Bloomfield Township by supporting our millage renewal.
Sincerely,
Michael Schostak
Bloomfield Township Trustee
mschostak@bloomfieldtwp.org
(248) 509-0941