Need to Know: What the Proposed Millage Increase Means for Berkley

had the spotlight at as speakers and committee members gave various presentations during a work session.

Though did not reach an official decision as to whether or not the proposal will make it to the August ballot, a shared sentiment of its necessity means the issue will be brought back up again at its May 21 meeting.

Overview: Why a Headlee override for Berkley?

A Berkley Citizens Advisory Committee was formed in March, when members of City Council selected 15 residents to serve as part of the group to assess the city’s financial condition.

The mission of the committee was to recommend if the council should place a millage proposal on the Aug. 7 ballot or not.

After two meetings in April, during which members reviewed dozens of prepared financial documents, the committee voted 14-1 to advise that the City Council prepare a proposal asking Berkley voters to approve an override to Michigan’s Headlee amendment.

The Headlee amendment, approved by Michigan voters in 1978, spells out various restrictions that Lansing and local municipalities must adhere to regarding tax policy, one of which includes the prohibition by local governments to add new taxes — or increase existing ones — without securing voter consent.

For Berkley, a Headlee override amendment would offered because the cost of running the city is exceeding its revenues.

Without adequate funding, City Manager Jane Bais-DiSessa explained, potential cuts include laying off public safety officers and other city employees, closing the , further postponing local road improvement projects, decreasing code enforcement services, reducing parks and recreation programs, cutting back on winter snow removal, decreasing library hours and programming, reducing tree trimming and replacement and eliminating curbside leaf and brush pickup.

“It’s always a scary topic for some folks,” she said at the meeting. “But, we’re not going to cut our way out of it this time.”

Citizens Advisory Committee’s report

At the Monday Council meeting, the committee presented its recommendation to take the proposed increase of 3 mills to voters this year. Committee Chair Marc Herron, the only member who voted against the recommendation, presented the final report to council.

Years of decreases in Berkley property values means the general fund and public safety in 2012-13 will have $61 million less than the tax value available in the 2006-07 period, Herron stated.

While prices have increased over the last six years, this means less revenue for Berkley to meet its expenses for the upcoming year. The city has also lost significant shared revenue from the state in recent years, Herron read from the report.

“A continued decline in operating revenue threatens the city. Failure to increase it could potentially lead to more cuts,” he said. “We want to maintain a safe community and a high quality life that Berkley residents enjoy.”

After careful deliberation, the committee recommended that the City Council propose an increase of 3 mills to Berkley voters, he explained, adding that it did not include a sunset provision, or time limit, on the proposal.

A look at the finances

City Finance Director David Sabuda recapped the numbers for council and the public at Monday's meeting, reiterating the need for more tax revenue to sustain the city’s services offering to residents.

Importance of the general fund

Out of the city’s five major funds, Sabuda explained that Berkley is projected to lose more than $4 million over the next four years. “Revenues are dropping faster and faster due to declining property values in the municipalities,” he said.

In the general fund alone, more than $1.3 million has been lost from revenue, meaning a 13 percent reduction in revenue funds for daily operating in each department, he explained. “We’ve got a tough road ahead of us and these funds are crucial.”

Bais-DiSessa explained the importance of the general fund for the public and future voters to understand what the monies are used for.

“When we talk about operations and the general fund, it means just about every service (in the city), from public safety to parks and recreation … code inspections, books and library hours,” she explained. “Basically everything.”

Also, in the case of an emergency for the city, this fund is used because of its flexibility, she added.

How millage increases translate

With a proposed 3-mill increase, 2 mills will be used for operating — specifically police and fire services – and 1 mill for sanitation.

With this proposed increase, it would mean approximately an additional $175 a year for each average homeowner.

While these are just averages based on the value and tax value of the home — meaning that some would pay more, some less, Sabuda explained — the 3-mill increase can be broken down like this, per average homeowner:

• $175 a year
• $14.58 a month
• 48 cents each day

Compared to neighboring cities in the region, Sabuda explained that Royal Oak had the lowest tax rates last year, with Berkley second and Birmingham third. With the 3-mill increase, Berkley and Birmingham would switch places.

“Berkley would then be in third place in neighborhood comparison, or the third lowest in the region for tax rates,” he said.

Proposal consideration

For the proposal to be put forth to Berkley voters, City Council must decide on several factors:

The ask

Monday night’s meeting included a discussion on the language of the ballot question, for example. Particularly, council members must agree on whether or not the proposal should come in the form of one single question for the 3 mill increase or be split up, based on the millage.

Most councilmembers said they would prefer to see it in one question.

“What happens when one passes and the other doesn’t?” Mayor Pro Tem Dan Terbrack asked. “It puts us in the position of not knowing what will happen budget-wise.”

He added that because it was clear the 3-mill increase is crucial for the city to maintain services, then the chances are better to have the mills increased if they are presented together.

“So in the future, we aren’t short on something,” he said.

The timing

Council must also agree when to propose the increase.

While the Citizens Advisory Committee initially recommended the proposed increase come in December, when tax bills are typically smaller, council members generally expressed that levying the taxes in July would be more suitable long term.

“It seems tricky,” Councilman Steve Baker said. “As much as I wish we had this revenue, I struggle with the December timing.”

He, like several other councilmembers, said the December timing makes sense for most taxpayers who have a lower tax bill that month. But because the taxes would be levied again in July each year thereafter, it might present a problem for residents financially.

“We don’t want to hit people twice in six months,” he said.

How residents can get involved

As a formality, the matter was voted down at Monday’s meeting to be brought back up again at the next City Council meeting.

Mayor Phil O’Dwyer asked that the proposal be adjusted to reflect the sentiments of council, including the language, single-question form and timing. With that, council is expected to make the decision to bring the millage increase to residents on the August ballot during the May 21 council meeting.

In the meantime, all of the material and financial literature reviewed by the Citizens Advisory Committee and council is available to the public. These documents thoroughly explain each element of the city’s budget, projected losses and potential cuts in order to make a fair and balanced decision when it comes to a millage increase.

Documents include:

• committee information, including names, meeting agendas and minutes
• financial details, include a glossary of terms, trends and outlook presentations and city services

All of these, and more, are available at BerkleyMich.org.

Come back to Berkley Patch for continued updates on the proposed tax hike and the May 21 decision from City Council.