Faced with the prospect of declining property tax revenues for the next three years, Oxford Township is preparing to batten down the spending hatches by coming up with general fund, police and fire budgets that extend beyond the usual one-year time frame.
‘Ultimately, what I would project seeing happen is that this board would adopt a three-year rolling budget and then we would continue to update (it) just as we update 2010,? said Trustee Mike Spisz. ‘So, instead of just updating 2010, we would update 2011, 2012 and possibly 2013.?
According to projections provided by Oakland County, the township is facing declines in taxable value of 13 percent in 2011, 12.5 percent in 2012 and 5 percent in 2013.
To help bring general fund, police and fire expenses ‘more in line? with these decreasing tax revenues, the township board last week directed three committees to review the multi-year budgets, look for ways to save money and bring recommendations back in May.
‘We need to bring those numbers down somehow,? Spisz said. ‘We need to have some in-depth discussions about that.?
Working on the fire department budgets are Spisz, Treasurer Joe Ferrari and Supervisor Bill Dunn.
Dunn, Ferrari and Clerk Curtis Wright are examining the general fund budget, while Dunn and trustees Sue Bellairs and Joe Bunting are reviewing the police budget and coming up with a possible millage request for it.
Fire Budgets
For the fire/EMS budget, which is funded by a 1.5-mill levy, tax revenue is expected to decrease from $1.19 million this year to $1.03 million next year.
In 2012, the tax revenue will fall to $904,836 and require the fire department to use $139,256 from its fund balance to cover its expenses.
‘By the end of 2012, we won’t even have 10 percent of our budget in fund balance, which you’re supposed to have 15 or 20 percent,? noted Margaret Payne, administrative assistant for the fire department.
In 2013, tax revenue is estimated to dip to $859,595, requiring the department to use $195,045 from its fund balance.
Treasurer Joe Ferarri inquired as to what the fund balance would be at the end of 2013.
‘It would bring our fire fund balance down to $56,000,? Payne replied.
For the fire department’s Advanced Life Support budget, which is funded by a 1-mill levy, tax revenue is expected to decrease from $792,413 this year to $664,103 next year.
In 2012, the ALS tax revenue will fall to $581,090 and require the fire department to use $62,679 from its fund balance to cover its expenses.
In 2013, tax revenue is estimated to dip to $552,036, requiring the department to use $99,147 from its fund balance.
General Fund Budget
As of Dec. 31, 2009, the township has a fund balance for its general fund of $1.636 million and all of it could be used up between 2011-14 if something doesn’t change with regard to spending.
For the general fund budget, which is supported by a 0.95-mill levy, property tax revenue is expected to decrease from $786,000 this year to $646,000 next year.
This would require a $275,234 dip into the fund balance in order to cover the township’s expenses.
In 2012, tax revenue is expected to decrease to $549,700, requiring $551,375 from the reserves to help balance the budget.
Dunn noted when his office calculated these projections, no reductions in expenditures were made.
‘When we put this together we did not go in a slashing mode,? he said. ‘It was basically carrying on what we’re doing right now just to get a picture of what’s happening.?
Spisz noted if you assume approximately $500,000 will be needed from the fund balance for the 2013 budget, by the time 2014 rolls around, the township ‘would be in a negative equity position? because the fund balance would be down to approximately $300,000 while at least $500,000 would be needed to balance the budget.
It was noted that none of these figures take into account the estimated $400,000 to $1 million the township will need to pay off the village with regard to its takeover of the fire department. The projections also don’t include the estimated $211,000 to fix the road and drainage issues in the Elk View Estates subdivision off Baldwin Rd.
Police Budget
It appears that a reduction in services or an increase in taxes are the two options facing the township with regard to the police budget that it uses to contract with the Oakland County Sheriff’s Department.
Based on his office’s projections, Dunn said the police budget’s fund balance will go from $1.3 million in 2009 to $29,970 after 2012.
In order to finance the 2010 police budget, the township had to combine $191,309 from the fund balance with $1.9 million in tax revenue generated by a 2.9152-mill levy.
Next year, police tax revenue will decrease to $1.64 million, requiring a $465,809 transfer from the fund balance.
In 2012, police tax revenue will drop to $1.55 million, necessitating a $611,483 transfer from the fund balance.
According to Spisz, the current 2.9152-mill tax rate is not enough to support the level of staffing at the substation.
‘Based on my calculations right now, we’re going to need a 40 percent increase in that mill number just to maintain the current staffing we have,? he said. ‘If we continue with the same expense rate we have today, we will need a 40 percent increase in millage to cover our cost.?
When township voters originally approved the police millage back in 2000, it was at a rate of 3.24 mills.
But over the years, Headlee rollbacks reduced the tax to its present rate.
The police millage expires with the December 2011 collection, so it appears township officials must decide whether to keep the millage the same and cut staffing or ask voters to approve a tax hike.