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Dave Starr
F L I N T O I D
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Thu Feb 21, 2013 10:54 am |
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untanglingwebs
El Supremo
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Flint leaders start budget boot camp before asking governor for transition out of emergency
By Kristin Longley | klongley1@mlive.com
on February 20, 2013 at 8:46 PM, updated February 20, 2013 at 9:05 PM
FLINT, MI -- It was a scene rarely witnessed in the past few years at Flint City Hall: The mayor and Flint City Council gathered together for a frank discussion about the city's financial practices.
Mayor Dayne Walling and the Flint City Council started financial training tonight, united by a shared goal of asking Gov. Rick Snyder to transition Flint out from under an emergency financial manager.
"As we transition out of this, what are some things we should be doing so we don't end up back here?" asked Councilman Joshua Freeman, chairman of the finance committee. "Moving forward, we have to make sure we don't get there again."
In a near-two-hour session with a municipal finance expert, city council members and Flint Mayor Dayne Walling got a crash course on financial best practices, including oversight, setting rates and making realistic budget projections.
The mayor and council said they plan to send a resolution to Snyder in the next few weeks, asking him to appoint a transition team to see the city out of the state takeover. Under the new emergency manager law that takes effect March 28, there's a provision for the governor to appoint a "receivership transition advisory board."
The board would be responsible for monitoring a local government's finances after an emergency manager leaves.
The law also says the governor may require local government leaders to "pursue financial or managerial training to ensure that official responsibilities are properly discharged."
That's where Tony Minghine comes in.
Minghine is chief operating officer of the Michigan Municipal League and a former finance professional in Canton Township and Wayne County.
On Wednesday, he led Flint officials through the presentation on best practices and facilitated discussion on what to do and, perhaps more importantly, what not to do.
The discussion among council members and the mayor was, at times, frank in terms of past mistakes or oversights.
Councilman Dale Weighill, for example, admitted there were times when he voted to approve the budget despite thinking the numbers were likely not realistic. He agreed with Minghine that that practice shouldn't occur moving forward.
"I have voted for budgets where I expected there would be a deficit," Weighill said. "Just speaking for myself."
Minghine stressed to the mayor and council that being honest about the budget realities, no matter how bad they are, is better for the city in the long term.
"No matter how painful it is and no matter how much you don't like it, if you only have $100 you can only spend $100," Minghine said. "You do yourself and your community a disservice if you're not honest in doing that."
Officials talked about making budget amendments as soon as they become aware of variances -- instead of later in the year when it's harder to make cuts -- and about setting appropriate water rates. They also discussed the proper way to borrow and pay back money from the water and sewer fund.
Minghine stressed that Flint's financial problems are not unique to Flint, and are being faced by communities across Michigan. The difference is in how cities deal with the challenges, he said.
He urged the mayor and council members -- who often butted heads in the past in the course of running the city -- to work together.
"Separation of powers doesn't mean adversarial," he said. "Everything I said doesn't mean anything unless everyone does their part."
All the officials in the room agreed that communication will be key in moving the city out of its state-declared financial emergency.
If the transition team doesn't feel the city is doing business properly or responsibly, it can recommend the governor reappoint an emergency manager.
"If we're going to successfully move forward," Councilman Bernard Lawler said, "it needs to be that kind of open critical discussion."
Council members said they plan to discuss drafting a resolution to send to the governor at their next few meetings, and hope to send the request before the new law goes into effect at the end of March.
"We (need to) give him something before he makes a decision on what he’s going to do under the new law," Council President Scott Kincaid said. "It's something that needs to be done open and transparent."
It's unknown whether the mayor and council's request would be approved by the governor.
Snyder spokeswoman Sara Wurfel said this week that the governor would be open to considering the option, but noted that Flint still has "significant financial challenges" and "isn't out of the woods."
That said, Wurfel noted that it's Snyder's goal to transition local governments back to local control "as soon as prudent and possible."
At the work session on Wednesday, Walling said it was one of the best discussions that he and the council have ever had.
Flint resident Barbara Griffith-Wilson, who was in the audience during the meeting, commended the mayor and council for the effort.
"It's the first time I've seen you guys sit down and truly try to work together," she said.
Kristin Longley can be reached at 810-429-5333. You can also follow her on Twitter @KristinLongley or subscribe on Facebook.
Terry_Bankert
This is a scene worth repeating. The citizens of Flint expect it. "It was a scene rarely witnessed in the past few years at Flint City Hall: The mayor and Flint City Council gathered together for a frank discussion about the city's financial practices" For the brief time I was there tonight I saw a Mayor eager to bring his city back to self rule. I am impressed by the strength and committment of our city council. It is this elected leadership we depend upon. There is no easy solution here. With or with out a transition team keep meeting and inform your citizens ."It's something that needs to be done open and transparent."
melody1964
Great comments as usual Terry. I would like to be hopeful, however such budget workshops and advices have been provided to the City many times in the past, with no real change in culture or operations. In the end politics always wins out over common fiscal\financial sense.
Paul Jordan
I commend the mayor and members of the city council for taking the first steps to educate themselves regarding managing city finances. I'm financially comfortable now (knock on wood), but I can remember when my wife and I were starting out and living pay check to pay check. We sometimes literally counted our pennies, and had to balance our checkbook to the last dollar.
It is much more challenging to manage finances when there isn't enough revenue than it is when you are more affluent--whether you are a family or a city council. If you underestimate an expense (or overestimate revenue), there's no savings account (or fund balance) to draw on.
Poor people and the governments of poor cities must be more knowledgeable than the governments of cities like Birmingham or Bloomfield Hills because any mistake is much more disastrous here than it would be there.
Unfortunately, as I learned in my own life, sometimes the only long-term solution is more income. Even if the mayor and city council people all become truly expert in managing the city's finances, Flint's financial problems will continue until we have adequate financial resources. Since we have a relatively poor population, the real solution must involve more funding flowing back to Flint from the state.
To those who will view this as Flint sponging off wiser and more virtuous folks elsewhere, I would point out that when Flint's car plants were booming our taxpayers sent many hundreds of millions of dollars to Lansing that went to benefit folks elsewhere in the state. It is only appropriate that some of that should flow back to us in our time of need.
melody1964
Before making such statements, I would suggest that you review the current city financial statements to see exactly how much revenue the city is already receiving from outside of it's borders. If you exclude the water and sewer and Hurley Hospital operations, which should cover it's own costs, total revenues for the City operations were $94.2 million for the year ended June 30, 2012. Of that total, $44.1 million came from either federal or state grants or revenue allocations. That is a whopping 47 percent of resources coming into the city from sources outside of the City. Tax revenues (property and income) were $29.2 million with $14.8 million being received from income taxes. Let's be conservative and estimate that one fourth of the income tax is paid by non residents who work in the city ($3.7 million), the real percentage is proabably much higher. Total revenues from outside of the City now total $47.8 million out of $94.2 million, which equals greater than 50%. Those totals don't even include the federal and state subsidized loans used to improve the City Water Plant (> $49 million borrowed) and develop local business ($10.8 million). That would increase the outside support even higher. Nor do they include charges for services to non residents. A friend recently got a $190 bill from the city for "police services" when she was hit by a city resident (who didn't get a bill cause he paid property tax). As a non resident working in the City, she pays income tax, but I guess that didn't matter, she still got a bill from the City and the resident didn't.
I will admit the total outside support is a little overstated as it includes state road money and federal grants, some of which were funded by gasoline and federal income tax paid by city residents. But when you consider the vehicle traffic in Flint vs. that generated by SE Michigan alone, and the average income of a city resident those amounts of money returned to the City from the City are not going to be significant.
Based on the above, non residents already fund more than 50% of the City's operations, that seems plenty regardless of what happened in the past. But the question is exactly how much of Ctiy operations should those from outside the City fund for it to be equitable? The answer to that question from any city resident is always going to the one obvious response "more than what you are currently funding".
melody1964
Sorry, my numbers are understated. I forgot to include the additional $37. 5 million in federal grants that the City of Flint schools received during 2012 to provide education to Flint residents. Forgot to include that since it is spent by City schools rather than the City of Flint, but it should be counted too when determining how much subisidizing out city residents already give the City.
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Thu Feb 21, 2013 7:09 pm |
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untanglingwebs
El Supremo
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"The board would be responsible for monitoring a local government's finances after an emergency manager leaves.
The law also says the governor may require local government leaders to "pursue financial or managerial training to ensure that official responsibilities are properly discharged."
This training appears to be in anticipation of demands from Lansing for future training.
It should be noted that all newly elected council have in the past been given the opportunity for education on the budgeting process through Plante Moran.
Also with the elections this year some council are said not to be running for re-election. Freeman has changed his mind and has stated he will now run. I have been told Sarginson and Weighill will not reun again. Also the race for the 1st Ward appears to be wide open. I wonder about the wisdom of selecting Claudia Croom to replace Loyd as she just sits there in council motionless and rarely speaks, and then only to defend herself. |
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Thu Feb 21, 2013 7:18 pm |
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