A Budget Message From the Mayor

Anticipated expenditures exceed anticipated revenues. That is a simple description of the 2011 economic conditions in cities and states across the country. It is as true of Berkley’s budget in 2011 as it was in 2002 when property tax revenues had decreased by $317,000 and the Michigan Legislature reduced Berkley’s statutory state shared revenues by $63,178.

When Council decided to ask voters to approve an increase in Berkley’s millage rate – for the first time since 1969- two proposals were turned down. Public forums were held, and in defense of their votes, citizens expressed conflicting statements:

• Save the Library!
• Cut library hours to three days.
• No new books!
• Tax dollars should go for public safety, street cleanup and parks, not library reading groups.
• Eliminate the street sweepers!
• Put the sweeper in storage.
• Sell the street sweeper and the arena!
• Don’t touch Public Safety
• No new fire truck.
• Cut across the Board
• Start at the bottom and lay off people.
• Let the Garden Club take care of plantings
• People should pay for recreation services.

Some solutions that were offered were implemented. When the second proposal failed to pass city administration proposed these measures which council approved:

• Library staffing and hours were reduced.
• Parks and Recreation staffing was reduced and all programs had to be self-funded.
• Three Public Safety positions were not filled, and remain unfilled.
• Staffing at the DPW and City Hall was reduced.
• Full time positions were reduced or replaced by part time workers.

Nine years have passed and these measures are still in effect. The awful economic downturn of 2007-08 continues to take its toll on our country, state and city. The national debt and deficit have increased. Every year the state budget process has been prolonged and settled at the midnight hour. Our city budget must be finalized by the end of May each year, and it must be balanced – and it has been.

Cost cutting measures have been adopted. Newspaper headlines boldly declare that salaries of public employees must be cut and that they must pay a greater percentage toward their health insurance. Salaries of some city employees have not been increased for two and three years. Recent contracts which have been ratified with DPW , Public Safety Officers and Merit System employees include no increases in salary for three years. Out of pocket costs for health care will increase for current employees and retirees. We have met that demand.

According to a report prepared by Finance Director David Sabuda, the estimated reductions in expenditures made by the city beginning with the 2002-03 Budget, at minimum amount to nearly $5,000,0000. Add the federal/state grants for the Eleven Mile Rd. reconstruction, and the estimated reductions amount to $7,459,428. The list of reductions includes items in every department of the city, health care premiums, and shared service contracts.

He also prepared a three year financial forecast. The bottom line is the Estimated Ending Fund Balance, which was $1,549,516. in 2009-10. City finances have been managed so that reasonable expenditures were covered and there is a fund balance- unlike state and federal finances. The problem that his forecast raises is that the fund balance will continue to diminish to $655,714. in 2012-13 – even with the salary and fringe benefit reductions that have been ratified.

State budget analysts have misidentified the cause of the economic problems of Michigan and other states as well. According to them the cause of this economic disaster lies in the paychecks, insurance, and pensions of public employees –current and retired. In Berkley these people are our DPW workers, whose salaries barely qualify as middle class wages. They are the Library staff, all but two of whom are part-time employees who do not qualify for fringe benefits. They are the Parks and Recreation workers, the staff at City Hall, and our Public Safety officers. Do you believe that these people are really the cause of the current recession?

City council members are required to be good stewards of the revenue of the city. We are responsible for approving expenditures that will result in a balanced budget that includes a reasonable fund balance. That balance is in danger of shrinking, and in that event city services will have to be reduced significantly, or revenues must be increased.

I look forward to receiving your reactions and suggestions.