Targeted Cuts for Washtenaw County Budget
A page of notes taken by Andy Brush, the county's knowledge manager, during Tuesday's budget forum.
The handful of business people who attended a Washtenaw County budget forum on Tuesday morning stressed the importance of local investment, and heard a preview of areas targeted for cuts as the county grapples with falling revenues and a potential $26 million deficit over the two-year period beginning in 2010.
County administrator Bob Guenzel gave the small group, which also included several elected officials and department directors, a preview of budget recommendations that will be released later this week and formally presented to the board of commissioners at their June 3 meeting. Though he didn’t provide details Tuesday morning, he said the recommendations will include layoffs and a change in compensation for non-union employees. Meanwhile, union leaders from 17 different bargaining units are being asked to renegotiate contracts in talks that will continue through July. The county employs about 1,300 people – roughly 80% are union employees.
Guenzel outlined four general areas identified to close the $26 million budget deficit: 1) revenue generation, $3 million to $5 million; 2) department reductions, $7 million to $10 million; 3) employee compensation and benefits, $12 million to $14 million, and 4) structural changes, $3 million to $7 million.
He also laid out a wide range of possible cuts, including selling county-owned facilities – he noted that the Zeeb Road building was only half occupied, for example – and even the possibility of not opening the jail expansion when it’s completed in 2010. That expansion, which would provide an additional 112 beds, would cost at least $1 million extra per year to staff. He said that though governments in general are good at finding one-time solutions, “what we need going forward is primarily structural savings.”
Guenzel cited the Wall Street Journal in characterizing the economic crisis as the worst since the 1930s, with no end yet in sight. He said that though this area had the lowest unemployment rate in the state, the magnitude of the problem was dire. “We haven’t hit bottom,” he said.
Much of the budget background that Guenzel reviewed on Tuesday has been discussed at previous county board meetings. Guenzel’s briefing led into a discussion facilitated by county commissioners Conan Smith (D-District 10) and Mark Ouimet (R-District 1). It’s the first of several budget forums intended to engage different parts of the community – this one focused on local businesses.
Bob Guenzel, Washtenaw County administrator.
Smith said the board’s priorities are to provide short-term stability and long-term prosperity. Ouimet, referring to the upcoming budget decisions, said “I think we’ll have very spirited debates, which is a good thing.”
Linda Berry, a local healthcare professional, asked the first question: Are there cuts coming for the county’s health plan, which provides insurance to low-income residents? Guenzel said the county supports the health plan with about $600,000 each year, an amount that brings in three times that figure in matching state and federal funds. About 8,000 people are covered, and there are no plans to cut funding yet. However, he said they decided to close enrollment last week, so it is no longer open for new participants.
Diane Keller, president of the Ypsilanti Area Chamber of Commerce, said that leveraging state and federal funds was important, through projects like the federal Neighborhood Stabilization Program. The county has been a great partner, she said, with efforts like the Eastern Leaders Group and services offered by the Employment Training and Community Services (ETCS) department. It’s important for the county to be an umbrella entity for the region so that services aren’t duplicated, she said.
Paul Hickman, a board member of Think Local First, asked if the county had a policy for buying from local vendors. Smith said that yes, all things being equal, they’d buy local. But, he added, “nothing’s ever equal.” It was something they needed to grapple with, he said. Hickman also asked where the county kept its money. Ouimet said the treasurer has accounts for the county at several local banks, though some investments – certain bonds, for example – wouldn’t be considered local.
Ouimet said that the county’s retirement commission, on which he serves, has started very preliminary conversations about investing up to 5% of its roughly $152 million funds in local businesses. If they did, he said, it would be a first for any local government in Washtenaw County.
Jesse Bernstein, president of the Ann Arbor Area Chamber of Commerce, and county commissioner Kristin Judge. Other commissioners at the meeting included Leah Gunn, Ken Schwartz, Wes Prater, Mark Ouimet and Conan Smith.
Ingrid Ault, director for Think Local First, urged county officials to think about how they spend their money. Citing a frequently quoted figure from buy-local movements nationwide, she said even a 10% shift in spending habits can make a powerful difference in terms of local jobs, wages and economic impact.
Jesse Bernstein, president of the Ann Arbor Area Chamber of Commerce, said he doesn’t think we’ll get the “battleships” back, referring to GM and Ford, which employed thousands of workers. It’s important to invest in the economic development agency Ann Arbor SPARK, he said, to find alternatives for the future of the local economy. Groups like the chambers of commerce, SCORE (the Service Corps of Retired Executives), and the Small Business & Technology Development Center are other resources – the county needs to develop commerce at all levels, he said.
Bernstein said the idea of investing pension dollars locally was huge, but that other options, like microlending, should be considered too. Commissioner Leah Gunn, who also serves on the retirement commission, noted that the county is setting up a microloan program through the Eastern Leaders Group. [The plan is to have two funds, one managed by the Center for Empowerment & Economic Development (CEED) for more conventional loans, the other managed by Ann Arbor SPARK for higher risk loans to businesses with greater growth potential.]
Shawn Keough, president of the Village of Dexter, suggested that coordinating planning resources throughout the county might be one way to help with tight budgets.
Smith asked Tony VanDerworp, the county’s director of planning & environment, to talk about the Ann Arbor Region Success initiative. VanDerworp described it as a 10-year strategy focused on three areas: talent development, economic development and quality of life. Action teams have formed that are each led by a community “champion,” he said, and it’s their responsibility to take leadership and move the projects forward. There are action teams so far for regional transit, a young professionals network, Wireless Washtenaw and several others.
The group spent a fair amount of time talking about public safety & justice, which accounts for about 50% of the county’s general fund budget. Bernstein said that if the county is really looking at structural change, they need to deal with issues like the number of police and fire departments countywide. How many police chiefs are really needed? The municipalities in Washtenaw need to find ways to provide services and not compromise safety while not duplicating efforts, he said.
Gunn said that electing Jerry Clayton as sheriff last fall went a long way toward achieving that goal. He has the respect of other law enforcement officials in the county, she said, and she senses a cultural change under way that will lead to more collaboration.
Diane Keller of the Ypsilanti chamber asked whether fees could be raised for people who are jailed, so that they (rather than taxpayers) would bear the cost of incarceration. Guenzel said the challenge is that a lot of people in jail don’t have money to pay fees. That said, Clayton is looking at the fee structure to make sure that people pay if they have the resources. Smith added that Clayton is also emphasizing work release programs, so that people who are jailed can keep working at their jobs and return to jail after work, allowing them to earn money to pay for their incarceration.
In response to another question about fees, this time related to parks, Smith said the county is considering whether to raise fees for Rolling Hills Park & Waterpark, Independence Lake and Pierce Lake Golf Course. They might also pursue a liquor license for Pierce Lake, he said, as a way to increase revenues there.
As the meeting wrapped up, Smith asked the business people who attended to keep in touch as the county moves through its budget process: “We’re craving innovative solutions.”
The county’s timeline for the 2010 budget:
- June 3: Administration presents recommendations to the board of commissioners
- July 8: Board takes action on recommendations
- June-July: Administration negotiates with unions
- June-August: Internal work on recommendations within departments
- Sept. 16: Administration presents final 2010 budget to board for approval
- Nov. 18: Board votes on 2010 budget
At Tuesday's budget forum, clockwise from bottom left: Commissioners Mark Ouimet and Conan Smith, county administrator Bob Guenzel, county parks director Bob Tetens, county planning & environment director Tony VanDerworp, Diane Keller, president of the Ypsilanti Area Chamber of Commerce.
This is a lot of window dressing. The fact is that up to two thirds of the County budget is staff and benefits. You can’t cut that much money without significantly impacting the workforce.
The initiatives mentioned are great as possible long-term solutions, but won’t do much in the short-term. The Ann Arbor Region Success initiative is laughable, since they haven’t made any progress and much of it is dead in the water right now.
The problem with the County is the total lack of quality leadership. Its really sad.
The County of Washtenaw actually has an employee called a “Knowledge Manager”…?!…What if this person got laid off?…would the County Knowledge become unruly and scattered about?…or, just drift away down the Huron?…perhaps increasing the knowledge at Ypsi?…Belleville?…Cleveland, maybe….
The financial problems of the county are serious but at least they are transparent about it and reach out to our community for ideas. They City could learn a great deal from the County.
The idea of investing pension fund money locally is a bad idea. The County is not equiped to evaluate investment opportunities and most likely would cave in to political pressure and invest in someone brother in laws business.
Stew,
I actually think you have it backwards. I have seen nothing in the news until recently about how dire the situation is for the county except for maybe the controversary over the jail/sheriff’s department. I don’t believe it is malicious, but unless you dig you actually don’t know what is going on with things in the county. The press is basically non-existent for most of their issues. We all know they have to make cuts, but they only issue that is making news is the per diem for the commissioners which they can’t agree upon. (Kudos to Leah gunn and the other Ann arbor commissioners for holding strong)
The city, on the other hand has town halls, public forums, and meetings where there is actual debate and discussions regularly. To say that it is not transparent is to say that you do not watch or attend the meetings. Just because you do not like what they are saying, how they are voting or believe the facts presented, that does not mean they are lying or not being transparent. I think you have a bias towards the city and can’t see this.
The Washtenaw County Equalization report indicates that the budget deficit is much less than what the County Commissioners and Administration portray. Only about $1,000,000 for each of the next two years. What gives?
It’s disappointing to see that the still incomplete jail and the recently completed Zeeb Road facilities can be deemed surplus and expendable in a time of need. Were they ever really needed in the first place? Is the new AA City Hall really needed? When will the AA Schools start to talk about closing Pioneer High because it is no longer needed due to the recent opening of Skyline High? Where is the end to all of this bricks and mortar foolishness that our various government units have been engaged in over the past five to ten years?
My Two Cents:
I admit I am biased against the City. Years of bumping heads with them will make you that way.
Request information on anything from the DDA or the County and you get great information. Request information form the City and you get redactions by Roger Fraser.
Ask Karen Sydney, Jane Lumm, Lou Glorie, Ed Amonsen, John Floyd, or any number of other watch dogs about the transparency of the City. I suppose we all could be biased.
Stew
I am Washtenaw County’s knowledge manager. My primary responsibilities are the care and feeding of the county’s websites and the staff that use them to share information with their customers. The job is less about the technology, more about helping county employees, employees of other units of government, citizens and customers make best use of information sharing tools. I also spend a lot of time working with staff and helping make the flow of information be more productive, whether electronic or otherwise. If I got laid off, the county’s knowledge would not go to the river. We have many systems and security measures in place to protect our waters.
If you need additional information on the county’s budget situation, we maintain a section with links to all relevant information on our website: County Budget – 2010/2011 Planning Process
MTC, transparency at the County is not measured by their news coverage. It is measured by the information made public on the website and by request, and by the open process during public hearings and comment. Despite Conan Smith’s placement of limits on Ways and Means public comment, it is still much more accessible than the city’s by virtue of not being limited to a reservation list. As indicated by Andy Brush’s comment, the county delivers good content that is not “watered down”.
I agree that the City has been having lots of public hearings, meetings, and makes public comment available. I am also impressed by the progress on the website. Jackie Beaudry has done an excellent job of making minutes and other documents fully searchable, and though it is cumbersome the Legistar system makes access to meeting documents good. It is much improved from a couple of years ago.
Transparency is not only about accessibility of information but also about transmitting information (news media, press release, town halls, etc), It is more important to inform the public about issues and to give them an opportunity to provide input. How this is done and which method is better can always be debated. Nonetheless, I believe the city does a better job with transparency overall. I am more informed about what goes on in the city of Ann Arbor because of the city’s efforts to inform me. I have really limited knowledge about what goes on at the county level even though I do watch some of the meetings.
The county may respond better to document requests but that is only useful for those who are inside players who want specific information and know what to ask for. The transmittance of information to the public overall is much more important in my eyes.
Leave Andy alone…He may have a funny title, but he is extremly talented and a huge asset to the County.
He is also one of the nicest people you will ever meet.
I don’t know where HuronBob got a number of 1,000,000 from, but the County lost $1.5B in taxable value between 2008 and 2009. Looking at it from a budget standpoint makes it easier. Say the County brought in $100,000,000 one year and expected property values to rise 5% as usual the next year with a resultant revenue increase to $105,000,000. This expectation is budgeted because the price of everything from copy paper to heating fuel rises as do salaries and benefits. If instead of rising 5% the taxable value falls 5% the County gets $95,000,000 in revenue. The County has to trim $10,000,000 from the budget. The County trimmed several million in 2008 in anticipation of falling values in 2009 and the value dropped more than expected even for 2009 so more cuts need to be made for 2009. In 2010 and 2011 values are expected to drop even more as housing prices continue to fall and taxable values are set based on the new, lower prices. That’s how you get $26 million.
MTC, I think you will find that many county commissioners are frustrated with the lack of news coverage of their activities. Part of this is the nature of the issues that they must deal with and their newsworthiness. If you will visit the county website (ewashtenaw.org), you will find an abundance of information and also webcasts of the meetings.
Trying to compare the two units of government in this way is probably not useful. But I don’t think that the number of press releases is a good measure of the quality of governance.
What Richard (#11) said. Andy provides terrific services to County residents and officials.
The Washtenaw County Treasurer invests locally to help our communities while safeguarding public funds. She invests in Certificates of Deposit, up to the FDIC insurance limit per bank, in all banks doing business in Washtenaw County that meet qualifications for safety and offer competitive rates. This has increased the County’s investment from 3 local banks to 16 without any increased risk to the public. This local investment strategy enables the Treasurer to safeguard funds, support local banks, and increase the County’s return above the benchmark.
In 2008 home prices plunged, the value of retirement funds plummeted, and the credit markets collapsed. This makes a very difficult economic environment for people trying to provide for themselves and their families and makes it difficult for businesses to stay solvent, much less thrive. To recover public confidence in banking the federal government insured some money market funds and increased insurance coverage on bank deposits. The federal insurance has increased to $250,000 through December 31, 2013. In this new economic environment, the Treasurer initiated investment changes which have increased local investment.
The County Treasurer has the authority and responsibility to manage and invest surplus cash. These investments must be made in accordance with Public Act 20 of 1943 as amended and adhere to the County’s written investment policy. State law limits investments to Certificates of Deposit, Money Markets, Commercial Paper (if in the top 2 tiers of ratings), Agencies of the U.S. government, and U.S. Treasuries. As of December 31, 2008, the cash portfolio was $181,801,215. The average weighted yield was 2.22 %, ahead of its benchmark which yielded less than 1%. The value of this portfolio fluctuates with County cash flow needs, expenses, and unspent bond proceeds. It was $152,556,143 as of March 31, 2009 with a yield of 1.42%, still ahead of the benchmark.
Investments of the County’s retirement system are managed by an external portfolio manager under Public Act 314 of 1965. This State law permits investments in stocks, corporate bonds, real estate, and international securities. The Retirement Fund had assets of $152,558,497 as of December 31, 2008. The value on March 31, 2009 was $144,149,000. The 10-year annualized return is 1.7%.