Property Values Up, Budget Decisions Loom

Washtenaw County board of commissioners meeting (April 17, 2013): Major budget issues were the focus of the April 17 county board meeting, including news that tax revenues in 2013 will be higher than anticipated.

After several years of reporting declining tax revenues, Raman Patel – the county’s equalization director – gave commissioners a report showing stronger signs of economic recovery, reflected in a 1.68% increase in taxable value. That translates into an estimated $2.327 million more in property tax revenues for county government than had been budgeted for 2013. [.pdf of Patel's presentation]

Also related to the budget, commissioners gave initial approval to a four-year budget planning cycle, a change from the current two-year cycle that’s been in place since 1994. Voting against the item was Ronnie Peterson (D-District 6). He and other commissioners expressed a range of concerns, including the fact that commissioners are elected every two years and therefore might not be able to contribute adequately to setting budget priorities. Although Peterson remained unconvinced, several commissioners observed that the annual budget affirmation process acted as a fail-safe, allowing the board to make adjustments based on changing priorities.

Another item that could have a dramatic impact on the county’s budget was only briefly mentioned: A proposal to issue up to $350 million in bonds to fully fund the county’s pension and retiree healthcare plans. It would be by far the largest bond issuance in the county’s history. County administrator Verna McDaniel plans to make a formal presentation about the proposal at the board’s May 2 working session. She distributed materials on April 17 to help commissioners prep for that meeting. [.pdf of bond proposal handout]

Commissioners also took a final vote officially to dissolve a countywide public transit authority known as the Washtenaw Ride. There was no discussion, but Conan Smith (D-District 9) – a vocal advocate for public transit – cast the sole vote against the resolution.

Other action handled by the board included a federal weatherization grant, a public hearing for the Urban County strategic plan, and resolutions honoring county employees and residents. Among them was Leila Bauer, the county’s chief deputy treasurer who is retiring after 41 years with the county. She received a standing ovation from the board.

County Bonding Proposal

County administrator Verna McDaniel passed out information to commissioners on April 17 regarding a major bonding proposal. She plans to make a formal presentation at the board’s May 2 working session. [.pdf of bond proposal handout]

The proposal is for a 25-year bond issue of up to $350 million to fully fund the county’s pension and retiree healthcare plans – the Washtenaw County Employees’ Retirement System (WCERS) and Voluntary Employees Beneficiary Association (VEBA).

Although commissioners were alerted to the possibility of this bonding proposal earlier in the year, the communication from McDaniel was the first time it had been formally raised at a public board meeting. She told commissioners that the material she was providing outlined six key points, including the purpose and objectives of bonding, and cost comparisons between estimated payments of debt service compared to the county’s annual required contribution to its pension and retiree healthcare funds.

She also provided a summary of relevant provisions in Public Act 329 of 2012, which the Michigan legislature passed in October of 2012. [.pdf of Public Act 329] The law enables municipalities to issue bonds to cover unfunded accrued pension and retiree healthcare liabilities, but has a sunset of Dec. 31, 2014.

The material distributed by McDaniel also lists benefits and risks of bonding, and a comparison of budgets based on bonding or not bonding.

Benefits cited by McDaniel include:

• Easier long-term budgeting provided by having predictable bond payments, rather than fluctuating amounts each year to cover pension (WCERS) and retiree healthcare (VEBA) costs. For example, the current combined WCERS and VEBA contributions in 2014 are estimated at $23.5 million. A bond payment is estimated at $18.6 million. [These annual lower payments don't take into account the higher amounts paid in interest over the life of the bonds, however. Details on the interest payments were not provided.]
• The complete elimination of the WCERS and VEBA obligations after 25 years.
• Proceeds from the bond, held in an intermediate trust, could be used to call the bonds after nine years, if some future event eliminates the WCERS and VEBA liabilities.
• Current rates for issuing bonds are at an historic low. Average debt service is estimated at 4%.

McDaniel also listed a few risks of bonding, including the size of the debt load, the uncertainty of market conditions, and the impact of defaulting, which would have consequences for the county’s credit rating and ability to issue bonds for other purposes.

The timetable proposes an initial board vote to approve the bond issuance on May 15 at its ways & means committee meeting, with a final vote on June 5. The board would vote on July 10 to approve the final bonding amount. During the summer months of June through August, the board typically holds only one regular board meeting each month.

McDaniel is also recommending that the county set up an intermediate trust to receive net proceeds from the sale of the bonds, and to invest and distribute the assets.

“This is an important and critical issue,” she said, “and we wanted to make sure you had as much information as possible in advance.”

Based on the county’s most recent comprehensive annual financial report (CAFR), Washtenaw County’s total outstanding debt at the end of 2012 was $60.877 million, up from $35.67 million in 2003. In 2012, the county paid $8.77 million in principal on its debt, $2.69 million in interest and other charges, and $166,892 related to bond issuance costs. [.pdf of debt data from 2012 CAFR]

County Bonding Proposal: Board Discussion

Ronnie Peterson (D-District 5) confirmed with McDaniel that the county’s legal counsel and bond counsel, John Axe, would attend the May 2 working session. [Axe has been advising the county on this proposal, and likely would be paid based on a percentage of the bonded amount.]

Peterson wondered if this proposal would impact the county’s current bonding capacity and ability to borrow for other needs.

McDaniel replied that this amount would be “well within our capacity.” The rating agencies allow the county to bond up to 10% of the county’s taxable value. According to the equalization report that was presented earlier in the meeting, the county’s taxable value is $14.416 billion.

Peterson asked McDaniel to provide more information at the May 2 working session about the county’s current bonding ability, as well as the impact that a $350 million bond issuance would have on the county’s ability to bond beyond that.

Dan Smith (R-District 2) said he was very interested in the impact that this bond would have on other communities in Washtenaw County. Rating agencies look at the total debt throughout the county, he noted. Communities have different levels of debt and taxable values, and he wanted to know how that would be affected regarding the “debt overhang.” [Debt overhang refers to the point at which debt is so great that an entity is unable to take on additional debt.]

The bond issuance that’s being proposed would add a substantial amount of debt on a per-capita basis, D. Smith said. Based on the data from the current equalization report and on the county’s current debt as provided in the most recent comprehensive annual financial report (CAFR), the county’s total debt – for all municipalities – is 9.2% of the county’s total taxable value.

Kent Martinez-Kratz (D-District 1) confirmed with McDaniel that the assumptions built in to her calculations factor in the new labor contracts, which eliminated defined benefit plans for new employees hired after Jan. 1, 2014. [See Chronicle coverage: "New Labor Contracts Key to County Budget"] He also highlighted a chart that showed “savings” that the county would see from this bond issuance, and indicated that he’d like more information about how those amounts are calculated. [.pdf of budget projection charts]

Yousef Rabhi (D-District 8) encouraged commissioners to email their questions to the administration prior to May 2, so that the financial staff would have adequate time to prepare responses. “It’s a big decision,” he said, “and we want to make sure we’re walking into this with a body of supporting information, both from professionals and from others in the community, to make sure we’re making the right decision on this.”

Rabhi said he had asked the administration to provide this material prior to the May 2 working session, so that commissioners would have time to review it and ask questions.

Equalization Report

Raman Patel, the county’s equalization director, made his annual presentation to the board on April 17. He began by noting that he has worked on 42 of the 55 equalization reports that the county has produced over the past few decades. [.pdf of Patel's presentation] [.pdf of equalization report]

Equalized (assessed) value is used to calculate taxable value, which determines tax revenues for the county as well as its various municipalities and other entities that rely on taxpayer dollars, including schools, libraries and the Ann Arbor Transportation Authority, among others.

After several years of reporting declining tax revenues, this year’s report showed stronger signs of economic recovery, reflected in a 1.68% increase in taxable value.

For 2013, taxable value in the county increased 1.68% to $14.2 billion. That’s an improvement over declines seen in recent years, when equalized value fell 0.76% in 2012, 2.85% in 2011 and 5.33% in 2010. It’s also an improvement over projections made when the county administration prepared its 2013 budget. The general fund budget was approved with a projection of $60.9 million in tax revenues. But actual revenues, based on 2013 taxable value, are now estimated at $63.236 million – for an excess in 2013 general fund revenues of $2.327 million. Patel stressed that at this point, the taxable value is a recommendation and must be approved at the state level.

Patel also presented tentative taxable values for specific jurisdictions. The city of Ann Arbor shows a 3.34% increase in taxable value, while the city of Saline’s taxable value is a 3.97% increase over 2012. All but six municipalities showed an increase in taxable value. Those municipalities with decreases include the city of Ypsilanti (-0.38%) and Ypsilanti Township (-2.53%).

Properties in the Ann Arbor Public Schools district – which includes the city of Ann Arbor and parts of surrounding townships – will see a 2.32% increase in taxable value. Properties taxed by the Ann Arbor District Library, covering a geographic area that in large part mirrors the AAPS district, increased in value by 2.11%. [.pdf of taxable value list by jurisdiction]

Taxable value is determined by a state-mandated formula, and is the lower of two figures: (1) a parcel’s equalized (assessed) value; or (2) a capped value calculated by taking last year’s taxable value minus any losses (such as a building being torn down), multiplied by 5% or the rate of inflation (whichever is lower), plus the value of any additions or new construction. This year inflation is 2.4%.

Patel reported that the county’s millage rate will not be rolled back this year. The state’s Headlee Amendment rolls back millage rates to prevent property tax revenues from increasing faster than the rate of inflation. That won’t happen this year, because the inflation rate of 2.4% is higher than the increase in taxable value.

In 2013, several categories of property saw increases in equalized value for the first time in years, according to the report. Commercial property showed a 2.2% gain in equalized value, compared to a 3.84% decline last year. It was the first increase in commercial property values since 2009. Residential property value – the largest classification of property in the county – showed an increase of 2.37%, gaining in value for the first time since 2007. Last year, the equalized value for residential property had dropped 0.57%, and had registered a 2.74% drop in 2011. The average residential sales price in February 2013 was $216,220 – up from a low of $154,015 in 2009.

Personal property values also increased, growing 3.15% compared to 2012.

Last year, agricultural property had been the only category that showed an increase. Growth continues in 2013, but at a slower pace. Agricultural property registered an 0.67% increase in equalized value this year, compared to an increase of 3.54% in 2012.

Industrial and developmental property values continue to struggle. Those were the only categories to register a decline in 2013. Industrial property showed a drop in equalized value of 4.78%. That compares to a 3.99% drop in value last year. Over the past few years that category has lost significant value, falling from an equalized value of nearly $1 billion in 2007 to this year’s value of $421.72 million. Developmental property – a relatively small category that covers properties not yet developed – had a 7.12% drop in equalized value.

Patel also highlighted the value of new construction in the county – $368.1 million, a 30% jump over the value of new construction in 2012. But most of the new construction is happening in DDA districts, he reported, so the full increase in tax revenue isn’t going directly to the taxing jurisdictions.

Patel noted that countywide, about $418 million is captured by local downtown development authorities (DDAs), local district finance authorities (LDFAs), brownfield tax increment financing, and other entities that are allowed to capture funds from taxing jurisdictions. For Washtenaw County government alone, $2.405 million goes to these other tax-capturing entities that would otherwise be revenues for the county’s general fund. He noted that although the official taxable value for Washtenaw County increased by 1.68%, the net increase is just 1.35% – after subtracting the amounts captured by DDAs and other tax-capturing entities.

Another factor is the impact that the Headlee amendment has had since the state’s voters approved that measure in 1978. The county was originally authorized to levy 5.5 mills, but since 1978 that rate has been rolled back to 4.5493 mills, Patel noted. In order to levy its full rate of 5.5 mills, the county would need to ask voters for a Headlee override.

Compared to surrounding counties, Washtenaw is faring well, Patel reported. Taxable values were flat in Oakland and Lapeer counties, and Livingston County showed a modest increase of 1.18%. But values in other counties continue to decline, including Wayne (-1.20%), Macomb (-0.55%) and Genesee (-2.43%).

Though the news for Washtenaw was generally positive, Patel cautioned that the loss of the state personal property tax – which Michigan legislators repealed last year – could ultimately result in a loss of more than $5 million in annual revenues for the county government alone, and more than $40 million for all taxing jurisdictions in Washtenaw County. The tax will be phased out starting in 2014 through 2022. As part of that change, a statewide voter referendum is slated for 2014 to ask voters to authorize replacement funds from other state revenue sources. It’s unclear what will happen if voters reject that proposal.

The county also hasn’t recovered from a loss in property value over the past few years. Although the $14.21 billion in total taxable value this year is higher than 2012, it’s 9.2% lower than the taxable value of $15.65 billion in 2008. “Even with the improved market, it will take a number of years to regain the valuation status,” Patel said.

Equalization Report: Board Discussion

Several commissioners praised the work, thanked Patel and his staff, and generally applauded the news. There were also several questions.

Dan Smith (R-District 2) asked how Patel got the comparative data with other counties. Patel replied that there are 83 counties in Michigan with 83 equalization directors. “We get together every month,” he said. “This is my job, because I want to make sure that my county is going to equalize property just like every other county.” Every assessment should reflect uniformity and equity – that’s his responsibility, Patel said, adding that the state Constitution is very clear about this equalization process.

D. Smith also asked about tax tribunal cases, and wondered what the impact might be on appeals made regarding this year’s assessments. Patel reported that the county has about $800 million in taxable value that’s in contention. That doesn’t mean that the county will have to refund $800 million worth of tax revenue, he explained. Often the original assessments aren’t changed, even if they are challenged.

Responding to another query from D. Smith, Patel explained that the “developmental” category is used to classify property that would eventually be developed. At the point when it’s developed, the property will be reclassified – as commercial or residential, for example, depending on its use. So the developmental category fluctuates considerably from year to year. It’s a category “parking spot,” he said.

D. Smith also clarified with Patel that the total amount of tax dollars levied countywide – including all municipalities, school systems, libraries, etc. – was $632.299 million, based on 2012 millage rates. Yes, Patel said. The amount will likely change only slightly for 2013.

Yousef Rabhi (D-District 8) thanked Patel and called the report wonderful news. After years in recession and making budget cuts “down to the bone,” Rabhi said, it’s good to hear that the county will be taking in more revenues than it budgeted for. But he noted that the federal government is cutting back on its funding, and budget cuts at the state level are expected to continue. He wanted to highlight the fact that the county now has a potential opportunity to help sustain some of the ongoing community investments that would otherwise be damaged or cut back due to federal and state funding cuts.

Rabhi noted that Washtenaw County is doing well compared to other areas in Michigan, and a lot of that is due to government investments, he said – through the county, the universities, and other local entities. “We’re putting money back in our community for economic development,” he said, “and we’re building the economy here in Washtenaw County. I don’t think it’s just a coincidence that we’re seeing a return in property values.”

Conan Smith (D-District 9) noted that the county is still seeing fairly significant losses in industrial property values. He wondered if it was due to properties being taken out of that classification, or because those industrial properties continue to decline in value. Patel replied that these properties continue to decline in value. As an example, he noted that General Motors had removed personal property from its closed Willow Run plant in Ypsilanti Township, which contributed to the property’s loss in value.

C. Smith said it might be something to talk about with Ann Arbor SPARK, this region’s economic development agency. Even though several classifications are seeing a turnaround, he noted, that hasn’t yet happened for industrial properties. In order for that to occur, the properties need to become competitive in the marketplace, he said. SPARK is really the county’s “go-to partner” in terms of recruiting tenants for those buildings, he added, so perhaps that effort should be given more weight in SPARK’s strategic plan.

County administrator Verna McDaniel reported that Paul Krutko, SPARK’s CEO, is very active in working on GM’s Willow Run plant as well as other industrial facilities in the county. “I think he knows that that’s a huge concern,” she said. [Both McDaniel and Conan Smith serve on the executive committee of SPARK's board of directors. The county allocated $200,000 to SPARK in the 2013 budget.]

C. Smith asked Patel to provide a list of the top 10 industrial parcels in the county, based on valuation, as well as the 10 parcels that are experiencing the greatest loss in value. This information would help in targeting any marketing that might be done, he noted.

Alicia Ping (R-District 3) thanked Patel, noting that this was the first good news the equalization staff has delivered since she was elected in 2010. “I’m surprised you aren’t all out there doing the happy dance,” she joked.

Outcome: Commissioners unanimously voted to accept the 2013 equalization report.

Four-Year Budget Process

Commissioners were asked to give initial approval to a four-year budget planning cycle, a change from the current two-year cycle that’s been in place since 1994.

The board had been briefed on the issue at a Feb. 21, 2013 working session. County administrator Verna McDaniel has cited several benefits to a longer budget planning cycle, saying it would provide more stability and allow the county to intervene earlier in potential deficit situations. [.pdf of McDaniel's Feb. 21 presentation] State law requires that the board approve the county’s budget annually, but a quadrennial budget would allow the administration to work from a longer-term plan.

With a two-year approach, larger cuts must be made within a shorter timeframe to address anticipated deficits. A four-year plan would allow the administration to identify potential deficits at an earlier date, and target savings that would compound over the longer period, making the overall budget more manageable.

The county is currently working on a new budget starting in 2014. Earlier this year, the county administration projected a $24.64 million general fund deficit over the four-year period from 2014 through 2017. A much smaller general fund deficit of $3.93 million is projected for 2014, but McDaniel hopes to identify $6.88 million in structural changes for that year – a combination of new revenues and cuts in expenditures – in order to eliminate the cumulative deficit going forward. These numbers will be revised in light of the county’s equalization report, which estimates that the county will receive $2.327 million more in 2013 tax revenues than had originally been budgeted.

Four-Year Budget Process: Board Discussion

Dan Smith (R-District 2) said he thought it was a step in the right direction, though he still had some concerns. He’s talked with county administrator Verna McDaniel about this process, and sees more positive than negative things coming from the change.

His basic concern is that commissioners are elected on a two-year cycle, which is in “direct conflict with a four-year budget,” he said. Although McDaniel has plans to accommodate that, he said, there’s no getting around the basic fact. However, he noted that countywide elected officials are on a four-year election cycle, which would synch well with a four-year budget. [Countywide elected positions are the sheriff, treasurer, county prosecuting attorney, clerk/register of deeds, and water resources commissioner.]

D. Smith said he’d like a more intense budget discussion with the county departments. The board is rather removed from that department-level discussion, he noted. One way to intensify that discussion would be to institute zero-based budgeting, he said. On a four-year cycle, each department would wipe its slate clean and be required to justify each item in its budget. Doing this every four years might not be as onerous as doing it every one or two years, he said.

Ronnie Peterson (D-District 5) clarified with McDaniel that the four-year budget process would begin with the budget that’s being developed, from 2014-2017.

Peterson then said that although his politics often differ greatly from Republican Dan Smith’s, he respected Smith as an individual and in this case he shared some of Smith’s concerns. Peterson stressed that this was the first time he had participated in a discussion about a four-year budget. [Peterson did not attend the Feb. 21 working session when McDaniel and the county's financial staff briefed commissioners on this approach.]

The responsibility for the county’s budget rests with the elected board of commissioners, he noted. Sometimes they just come to meetings “because we somewhat enjoy each other’s company,” he joked. But often there are pressing items related to appropriations, he added, citing the allocation of funds in the wake of last spring’s tornado touchdown in the Dexter area.

This responsibility is entrusted to the board, he said. In recent years, because of the economy, the board has made difficult decisions that sometimes resulted in residents not getting the services they need, he said, like the decision to stop administering the HeadStart program. [The responsibility for the Washtenaw HeadStart, which the county has administered since the 1960s, is in the process of being handed over to another to-be-determined entity.]

It’s not the board’s role to micromanage, Peterson noted, and the county would run quite well even if the board met only once every six months. Commissioners set the millage rate, accept the equalization report, make key hires – and set the budget, he said.

Earlier this year, the board approved new labor contracts that will determine the wages and benefits of employees for the next 10 years. As part of that, the board has the obligation to “right the ship,” Peterson said, and he didn’t know if commissioners could do that with a four-year budget cycle. They haven’t yet assessed some of the programs and structures that have been in place for years – programs and structures that need to be re-evaluated, he said.

Peterson told commissioners that they hadn’t really started the process for the next budget year, let alone for four years. He said he wouldn’t be supporting a four-year budget. The board needed to have a retreat to discuss it, he said, adding that perhaps others have already met and made that decision. The public should have input too, he said.

Peterson concluded by saying that even for a two-year budget, things can change – either because of the economy, or because of changing priorities among commissioners. “If you can count to a majority, you can change the budget,” he said.

Andy LaBarre (D-District 7) spoke next, indicating that he shared concerns about the impact of elections on the budget process. But he said he’d support a four-year budget. Everything the board and administration has done so far this year has been with the goal of providing more stability and predictability, he said. A four-year budget process would add to that. “And I feel secure in that we have a fail-safe in the [budget] reaffirmation each year,” he noted. “To me, if that wasn’t there, this wouldn’t be in any way, shape or form a prudent or responsible thing to do.”

In some ways, LaBarre added, a four-year approach moves the county away from a crisis-to-crisis mentality and more toward a strategic and tactical approach.

Yousef Rabhi (D-District 8) emphasized that the board’s responsibility is to pass an annual budget, and the four-year budget cycle won’t change that. In two years after the next board is seated, commissioners could decide that they didn’t want to do a four-year budget cycle, he said. So he didn’t feel that he was forcing anything on future boards.

There’s value in having a budget process and in allowing commissioners to delve into the details, Rabhi said. So there should be some sort of budget process every two years, with the understanding that the budget extends beyond a two-year time period.

In terms of the budget process so far, Rabhi reminded commissioners that they’ve had one budget retreat so far. Also, there was a working session in February specifically about the four-year budget proposal. “It wasn’t as well-attended as it could have been,” he added, but materials from that working session were provided to all commissioners, weighing the advantages and disadvantages. [.pdf of McDaniel's Feb. 21 presentation]

Rabhi said he’s scheduled a second retreat for the board on May 16 at the county’s Learning Resource Center. [The LCR is located near the county jail, at 4135 Washtenaw Ave.] The meeting is open to the public, and will be held at the same time as the board’s working sessions, which begin at 6 p.m.

If approved, Washtenaw County will be one of the only counties in Michigan if not the country to do a four-year budget, Rabhi said. “It’s a wonderful way to lead the nation in fiscal stability and fiscal responsibility.”

Conan Smith (D-District 9) also shared concerns that had been raised about process considerations. From the standpoint of staff and administration, he said, a four-year budget makes a lot of sense because of the long-term planning process. But from the board’s perspective, he still was concerned about the two-year election cycle.

The resolution in front of the board simply gave direction to the staff, C. Smith said. It’s a good model, because it leads to longer-term decisions with more predictability. But it doesn’t obviate any of the concerns that had been raised by other commissioners, he said, so the board needs to develop a budget policy for this four-year approach. If they were operating on a two-year cycle, commissioners would approve the two-year budget for 2014-2015 at the end of 2013, but in 2014 they’d likely just rubber stamp it, he said. Commissioners know that they’ll be around for two years, so that second year budget is one they’ve already worked on.

It would be different on a four-year cycle, C. Smith said. There’s no guarantee that a commissioner would be around for four years. So it’s important to differentiate what happens in each of the four years. In the third year, perhaps there should be a substantive review of the budget – have the priorities changed, or are the original objectives being met? Then in the fourth year, commissioners would begin the budget process again with a “fulsome” assessment of the previous four years, he said.

In concept, the four-year process is a good approach, C. Smith said. But the board hasn’t yet articulated clearly the role that commissioners should be playing inside that process. He supported the resolution, saying that it simply gave direction to plan for four years. In September, if commissioners decide they want to adopt only a two-year budget, “we still have that right.” He said he’d be happy to be a leader in thinking through how the board can engage in the next four-year budget process.

Peterson spoke again at length, saying it was amazing to him that the board had only held two short retreats, but had already made decisions about budget priorities. [In fact, there has been just one budget retreat so far – on March 7, 2013 – although budget issues have come up during discussions at several regular meetings.]

The budget isn’t the responsibility of administration, Peterson said, and he hoped the board assumed responsibility for it soon. He praised the county’s employees and talked about their sacrifices over the past few years. He urged the board to assess the county’s programs and services, to make sure the county never gets into this same kind of position again. He questioned how anyone could see the needs of the county four years from now, when things have changed so dramatically just over the past nine months. National healthcare reform is one example of changes that could impact the budget in the future, he said.

Rabhi responded, thanking Peterson for raising these concerns. Rabhi said he wanted to have a robust budget process, whether it’s a two-year or four-year budget. He expressed willingness to address Peterson’s concerns over the current budget process, and noted that another retreat is scheduled for mid-May. There will also be more budget-related working sessions, he said. “I don’t know of any private discussions that have been had around the budget,” Rabhi added.

A budget task force has been working under the direction of the administration, Rabhi said, noting that Felicia Brabec – chair of the board’s ways & means committee – has been very active in those. In addition to retreats, working sessions and regular meetings, Rabhi said he was open to other suggestions from commissioners in the budget process.

Brabec agreed that the board needs to be thinking more strategically, and said the next retreat will focus on that approach, looking at things like community impact. Rabhi added that the budget can’t just be about dollars and cents – it’s also about community impact, and developing a framework for assessing impact.

Dan Smith stressed that the board would be voting on something very specific that night, and he read from the resolution’s only resolved clause: “… that the Washtenaw County Board of Commissioners approve the development of a Quadrennial County Budget.” It doesn’t say that the board will adopt a quadrennial budget, he noted – it’s just the beginning of the process. At any point, commissioners could change this approach. The actual voting on the budget itself is a long way off, he said, and this is just the first step in the process. He said he’d continue evaluating it over the next few months.

Conan Smith reported that he had communicated to Brabec and LaBarre – but not to Rabhi, the board chair – his concerns that the board hasn’t allocated sufficient time so far for a robust budget conversation. Waiting until late May for the next board retreat means that administration will already be deep into the budget process, he said, and it gets harder to change direction if you want to keep the process on schedule. He expressed concerns that presentations at the working sessions had been on topics with lower priority than the budget.

C. Smith said he knew there’s keen interest in bonding for pension and healthcare liabilities, but going down that path before the board has a conversation about budget priorities is not the right sequence. He thought there should also be more conversations on the budget at the board’s ways & means committee meetings.

In the last budget cycle in 2011, C. Smith said, the board had held three retreats “all before March.” [He had been board chair at the time. Retreats – including sessions on Jan. 29, 2011 and Feb. 9, 2011 – culminated in the board adopting a set of budget priorities and principles at its March 16, 2011 meeting.]

The board had “a more engaged conversation by this point in the last budget process,” C. Smith said, “so I think that might be part of what the tension is – it feels like we’re getting late, in all honesty.” He urged the board leadership – Rabhi, Brabec and LaBarre – to examine their budget schedule and possibly call additional meetings to focus on the budget.

Outcome: Commissioners voted 7-1 to approve the resolution directing the administration to develop a four-year budget. Dissenting was Ronnie Peterson (D-District 5). Rolland Sizemore Jr. (D-District 6) was not in the room when the vote was taken. A final vote is expected on May 1.

Weatherization Grant

Commissioners were asked to give initial approval to accept $185,654 in funds for the county’s weatherization assistance program.

The funding roughly equals the amount of federal weatherization dollars that the county received in 2012, which was a decrease of about 65% compared to 2011 federal funding levels. The current funding is allocated through the 2013 Low Income Home Energy Assistance Program (LIHEAP). The county last received LIHEAP funding in 2010, but has received weatherization grants from other federal funding sources in the intervening years.

For the period from April 1, 2013 to June 30, 2014, the program is expected to weatherize 27 homes. According to a staff memo, the work includes an energy audit inspection and follow-up inspection of the completed weatherization work, which might include attic and wall insulation, caulking, window repairs, furnace tune-ups, furnace replacements, and refrigerator installations. To qualify for the program, residents must have an income at or below 150% of federal poverty, which is about $35,325 for a family of four.

Weatherization Grant: Board Discussion

Dan Smith (R-District 2) asked whether the county would use outside subcontractors for this work, or if staff would do it. Mary Jo Callan – director of the county’s office of community & economic development (OCED) – replied that licensed contractors are hired to do the weatherization work, while staff members act as project managers and oversee the work.

D. Smith also noted that it’s been a few years since the county has received this type of grant. As he had read through the contract, there seemed to be some rather onerous requirements – such as making sure contractors meet the federal requirements needed to do the work. He wondered whether the county had sufficient resources to make sure all of those contract requirements are met. [.pdf of LIHEAP agreement]

Callan noted that although the county hasn’t received LIHEAP funding since 2010, there were large amounts of federal recovery (stimulus) dollars available in the interim. The requirements for all of this funding are similar, she said. Getting federal funds isn’t simply being given a blank check, she noted. It’s sometimes onerous, she acknowledged, but the county has a robust structure in place to manage dozens of federal grants.

Andy LaBarre (D-District 7) asked for Callan’s opinion on the proposed 30% reduction in LIHEAP funding that’s part of President Barack Obama’s budget. Callan replied that this is part of the analysis that her staff is doing related to the impact of federal sequestration. “A cut to this program is actually not new,” she said. It’s been a recurring recommendation in the federal budget for at least three years – either LIHEAP specifically, or weatherization in general.

Callan noted that the president’s budget also proposes a 50% cut in the Community Development Block Grant, which would have a tremendous impact on local programs. County staff is following this closely, she said. If the cut materializes, it would absolutely mean a decrease in the number of weatherization projects done each year. “And at some point, if you receive such a low allocation, you can’t have a program,” she said.

Ronnie Peterson (D-District 5) wondered how the county establishes criteria for delivering services. He said he’s very concerned about the elderly getting the services they need. In the past, he said, the program has served a lot of rental properties, while there are elderly homeowners who haven’t received the weatherization services. He wanted to see if senior citizens could get some kind of preference.

Brett Lenart, OCED’s housing and infrastructure manager, replied that the elderly are given a priority. The scoring system goes beyond a first-come-first-served approach, he said, and includes criteria like whether there are senior citizens or young children in the home, among other things. In response to additional queries from Peterson, Lenart noted that more information is available on the county’s weatherization website.

Conan Smith (D-District 9) reported that the Better Buildings for Michigan program has an version that’s available for non-low income families. A lot of people don’t qualify for weatherization program based on their income level, he noted, but could still use some support. He said he could help OCED connect with that program. [The Better Buildings for Michigan program is run by the Michigan Suburbs Alliance, where Smith serves as executive director.]

Outcome: Commissioners unanimously gave initial approval to accept the weatherization grant. A final vote is expected on May 1.

Employees, Residents Honored

At its April 17 meeting, the board presented resolutions of appreciation honoring Rabbi Robert Dobrusin and several residents from the city of Saline, as well as to Leila Bauer, the county’s chief deputy treasurer who is retiring after 41 years of service.

In addition, the board declared the week of April 14-20 2013 as National Public Safety Telecommunicator Week in Washtenaw County. Several members of the county’s dispatch operations were on hand and received recognition from the board. [.pdf of telecommunicator resolution] Marc Breckenridge, Washtenaw County director of emergency services, said dispatch operators have gone through a lot over the last couple of years, citing new technology and changes related to combining county dispatch operations with the city of Ann Arbor. “They’ve really come through for us, and we’re really proud of them,” he said.

Dobrusin was recognized for 25 years of “providing spiritual and pastoral support” for the Beth Israel congregation in Ann Arbor, the city’s “oldest Jewish Institution.” [.pdf of Dobrusin resolution] Also cited was his work as a founding member of the Interfaith Round Table of Washtenaw County and with the Interfaith Council for Peace and Justice. The resolution noted his human rights efforts, including his current position as national co-chair with T’Ruah: The Rabbinic Call for Human Rights.

Former county commissioner Barbara Bergman attended the meeting to accept the resolution on behalf of Dobrusin. She highlighted his work in supporting the rights of indentured workers, then indicated that this would be a surprise for him. “If you know Rabbi Dobrusin, don’t talk!”

The board also passed a resolution of appreciation for Leila Bauer, the county’s chief deputy treasurer. Her work over the years has included serving on the Washtenaw County Health Organization, Washtenaw County Community Mental Health board, Washtenaw County Human Services board, and the Washtenaw County Health Authority. She received a standing ovation from the board. [.pdf of Bauer resolution]

Several Saline residents were also recognized by the county board. Helen Martin was honored for her work with the Saline Downtown Merchants Association and Saline Main Street. Jeff Dowling was recognized for receiving the “Saline Salutes” 2013 Citizen of the Year Award, as well as for work with the American Cancer Society and various Saline community events. Joy Ely, owner of The Pineapple House, was recognized for receiving the “Saline Salutes” 2013 Lifetime Achievement Award, and for her support of downtown Saline. Also honored by the board was Sarah Chu, who received the city of Saline’s 2013 Youth of the Year Award. [.pdf of Martin resolution] [.pdf of Dowling resolution] [.pdf of Ely resolution] [.pdf of Chu resolution]

Outcome: Commissioners unanimously passed all resolutions of appreciation.

Washtenaw Ride Dissolved

On the agenda for a final vote was a resolution to officially dissolve a countywide public transit authority known as the Washtenaw Ride. Initial approval had been given on April 3, 2013.

The Act 196 authority, created in mid-2012 and spearheaded by the Ann Arbor Transportation Authority, was for all practical purposes ended late last year when the Ann Arbor city council voted to opt out of the transit authority at its Nov. 8, 2012 meeting. Of the 28 municipalities in Washtenaw County, the city of Ypsilanti is the only one that hasn’t opted out.

The county board’s April 17 resolution rescinds a board resolution that created the transit authority, and requests that the state legislature also take action to dissolve the Washtenaw Ride, in accordance with Attorney General Opinion #7003. That AG opinion stated that “the dissolution of a transportation authority organized under the Public Transportation Authority Act requires an act of the Legislature and may not be accomplished by the unilateral action of the city in which it was established.” [.pdf of AG opinion 7003]

The county’s role in creating the transit entity had been laid out in a four-party agreement with Ann Arbor, Ypsilanti and the AATA, which commissioners approved on Aug. 1, 2012 in a 6-4 vote. Subsequent revisions involving the other entities resulted in the need for a re-vote by the county board, which occurred on Sept. 5, 2012.

There are two other transit efforts now under way. Washtenaw County is part of a southeast Michigan regional transit authority (RTA) created by the state legislature late last year. The RTA was formed to coordinate regional transit in the city of Detroit and counties of Wayne, Macomb, Oakland and Washtenaw. Conan Smith has been a strong advocate for the RTA, and made Washtenaw County’s two appointments to the RTA board before his term as county board chair ended on Dec. 31, 2012.

Separate from the RTA effort, the AATA has been meeting with representatives of the county’s “urban core” communities to discuss possible expanded public transit within a limited area around Ann Arbor. It would be a smaller effort than the previous attempt at countywide service. The AATA hosted a meeting on March 28 to go over details about where improvements or expansion might occur, and how much it might cost. [See Chronicle coverage: "Costs, Services Floated for Urban Core Transit."]

There was no discussion on this item.

Outcome: On a 7-1 vote, commissioners passed a resolution dissolving The Washtenaw Ride. Voting against the resolution was Conan Smith (D-District 9), but he did not comment on his vote during the meeting. Rolland Sizemore Jr. (D-District 5) was absent.

CSTS Job Creation

On the April 17 agenda for a final vote was a resolution authorizing the creation of 39 new jobs and the reclassification of 76 others for Washtenaw County’s community support and treatment service (CSTS) department. Initial approval had been given on April 3, 2013.

CSTS is a county department employing about 300 people, but receives most of its funding from the Washtenaw Community Health Organization, a partnership between the county and the University of Michigan Health System. The WCHO is an entity that receives state and federal funding to provide services for people with serious mental illness, developmental disabilities and substance abuse disorders. WCHO contracts for services through CSTS. Although staffing has remained fairly constant in the last five years, demand for services has increased by about 40%. These jobs are being created to provide the capacity to meet that demand.

The new jobs include client service managers, support coordinators, mental health professionals, mental health nurses, management analysts, administrators and a staff psychiatrist. All of the reclassified positions are client service managers. Of the 39 new positions, 30 of them are union jobs, represented by AFSCME.

According to a staff memo, the changes will add $14,255,535 to the CSTS 2012-2013 budget, bringing the budget total to $41,822,489. Of that, WCHO is providing $38,692,815, including revenues from grant pass-throughs. Other revenues include $165,190 from the Haarer bequest and $246,846 from a contract with the Washtenaw County sheriff’s office.

CSTS Job Creation: Board Discussion

Ronnie Peterson (D-District 5) clarified with CSTS staff that they would be returning later in the year to secure approval for their annual budget. The CSTS budget runs from Oct. 1 through Sept. 30. At that time, there would be a broader picture of the services that CSTS offers, he noted. The organization is shifting to more of a fee-based approach, Peterson said, and someone will need to assume responsibility for paying for these services. It would be helpful to show exactly what services are delivered by CSTS. It’s a very complex department, he said, and most people don’t know what services it provides. “You are the resources of last resort for many of our citizens,” he said. It’s important that the county provide the support that CSTS needs to deliver its services, he noted, especially as funding changes at the state and federal levels.

Yousef Rabhi (D-District 8) thanked the CSTS staff for their work, and said he echoed Peterson’s sentiments.

Outcome: On a final vote, commissioners unanimously approved the creation and reclassification of CSTS jobs.

Public Hearing for Urban County Plan

A public hearing to get input on the Washtenaw Urban County‘s five-year strategic plan through 2018 and its 2013-14 annual plan was held during the board’s April 17 meeting. [.pdf of draft strategic and annual plans]

The Urban County is a consortium of Washtenaw County and 18 local municipalities that receive federal funding for low-income neighborhoods. Members include the cities of Ann Arbor, Ypsilanti and Saline, and 15 townships. “Urban County” is a designation of the U.S. Dept. of Housing and Urban Development (HUD), identifying a county with more than 200,000 people. With that designation, individual governments within the Urban County can become members, entitling them to an allotment of funding through a variety of HUD programs. The Urban County is supported by the staff of Washtenaw County’s office of community & economic development (OCED).

Two HUD programs – the Community Development Block Grant and HOME Investment Partnership – are the primary funding sources for Urban County projects.

The plans indicate that the Urban County area is expected to receive about $2.7 million annually in federal funding, which will be used for these broad goals:

1. Increasing quality, affordable homeownership opportunities

2. Increasing quality, affordable rental housing

3. Improving public facilities and infrastructure

4. Supporting homeless prevention and rapid re‐housing services

5. Promoting access to public services and resources

6. Enhancing economic development activities

Only one person spoke during the April 17 public hearing. Thomas Partridge criticized the lack of affordable housing in the county, and said there was insufficient funding for adding adequate housing. He urged commissioners to hold their retreat and do their strategic planning in the boardroom, where the proceedings can be televised and accessible to residents.

Communications & Commentary

During the evening there were multiple opportunities for communications from the administration and commissioners, as well as public commentary. In addition to issues reported earlier in this article, here are some other highlights.

Communications & Commentary: Thomas Partridge

Thomas Partridge spoke during the evening’s two opportunities for public commentary – each time speaking for the full three minutes that speakers are given. He described himself as an advocate for the most vulnerable residents, and called for ending housing discrimination in every city and township in Washtenaw County. He advocated for zoning and planning policies that ensure non-discrimination in housing. Partridge also demanded the recall of all elected officials who ran for office on the platform of advancing Michigan, but who subsequently neglected their promises and have taken the opposite attitude.

He also noted the much lower turnout during public commentary at the county board meeting compared to an Ann Arbor city council meeting earlier in the week. [The council's April 15, 2013 meeting had included two public hearings on controversial topics: 45 speakers participated in the public hearing on proposed changes to the Ann Arbor Downtown Development Authority ordinance, and 51 people spoke on the 413 E. Huron site plan.]

Responding to Partridge’s comments about the need for more public participation, county board chair Yousef Rabhi said the board wanted to ensure that there aren’t any barriers to citizens participating in its meetings. Any time he speaks with constituents, Rabhi said, he stresses the importance of the county’s work and encourages input. But he conceded that the county board doesn’t draw the same kind of crowd that the Ann Arbor city council does. On the other hand, he noted, the county board’s meetings don’t last until 3 a.m. [The council's April 15 meeting had adjourned after 3 a.m., before the council finished its business. Most council agenda items were postponed until May 6.]

Present: Alicia Ping, Felicia Brabec, Andy LaBarre, Kent Martinez-Kratz, Ronnie Peterson, Yousef Rabhi, Rolland Sizemore Jr., Conan Smith, Dan Smith.

Next regular board meeting: Wednesday, May 1, 2013 at 6:30 p.m. at the county administration building, 220 N. Main St. in Ann Arbor. The ways & means committee meets first, followed immediately by the regular board meeting. [Check Chronicle event listings to confirm date.] (Though the agenda states that the regular board meeting begins at 6:45 p.m., it usually starts much later – times vary depending on what’s on the agenda.) Public commentary is held at the beginning of each meeting, and no advance sign-up is required.

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