Shores council looks at the numbers
and doesn't like what it sees – red
In its most civil meeting in months, the Grosse Pointe Shores City Council invited private accounting firm Plante & Moran to address the city’s less than optimistic financial status.
The presentation, given by Dave Herrington and Jenny Cederstrom, was divided into two audit periods – a one-year audit that ended on March 31, 2009, and a three-month audit that ended on June 30. The difference between the two periods is the Shores emergence from a village to a city.
“We all know that the economy has suffered greatly, and our residential and commercial property – here, primarily residential property – has dropped dramatically in value,” Herrington said. “The No. 1 revenue source in virtually every community is property taxes.”
Part of the arrangement in hiring Plante & Moran is that the firm will give seminars to city employees to figure out the best possible options in rolling into the next fiscal year.
“It is what it is,” Herrington said of balancing the structural deficit. “I don’t know what your number is, but I know there will be a reduction and now’s the time to begin to address how this community wants to examine the steps it will take to get back to a balanced budget.
“This isn’t an indictment on anybody; this is what’s happening in every community.”
At the end of the March 31 audit, revenues were lower than the city’s budget by roughly $130,000, according to Plante & Moran’s study, and expenditures were greater than the budget by about $30,000.
The report also shows that, in the three-month audit period since becoming a city, the Shores was off about $60,000 more than anticipated, largely because it was not collecting property taxes at this time. Property taxes typically make up about 84% of the city’s revenue.
The city’s total fund balance at the end of the June audit was $75,000, but was facing $285,000 in sanitation-related expenditures, said Cederstrom. “Going into this next fiscal year, in order to spend $285,000 on sanitation-related purposes, you’ll have to make certain that you build in a cushion of about $210,000 in order to make that happen.”
Herrington said that the city is required to act in order to get off the state’s “radar screen of concern.” Anytime the state gets a fund with a deficit number, it sends a letter to the city asking whether the city has a plan.
“It’s called a deficit reduction plan,” Herrington said. “What you need to be able to demonstrate is we do have a plan.”
Resident John Booth, who was noticeably upset, said “this town has never had a negative overdrawn general fund.”
“The big issue is not so much the expenses, but the chronic inability of this council and its finance committee to come up with any kind of realistic revenue projections,” Booth said. “The pie-in-the-sky revenue projections of the last three years have exhausted almost all the funds that we have in this area, resulted in a demerit of the state, a degrading of our credit, and it is a travesty to continue that way.
“The only sensible thing to do is create a panel or committee of independent residents to come up with revenue projections from which a budget can be projected.”
During the two-hour session’s closing comments, Councilman Thaddeus Kedzierski had the last word on the city’s financial troubles: “Everyone knows we have great services… but after being on the Finance Committee for the last couple of months and looking at our finances, we can’t continue to do business as usual,” he said. “We’re smaller than any other Grosse Pointe, we’re smaller than almost every city in the state, and it’s hard to benchmark because we don’t have a commercial district that raises our revenue.”
