Ann Arbor Budget Marathon Ends

Ann Arbor city council meeting (May 31 session of May 16, 2011 meeting): The Ann Arbor city council finally adopted its fiscal year 2012 budget near midnight on the last day of May. The meeting had begun on May 16, was then recessed until May 23, immediately recessed again, and finally ended on May 31.

An amendment to extend funding for four police officer positions for an additional three months failed on a 5-6 vote. That means that 20 total full-time positions in the police and fire departments will now be eliminated. In terms of sworn officer positions, that translates into a loss of six police (four through layoffs) and seven firefighters (three through layoffs).

Successful amendments to the budget included: (1) use of $85,600 in general fund reserves to add to human services funding; (2) use of $90,804 in general fund reserves to add to the parks allocation; (3) use of $7,000 in general fund reserves to cover the cost of an additional city council primary election (as proposed, the FY 2012 budget anticipated primaries in only two of the city’s five wards); and (4) acknowledgment of an additional $87,452 from the Ann Arbor Downtown Development Authority’s parking fund to the city’s general fund, resulting from a newly ratified parking contract. A proposed amendment to reduce allocations to the public art program failed.

In other business related to the city’s budget, the council ratified a new contract with the DDA for management of the city’s public parking system. It’s a contract that runs for 11 years and will transfer nearly $3 million of public parking revenue to the city every year. The council rejected on a 2-9 vote a proposed amendment that would give the city council veto power on the DDA’s authority to set parking rates.

The council also approved a resolution to waive the city’s share of excess TIF (tax increment finance) capture in the DDA’s district – that amounts to $712,000 that won’t be paid to the city.

City-DDA Parking Contract

Christopher Taylor (Ward 3) introduced the agenda item on the new contract under which the DDA would continue to manage the city’s parking system – the item was added to the agenda that night at the council table. Taylor has led the city council’s “mutually beneficial” committee’s work in its negotiations with the DDA’s own committee – a process that has lasted more than a year since first moving into public view. The contract was originally supposed to be ratified by Oct. 31, 2010.

In broad strokes, the contract would transfer 17% of the parking system’s gross revenues to the city. The contract is to run over an initial 11-year term, with one 11-year renewal option.

Under the new contract, the city would also be required to report to the DDA on a regular basis about its street maintenance activity in the downtown area, as well as its parking enforcement activity. The new contract also defines a specific geographic region as the area where the DDA will manage any parking facilities.

Under the old contract, the DDA proposed parking rate changes, which were then automatically enacted unless the city council acted to veto them. The new contract only requires consultation by the DDA with the city on parking rate changes.

The new contract also includes an “underwriting” or “backstopping” clause, which was added late in the negotiations. Key features of that clause include: (1) it’s applicable only through 2016; (2) it’s triggered if the combined DDA fund balance falls below $1 million; (3) the trigger is evaluated based on the annual audit of DDA books in September or October, for the previous fiscal year; (4) if underwriting were triggered, it would take the form of reducing existing payments that the DDA makes to the city; (5) the city’s liability is limited to $1 million annually and $2 million cumulatively; and (6) any money the city is deprived of through this underwriting would be restored to the city, at whatever point the DDA’s cumulative fund balance reaches $4 million.

City-DDA Parking Contract Deliberations

Taylor told his colleagues that what they were considering reflects a great deal of work. He then reviewed the basic features of the contract. He argued for the DDA’s rate-setting authority by saying that the DDA already controls rates and hours. Even though the city has had a veto, in memory, that veto has not been exercised, he said. The DDA has performed its responsibilities for management of the system admirably, he said.

The 17% of gross parking revenues in the contract is an amount that would bring the city millions of dollars extra, compared with the current contract, Taylor said. It would also plug a $1.8 million hole in the city’s budget.

By way of background, the amount of the transfer to the city under the new contract would be more than $2.5 million. The DDA is already obligated under the current contract to transfer around $800,000 to the city’s street repair fund. The new contract combines all individual payments into a single percentage-of-gross payment. So during deliberations, councilmembers used the round-figure of $1.8 million as the additional value the city was getting out of the contract.

Carsten Hohnke (Ward 5) called the contract a pretty significant undertaking, providing $1.8 million extra revenue to the city. He thanked Taylor and DDA board members Roger Hewitt and Joan Lowenstein for their work. He said that at no point did he ever believe the DDA was not negotiating in absolute good faith. Hohnke noted that at one point during the conversations it was suggested that perhaps the city should just let the DDA know how much money it wanted and the DDA would simply set rates to achieve that revenue – that made a lot of sense to him.

The DDA has no statutory or moral standing to direct the city about how to manage the parking fund, Hohnke continued. But the city is in a contractual agreement, and his view was not the only one that was a part of the conversation, he said. What came out in the end, Hohnke added, was the best the city can hope for. He said that a good negotiation should leave both sides feeling like they’ve been beaten up pretty well, and this one did that.

Marcia Higgins (Ward 4) had some questions about the map accompanying the contract that defines the “parking area.” Taylor confirmed that the boundaries of the area in which the DDA would manage parking would be the subject of an open conversation. Higgins had some specific concerns about the boundaries along State Street, but seemed content that those issues could be addressed administratively.

Stephen Kunselman (Ward 3) asked how many FTEs (full-time equivalent jobs) in police and fire will it save? He had concerns about assigning that much money and power to a non-elected body, when there is no opt-out clause for the city. He contended that the contract really has tied the hands of future councils. He also reminded his colleagues that they’d received an email from a past councilmember who said he would never choose to contract with the DDA to manage parking again. Without an opt-out clause, the city council is abdicating its authority to a non-elected body, Kunselman said.

Responding to Kunselman’s question about FTEs, interim city administrator Tom Crawford said it worked out to 16-17 FTEs. Hohnke responded to the issue of an opt-out clause and rate-setting authority by telling Kunselman that the committee couldn’t negotiate their way there – that was not going to be acceptable to the DDA. Hohnke stressed that he didn’t mean to suggest that the DDA was controlling the conversation, but it was important to get to as high a percentage as possible for the financial term of the contract.

Sabra Briere (Ward 1) picked up on the contract’s financial aspect. A question for her was exactly what the driving issue was during the negotiations. How big a role did the other terms of the actual agreement play in the discussion? Hohnke contended that the other non-financial terms played a very significant role. The city council had provided guidance on how to negotiate – some things that would provide benefit to the DDA had to fall out of the conversation, he said.

The benefit to the DDA in the new contract includes a clearly defined geographic area, and greater control for parking rates. Separate from the contract was greater responsibility for downtown planning. Hohnke also pointed to “second tier” issues on which greater clarity had been achieved – like the purposes for which the parking structures can be used.

Briere then registered some discontent with the council’s committee about the level of their communication back to the council during the negotiations and the council’s ability during that long process to weigh in as a body on the content of the contract. What had prevented the committee from conveying specifics of the contract to the council for prior consideration, so that the council would not be sitting on the last night of the last day of the month and not be satisfied with what was in front of them? She wondered what had prevented the committee from communicating more – either with individual councilmembers or in public view.

Hohnke allowed that there’s always a benefit to more communications. He said he recalled Taylor giving updates to the council during communications time at previous meetings. It was well-covered by the local press, he said. [Basic terms of the new contract were summarized in The Chronicle's coverage of the DDA's December 2010 board meeting.]

Hohnke continued by saying the committee had tried to communicate as much as possible. Briere said she’d read everything that was written and she did not feel uninformed. However, she felt that the council as a body didn’t have an opportunity to discuss it.

Mayor  John Hieftje noted that the council had voted to give direction on the financial component of the contract in April. At that time, councilmembers could have talked about the contract, he said. Briere told the mayor that she’d asked if the council could talk about the other, non-financial terms of the contract on that evening and she’d been told they could not.

Kunselman came back to his point that future councils should not have their hands tied. He wanted an opt-out clause. Hohnke noted that beginning in 2022 there is an opt-out provision.

Kunselman noted that before that time, if there is a breach, then the city and the DDA would end up in court. He wondered if the issue of excess TIF collected in the DDA’s district – which had introduced uncertainty into deliberations a month earlier – amounted to a breach of contract. Kunselman also wondered about the status of the DDA’s compliance with some of the statutory reporting requirements.

From the state’s Downtown Development Authority Act 197 of 1975:

(3) Annually the authority shall submit to the governing body of the municipality and the state tax commission a report on the status of the tax increment financing account. The report shall be published in a newspaper of general circulation in the municipality and shall include the following:
(a) The amount and source of revenue in the account.
(b) The amount in any bond reserve account.
(c) The amount and purpose of expenditures from the account.
(d) The amount of principal and interest on any outstanding bonded indebtedness.
(e) The initial assessed value of the project area.
(f) The captured assessed value retained by the authority.
(g) The tax increment revenues received.
(h) The number of jobs created as a result of the implementation of the tax increment financing plan.
(i) Any additional information the governing body or the state tax commission considers necessary.

Kunselman said he’d asked the DDA and the city clerk if that status report had been submitted and no one had responded. Is that is a breach of contract, if the DDA hasn’t met their obligations under the state enabling legislation?

City attorney Stephen Postema characterized it as a two-fold question. If there’s any breach, then there’s a notice provision and a time period for cure. But here’s been no notice with a cure period that has ended, Postema said. The proposed new contract includes a breach provision. The excess TIF capture issue is separate from the parking contract, so as far as excess TIF capture goes, it does not cause the DDA to be in breach of the parking agreement, Postema said. Board chair Joan Lowenstein, who attended the May 31 session, provided a publishing order confirmation for a report that the DDA had published in AnnArbor.com earlier this year.

Sandi Smith (Ward 1), who also serves on the DDA board, said it’s not as if this is a new partnership – it’s been an ongoing relationship for around 20 years. The DDA has a habit of doing long-term planning over 10-years and planning a maintenance schedule longer than that, and assiduously reserving money for maintenance so that the parking structures don’t fall into a state of disrepair. She said that 17% is as close as they can get without deferring maintenance, and even so, some maintenance will still be deferred. Part of the mutual benefit is the ability to do long-term planning. Good things will come out of this for both sides, she said.

Taylor allowed that 11 years is long-term, but it’s a contract with the DDA, with whom the city has worked already for decades. In addition, he said, 11 years functionally is just a four-year extension, given that the current contract runs for another seven years.

City-DDA Parking Contract: Parking Rate-Setting Authority

Briere then proposed an amendment that required parking rate changes to be forwarded to the city council for addition to the  council’s agenda and council approval.

Taylor said he wouldn’t support Briere’s amendment, though he understood its rationale. He said it would render the agreement unacceptable to the DDA and prevent the city from obtaining additional revenue. He said he was satisfied that the authority for rates and hours is suitable to rest with the DDA. In fact, the DDA has had the authority for years, subject to council’s veto.

Hohnke also said he wouldn’t support the amendment. He said he thought the amendment would result in laying off 16 additional safety services personnel because of the $1.8 million shortfall. He drew an analogy to the Ann Arbor Transportation Authority, which does not come before the city council to get confirmation for fare changes. It would be onerous if the AATA had to do that, he concluded.

Higgins confirmed with DDA board member Roger Hewitt that in his memory, the council had not exercised its veto on parking rates. She asked him to explain it from the DDA’s perspective. Was the current system not working well? Hewitt said it worked well for a three-rate system: surface lots, parking structures and metered street parking. But as the DDA transitions to parking demand management, there will be different rates based on geography and time.

Hewitt noted that in the new contract, there’s a requirement for public input and council input. There’s a required joint working session of the city council and the DDA board. There’ll be more input than there’s ever been in the past, he said. Higgins wanted some assurance that the input would be more than just a posted public meeting. Hewitt responded by saying the goal is to educate the public on what the DDA is doing.

Higgins said that based on Hewitt’s explanation, she was becoming more inclined not to support the amendment. She got additional clarification from Hewitt that rate changes would very likely happen only once a year. Hewitt said clearly the DDA was not planning to do something that will enrage the citizenry or the city council. The DDA is there to help downtown. And if everyone tells them this doesn’t help downtown, he said, they’d be stupid not to listen to that.

Briere asked Hewitt about rapid mid-year corrections to parking rates. Hewitt explained if there are obvious signs that rates are not working from a financial or operational perspective, those corrections might be sought, but the DDA wouldn’t want to do something significant without council and public involvement. The council would have to trust that the DDA wouldn’t make a radical change without consultation, he said.

Briere observed it would be wildly irrational for the city council to nitpick by suggesting a dime here or there. Hewitt replied that some things will undoubtedly not be popular. People want parking to be plentiful and free, he said. Briere said her concern was not about whether the matrix of rates associated with a parking demand management system is good matrix – rather, it’s the abandonment of the council’s authority. In this case, the DDA is just a contractor. She noted that even from city staff, the council questions fee recommendations. She said she did not understand why parking rates could not come for approval to the council around budget time. Hewitt replied that the new contract gives the DDA a new responsibility to pay $2.5 million or more to the city annually. With that responsibility, the DDA needs the authority – you can’t have that responsibility without authority, he concluded.

Stephen Rapundalo (Ward 2) said that he, too, had reservations around the rate-setting authority. The council shouldn’t fool themselves into thinking they’d become experts in a demand-based system, he said. But Rapundalo wondered what the impact has been when changes to rates have been made. Hewitt told Rapundalo that the best example was when on-street spaces were the least expensive and structures were most expensive. The economics were that it made sense to get a parking ticket. When that price schedule was reversed, it led to increased usage in the parking structures. Rapundalo asked why it was not contemplated that the public hearing on parking rates [required in the parking contract] be held during the evening instead of at noon, when the DDA board meets. Hewitt said no decision has been made on that – the DDA would like to hold the public hearing at a time when people can attend. Rapundalo observed that while the city can dissolve the DDA, that’s not a simple thing to do.

Kunselman said he had no interest in dissolving the DDA. But he noted that the city council sets rates all the time. He suggested setting maximum rates under which the various parking demand management rates could fall. Just let us have our real authority, Kunselman stated. He said he’d support Briere’s amendment.

Tony Derezinski (Ward 2) said he wouldn’t support the amendment taking back rate-setting authority for the city council. He said really objected to mischaracterization of the vote as being about abandoning the council’s authority. It’s about a process of negotiation, he said. It’s about stability that a longer-term contract can bring. He characterized the contract as a very tightly tuned instrument. The people at the DDA are not strangers, he said.

Margie Teall (Ward 4) said she appreciated Derezinski’s remarks. The negotiation has been about compromise. Briere asked Teall to explain what the city is getting out of the contract. Teall replied: $1.8 million. Briere concluded, “So it’s about the money.” Teall replied that it has to be about the money and she didn’t think there’s anything untoward about that.

Mike Anglin (Ward 5) said he wanted better communication between the DDA and the city council. He was also concerned about access to handicapped parking – he wanted to see that addressed in the next round of conversation. He said he didn’t think it would be a problem to get rate changes approved in a timely way. Hewitt said it’s not a time issue – it’s a matter of picking and choosing one individual rate in the matrix. Changing one thing would have an impact elsewhere.

Kunselman went back to his suggestion of setting three maximum rates – for on-street, lots, and structures. The DDA could then set rates under those maximums. Hewitt feared the perception would be that the maximum rate would apply everywhere. The maximum rate becomes the number in the public’s mind, he said.

Smith said the contract as proposed takes the conversation away from politics. She did not want to see decisions on parking rates made because someone wanted to make a political point. Smith said she wouldn’t support this or any amendment.

Higgins said she’d been a long-time opponent of giving rate-setting authority to the DDA. But the explanation Hewitt had given provided her some comfort. She also pointed to the annual joint meetings. It’s important that there’s a balance of power. She said she would not support the amendment. Higgins echoed sentiments expressed by Briere earlier by saying she wished that the council could have aired this sticking poin much sooner.

Hieftje responded by saying that the committee meetings and the negotiations have been covered by the press. If amended in the way that Briere was suggesting, he felt the DDA wouldn’t accept it.

Briere concluded the discussion on her proposed amendment by saying she appreciated what Hieftje and Higgins had said – it was not her intent to destroy the opportunity to reach a contract agreement. Rather, her intent was to get the issue discussed. As a council, they had not had group input. She said she appreciated the work everyone has put into the contract. But she rather resented that now councilmembers had to accept things as they sit in front of them, or everything implodes.

Outcome on the rate-setting amendment: The council voted down the amendment. It received support only from Briere and Kunselman.

City-DDA Parking Contract: Shall We Say “Shall”

Higgins took issue with a phrase in the contract related to hours of enforcement: “City shall use best efforts to emphasize areas, hours, and methods of parking enforcement within the DDA Parking Area per DDA’s request.” After interaction with Taylor and Hewitt, Higgins was satisfied that the operative part of the phrase was “best efforts” and that the DDA would insist on “shall.”

Kunselman took issue with the “backstopping” clause of the contract. The city already guarantees all debts incurred by the DDA, he said. The clause meant that the city will be laying off its own staff before laying off DDA staff. Hewitt countered that the DDA employs four people and manages annual revenues over $19 million, with responsibility for assets [the parking structures] worth over $100 million. Four people doesn’t seem excessive, Hewitt said.

Kunselman then introduced the topic of an unpaid invoice of $1 million that the city had sent the DDA. Financial services manager Karen Lancaster explained that the city gets $2 million from the DDA under parking meter rent in the FY 2011 [the current year's] budget. The first $1 million had been paid in October 2010, she said.

Kunselman asked if it was legally possible for the city to enter into a contract with an entity that owed it money. City attorney Stephen Postemna explained that to be in default, the DDA would have to have been given notice and then not cured the situation. Smith drew out the fact that this $2 million was money the DDA had granted to the city last year, outside the requirements of the existing parking contract. She did not understand why a bill had been sent.

Kunselman insisted that even “a gentleman’s agreement is an agreement.” Higgins followed up on Kunselman’s point by asking DDA board chair Joan Lowenstein why the DDA was holding on to the money. Lowenstein indicated that she did not understand why there’s an invoice. She said there’s a check, it’s been signed, and it will go to the city.  It’s the DDA’s intention to pay it before the end of the fiscal year. Hieftje said the $2 million grant allowed the city to prevent eliminating 18 positions. The first part had been paid in the first half of the fiscal year. The DDA will pay the second half in the second half of the year. [The check was physically handed over at the DDA's board meeting the following day.]

Hieftje then made some general remarks on the purpose of downtown development authorities, calling them a key to economic success. Ann Arbor’s DDA has done a great job in Ann Arbor, he said. He noted that there are certainly opportunities for grandstanding on this issue.

Hohnke said it’s possible to resent the fact that there are consequences to not supporting the contract, and resent the fact that it’s a contract. But absent any alternative to making up the financial gap, he said, he’d be supporting the contract.

Kunselman contended there are alternatives to assigning responsibility for management of the public parking system to the DDA. The council could set up an advisory board, for example. Kunselman said he felt there was not really any choice now but to vote for the contract. He said he wished the council had discussed the contract as a body, like the DDA board had done.

Higgins said she really appreciated the opportunity to have members of the DDA board present to answer questions in depth. She also appreciated the work of the committee.

Outcome: The council voted unanimously to ratify the new parking contract under which the DDA will continue to manage the city’s parking system.

Excess TIF Capture

The resolution on how to treat excess TIF (tax increment finance) capture in the Ann Arbor Downtown Development Authority district was added to the agenda just before the fees and budget for fiscal year 2012 were set. It was Christoper Taylor (Ward 3) who added the item. He had led the “mutually beneficial” committee’s efforts on behalf of the city in negotiating the new parking agreement with the DDA.

The resolution addressed how the city of Ann Arbor would treat its share of excess TIF capture that had bee collected in the DDA district since 2004. The total amount of excess TIF capture that has accumulated since 2004 in the DDA district is, according to DDA calculations, $1,185,132.

Questions had been raised by the city of Ann Arbor on Friday, April 29, about the implementation of the city’s ordinance governing TIF capture for the DDA district. Those issues were raised shortly before Monday, May 2, when the city and the DDA had originally been scheduled to vote on their new contract under which the DDA would continue to manage the city’s parking system. The city’s DDA ordinance (Chapter 7) includes a clause stipulating that if the growth rate in the TIF capture exceeds what is anticipated in the DDA’s formal TIF plan, at least half of the excess must be divided proportionately among the taxing authorities that had some of their taxes captured in the TIF district.

The DDA had already voted to return $473,365 in taxes previously captured as part of the DDA’s tax increment finance (TIF) district. The money will be divided among three taxing authorities: Washtenaw County ($242,179); Washtenaw Community College ($156,520); and the Ann Arbor District Library ($74,666). But the expectation was that the city of Ann Arbor would waive its share of the excess – $711,767. That includes any amount due to the Ann Arbor Transportation Authority, which receives the revenues from a public transit millage levied by the city. The language of the resolution in front of the council on May 31 describes how the AATA will apparently still get the amount it would have received, if the city had not waived its share:

RESOLVED, That the City Administrator is authorized and directed to determine what proportionate amount of the acknowledged remittance of $711,767 may be payable to the Ann Arbor Transportation Authority and to make any credit adjustments necessary as part of the City/Ann Arbor Transportation Authority annual reconciliation process; …

While the language is somewhat vague, a source at the AATA has indicated to The Chronicle that they’ve been told the AATA will be “made whole.”

Excess TIF Capture: Council Deliberations

Carsten Hohnke (Ward 5) indicated he would support the resolution, but said he was concerned about how they got here. He asked interim city administrator and CFO Tom Crawford to identify which organization’s process the issue had “slipped through.” Crawford declined to place blame, but told Hohnke that the city had noticed the issue as questions had arisen about the TIF capture in the district.

[As the city and the DDA had gone back and forth about financial terms of the parking contract over the last several months, the overall DDA fund reserve balance became an issue. Councilmembers were keen to demonstrate that the DDA's future TIF capture would allow it to maintain an adequate overall fund balance, even if a substantial percentage of public parking revenues were transfered to the city.]

Crawford indicated that the city financial staff members do research when they receive questions, and they had discovered the issue in that context. It’s an old ordinance, he said, and they had not noticed it in a while – that was just an oversight. Mayor John Hieftje thought the explanation that best fits it is that the ordinance had never been triggered over a long period of time – that is, no excess TIF had been captured. Crawford reported that city staff had circled back with every party involved and said there’s now a process in place to ensure that the TIF capture is calculated correctly.

Marcia Higgins (Ward 4) asked about the issue with the AATA, which would be due to receive more than $80,000 in return of excess TIF – if the city of Ann Arbor did not waive the excess. She wondered why the city was considering the issue, given that it’s AATA’s millage. Crawford clarified that it’s actually a mass transit millage, not the AATA’s millage to levy. Hieftje noted that every year, there’s a reconciliation process that goes on between the city and the AATA, and the excess TIF capture will be part of the discussion.

Sabra Briere (Ward 1) inquired whether the calculations were the same year by year. The question did not lead to a discussion from Crawford of a central issue behind the calculations of excess capture.

By way of background, at least two interpretations are possible. Interpretation A would be that each year when the tax rolls are closed (after the Board of Review has handled all appeals), that year’s valuation is compared with the previous year’s, and the percentage difference is calculated. That percentage is compared with the percentage growth forecast by the TIF plan between those two years. Interpretation B would compare a given year’s valuation against the valuation in the first year of the plan (not the previous year) and compute the percentage difference between them. That percentage difference would then be compared against the percentage growth forecast by the TIF plan from the beginning of the plan to the current year. The DDA is using interpretation A. That falls in favor of the DDA by a total of at least $1 million, according to The Chronicle’s calculations.

Stephen Kunselman (Ward 3) indicated surprise that no staff report was included with the resolution. He said that to compute the excess, his understanding is that the DDA is looking at the projections in the TIF plan labeled “optimistic” instead of “realistic.” He pointed out that Crawford had previously mentioned to the council that he’d estimated the excess was based on “realistic” projections.

Kunselman continued by saying that the “realistic” projections are in bold-face, so you’d think that would be the one they’d use. [According to The Chronicle calculations, use of the "realistic" projections would result in the return of roughly an additional $110,000, across all taxing units in the DDA's TIF district.] Kunselman also complained that he hadn’t received an answer from the city staff about how this affects previous audits. Does the city have to amend its past audits? Why does the resolution need to be passed tonight? he aksed. Does this have anything to do with the budget?

Kunselman said he was a little “queasy” about what the other taxing units might have to say about the calculations. This raises all kinds of confusion, Kunselman said. Hieftje contended it was something that had a simple answer: Whose decision is it? Hieftje directed the question to assistant city attorney May Fales, who stated simply: The responsibility is the DDA’s. Crawford said he would not speculate about what an auditor might say. The reason it’s in front of the council now, he said, is that the DDA needs to understand what its resources will be for its budget. Kunselman concluded by indicating his frustration that no staff report had been included and that the decision about the calculation was being left to the DDA.

Briere said she’d support the resolution, in part because it lays a groundwork for approving the DDA’s budget, which is part of the city’s budget. If the council fails to approve the resolution, she said, the DDA’s budget is put in jeopardy, and it throws the city’s budget discussion into a state of limbo.

Outcome: The council unanimously approved waiving of the excess TIF owed to the city by the DDA.

Water Main Study

In front of the council on May 16 had been a resolution to approve a $208,984 contract with AECOM for a study of the city’s water distribution system. The money for the study, which dates from a 2007 request for proposals (RFP), was allocated in the fiscal year 2011 budget of the city’s water fund. The level of service (LOS) study to be done by AECOM would recommend a sustainable level of service for the city’s water distribution system, and determine how much investment it would take to achieve that level. The study would also help the city decide, for example, which water mains should be replaced first.

Before tabling the item on May 16, the council had amended out a $10,550 contingency. The item had been tabled for essentially two reasons. First, councilmembers expressed concern about the general issue of using consultants to communicate with residents, instead of relying on city staff. Second, councilmembers had concerns about the cost of the study, and they were inclined to delay action on all budget-related issues, given their plan that evening to delay action on the FY 2012 budget. It was taken off the table and put before the council at its May 31 session.

Water Main Study: Council Deliberations

Public services area administrator Sue McCormick addressed the council by challenging the idea that the consultant was being hired to do a public engagement effort. AECOM would be providing deliverables that include laying out a water main replacement strategy and a recommendation on what the city needs to do to fund that strategy. Only one piece of that is speaking to the public, along with the city staff. She stressed that it’s a small piece of what the city is paying AECOM to do.

Marcia Higgins (Ward 4) responded to McCormick by saying that on May 16, Cresson Slotten – unit manager of the systems planning unit – had told the council it’s a public engagement process. That’s also what she’d heard McCormick say in her remarks just then. So Higgins said she wouldn’t not support it. She’s reluctant to spend more money on studies, saying she felt it could be deferred for six months. She asked if there is any reason the city needs to do the study. McCormick said the city is required to do a water distribution master plan every 5 years – she was not certain if the legal requirement had been meet already in the first phase of the study.

Mayor John Hieftje said he wanted more time to review some material that McCormick had provided. The bottom line, said Hieftje, is nothing in the resolution affects the city’s general fund and would have no effect on job cuts.

After an additional brief interaction with the mayor, Higgins moved to postpone the resolution until July 5.

Outcome: The council voted unanimously to postpone the resolution on the water main study until July 5.

FY 2012 Fees

Before the council was a raft of fee changes in the community services and public services area. They included items in parks and recreation services, like bumping daily admission at public swimming pools from $4 to $5. Fee changes also included items like increasing fees for removal of utility poles in the right-of-way from $70 to $72.50 – the charge for each additional pole increased from $27 to $28.75. [.pdf of all fee changes as proposed]

FY 2012 Fees: Council Deliberations – Trash Carts

Sandi Smith (Ward 1) proposed eliminating one of the proposed new fees – a $45 per month per cart refuse collection fee in the downtown. She said the new fee had not been communicated to merchants well. Mayor John Hieftje thought some merchants in the downtown actually supported the fee.

Smith had talked to some merchants who only generate one bag a month – they were against the new fees. Hieftje asked why some merchants were in favor of the fee. Smith speculated that such merchants might have a dumpster. Sabra Briere (Ward 1) said in her discussion with a single downtown merchants association, they’d already made a decision as a group to outsource their trash collection. Margie Teall (Ward 4) said the city’s commercial recycling is set up in such a way as to encourage the use of larger dumpsters or a compactor. It’s designed as a tool in the tool box to encourage more recycling, which is a free service, she said.

Smith replied by saying she failed to see how this helps with reducing waste. For a small business, $45 per month is a big deal. Small businesses feel like they’re being taxed and poked and prodded from all sides. She contended there’s no way to opt out. She suggested that the council should strike the fee and come back with a better communication plan. It needs to be re-thought and re-presented, she concluded.

Stephen Kunselman (Ward 3) elicited from public services area administrator Sue McCormick that the zone for the commercial waste franchise is across the entire city. Currently, those using dumpsters are paying, but those with carts are not, she said.

Briere noted that the new fee isn’t affected by volume or frequency – it’s three times a week. The city is implementing a $45 per month per cart fee for property owners, but that could be as varied as one large building, or a small store in a large building, she said.

Teall said as she recalled, there was a public rollout of the future cart charges when the city added commercial recycling. Responding to his council colleagues’ concern about the lack of an opt-out provision, Christopher Taylor (Ward 3) said the information provided to the council notes a waiver provision, if there’s a sharing of a dumpster.

Hieftje said he would not support the removal of the fee – there are ways to get around it.

Outcome on Smith’s amendment on trash carts: The amendment failed, with support only from Smith, Briere and Anglin.

Outcome on fees: The council unanimously approved the new set of fees for the fiscal year.

FY 2012 Budget

Discussion by the council of the FY 2012 budget took the form of various amendments. Their deliberations also included a turn at the podium from Barnett Jones, head of public safety services.

By way of background, the budget proposed by city administrator Roger Fraser – made before he left that position at the end of April to become a deputy state treasurer – included the elimination of 20 full-time equivalent positions (FTEs) in the public safety area – police and fire. The breakdown for those eliminations was as follows:

 5 police officer layoffs
 1 police officer vacancy
 3 police support staff layoffs
 4 police support staff vacancies *
 5 firefighter layoffs
 2 firefighter vacancies
------------
20 total safety services eliminations

* Two of these positions were not included in the
budget impact sheets presented to the city council
in February – they were positions still on the
books but with no budgeted dollars.

The city council had been presented with this breakdown at a February 2011 work session.

FY 2012 Budget: Public Safety Discussion

Mayor John Hieftje asked Jones to the podium to clarify how the cuts in public safety positions would translate in terms of layoffs for officers and firefighters. There would be five layoffs of sworn police officers and five layoffs of firefighters, Jones said. There are other cuts as well, but those 10 are sworn officers. Based on the report of one recently announced retirement, that number would drop to four police officers to be laid off. Two announced retirements would drop to three the number of firefighters to be laid off.

Hieftje asked if there was anything else that could be done. Jones said he’d talked with both assistant fire chiefs, who had over 50 years of experience in the fire service. He mapped out the strategy if the loss of the five firefighter positions could not be avoided.

The fire department works based on three 24-hour shifts A minimum complement for five stations – each with a truck, and two trucks at the downtown station – is three firefighters per truck, plus a battalion commander. That translates to 19 firefighters per shift. Jones said that with better management of overtime, if they cut three FTEs, it should be possible to manage without closing a station. Hieftje confirmed with Jones that this would eliminate the need to close a station on a rotating basis, which is currently the strategy.

Stephen Rapundalo (Ward 2), who chairs the council’s labor committee, clarified with interim city administrator that some of the layoffs – four in police and two in fire – could be mitigated if the respective unions adopted the city’s benefit plan, which requires employees to contribute part of the cost of their health care. With the one retirement in police and two in the fire department, that meant that all layoffs in police and two out of the three in the fire department could be avoided, if the unions adopted the city’s health care plan, Rapundalo concluded.

Hieftje asked Jones to clarify the impact of losing police officers. Jones said that if he lost officers, he would move people who are currently outside of the patrol division into patrol duties.

A total of 56 officers are assigned to patrol – 28 officers for day patrol and 28 at night. There are a total of 89 officers in patrol and command – so the bulk of the force is assigned to patrol. Marcia Higgins (Ward 4) clarified with Jones that all layoffs in the police department would be in the patrol division. Higgins asked if more positions could be saved if additional officers retired. Jones told her yes, but he had no retirements.

Sabra Briere (Ward 1) asked interim city administrator Tom Crawford about other staff in the city – outside of the police and fire departments – putting in for retirement as well. Some of those retirements are funded out of the city’s general fund. Crawford assured Briere that every retired position is evaluated as it comes through. Briere said she did not want to see empty positions carried forward if they’re not going to be filled. Crawford told her that if the city can operate without a position for a year or two, that indicates it’s not needed. Sometimes, though, instead of eliminating a position as soon as it becomes vacant, the city tests out whether it can manage without the position.

Stephen Kunselman (Ward 3) asked Crawford about the additional FTE that has been added to the DDA over the last year. Can that position be moved to the police department? Crawford told Kunselman it could not be moved – that’s the DDA’s money and they have the purview to spend it, Crawford said.

FY 2012 Budget: Public Safety Amendment

After the other budget amendments had been handled, Marcia Higgins (Ward 4) introduced a budget amendment that would restore funding for four police officers for a period of three months. Higgins noted that the city has asked the unions to consider contributing to their health care costs, and the city would like to maintain the positions, but the city needs the police officers. Briere said she supported Higgins’ amendment initially, because the council had heard it might not need to lay off firefighters – they’d heard sufficient numbers might retire. In support of the strategy of extending funding for another three months, she said, it’s good to have carrots and “repercussions,” thus eschewing the word “stick.”

Hieftje said the extension of funding would be “leading people on.” Crawford noted that negotiations with both police and fire unions operate under Act 312 – which includes binding arbitration.

Rapundalo thanked Crawford for making the point about Act 312 arbitration. Rapundalo said he’d like to save the positions as much as anybody. He said he’d tried for many months to encourage public safety unions to be more accommodating, to take on health plans that salaried employees and smaller unions have already accepted. He felt Higgins’ amendment would lead people on and doesn’t give them any incentive.

Christopher Taylor (Ward 3) asked if there was anything special about the three-month time frame. Higgins responded by saying there’s a lot going on at the state that the city is still waiting for – police officers could still interview elsewhere.

Hieftje said if the concern is that there are still laws to be passed at the state level [which would cap the contribution by governments to public employee health care costs at 80%], the city’s Lansing lobbyist thinks that legislation will pass in June.

Carsten Hohnke (Ward 5) said he was not sure he followed the logic behind the amendment: either there’s a greater contribution to health care, or there’s a greater contribution to health care – there’s no difference in the outcome. Briere noted that one path is voluntary, while one would be state mandated. What we’re buying is a grace period, said Briere.

Hieftje confirmed with Crawford that people could be hired back, after being laid off, if they’re still available.

Outcome on three-month amendment: The council voted 6-5 against the amendment. Voting against it were Smith, Derezinski, Rapundalo, Taylor, Hohnke and Hieftje. Voting for it were Briere, Kunselman, Teall, Higgins and Anglin.

FY 2012 Budget: Human Services

In front of the council was a resolution it had tabled on May 16. That resolution made allocations to nonprofits in the amount of $1,159,029. The amount to be allocated reflected a 9% reduction from FY 2011 human services funding levels. The council had postponed consideration of the human services allocation at its May 2, 2011 meeting in order to explore ways of “finding another dime.”

The city’s support for human services is allocated in coordination with other entities: the United Way of Washtenaw County ($1,677,000), Washtenaw County ($1,015,000) and the Washtenaw Urban County ($363,154).

Sabra Briere (Ward 1) introduced a resolution on May 31 to increase the funding for the office of community development – which coordinates the funding – by $85,600 to partly mitigate the 9% reduction.

Sandi Smith (Ward 1) said that on the surface, she supported the amendment. But she said that everybody would like to have no reductions on anything. Ann Arbor is still funding human services at an amount greater than other cities, she said. Stephen Rapundalo (Ward 2), who was one of the architects of the scoring matrix for assigning allocations, said he’d been torn about this as well. But the fact of the matter is that last year nonprofits were given notice that they’d need to prepare for cuts. He said in good conscience he could not tap the general fund reserve in the way the amendment proposed.

Margie Teall (Ward 4) said she’d support the amendment, reasoning that the council has made cuts to human services support over the years. Nonprofits are experiencing cuts from everyone. She noted that she’d sat on the task force that had made recommendations about how funds would be distributed. She asked how the funds would be distributed among the nonprofits, if they were restored?

Mary Jo Callan, who heads up the joint city/county office of community development, said that the review team had asked that any restored funds go to nonprofits that had received the top tier rating. She also noted that since the reviews were completed, her office had learned about an additional $14,700 cut. Teall confirmed with Callan that city of Ann Arbor funds would be going to fund organizations that would not otherwise be funded through coordinated funding sources.

Rapundalo responded to Teall’s contention that there’d been cuts by saying that the city had been operating under fairly full funding levels for the last few years. Carsten Hohnke (Ward 5) said the city’s human services funding is a good investment, and it’s intrinsically linked to maximizing the safety services investment. It’s a smart policy, he said, but at the same time, dipping into the fund balance isn’t a good policy. He called it a case of the city imposing on itself a limit so that cuts are aligned with an overall decrease in the budget. He said that regrettably, he wouldn’t support the amendment.

Briere said she appreciated the comments she’d heard so far. She was simply trying to identify one-time dollars in this year’s budget not allocated for next year. That’s why she felt moderately comfortable in taking money from the fund balance. For a few years, human services funding has remained stable – it’s not fallen or risen. She reminded her colleagues that they’d received information that day about the impact of the nonprofit community on the economy.

Higgins said since she’d begun serving on the city council, the amount of human services funding had actually increased by $250,000 and it’s stayed at that amount. It’s hard to watch federal and state governments reducing funds – it’s a core value. She contended that when you’re out in the community talking to people, this is where they want money spent – these are families and children. It’s why the council decides every year to extend funding – to help those citizens most in need. She concluded by saying it was her hope that the council could do that again.

Teall invited Callan to describe other savings that her office had achieved. Callan said there’s a reorganization going on at the county to merge the office of community development with other departments. They had identified at least $26,000 in annual operational savings. If that had been analyzed before the administrator’s budget had been proposed, it would have been part of her budget presentation to the council.

Mike Anglin (Ward 5) asked how many volunteers were involved in the nonprofits the city was funding. Callan said that 365,000 hours are donated to the 40 different nonprofits that the city funds, equivalent to 200 full-time employees.

Outcome: The council passed the human services resolution on a 6-5 vote. Voting for the allocation were Briere, Kunselman, Teall, Higgins, Anglin and Hieftje. Voting against it were: Smith, Derezinski, Rapundalo, Taylor and Hohnke.

Crawford pointed out that the budget, per the city charter, must be ratified by seven votes. But as the resolution contained an amendment, it needed only the six votes it received.

When the council considered the FY 2012 budget as an item unto itself, later in the meeting, the council’s vote on the human services amendment was unanimous.

FY 2012 Budget: Parks Amendment

An amendment proposed by Christopher Taylor (Ward 3) tapped the general fund reserve for $90,804 to bring the support of the parks system back in line with the administrative policy established in 2006 in connection with the parks capital improvements and maintenance millage. At the council’s May 16 session of the same meeting, councilmembers had voted to modify the 2006 policy to allow for use of non-millage funds to count as general fund support for the parks system, even if those funds do not come from the general fund. For additional background, see Chronicle coverage: “Council to Get Reminder of Parks Promise.”

Taylor, who serves as an ex-officio city council representative to the city’s park advisory commission, said that for him the resolution met the test of balance between tapping the general fund reserve and honoring the promise to voters.

Sandi Smith (Ward 1) said that just as she was against tapping the general fund reserve for human services, she was also not in favor of doing it for parks. The council has to keep making hard choices, she said, and she would reluctantly not support the amendment.

Carsten Hohnke (Ward 5) also said he would reluctantly not support the amendment. He shared the same concerns that Smith had. He said it was not a good policy to dip into general fund reserves.

Mike Anglin (Ward 5) noted that the savings the city had identified, which would now being restored, came from the mowing cycle – mowing would have occurred less often, without the restored funding. It’s what they’re encouraging the city staff to do, he said: to become more efficient. The reason the city’s park advisory commission had discussed the issue was that commissioners saw it as a cut.

Sabra Briere said if this money could be identified as a new activity or as meeting a new gap, that would be different from what the amendment did. What the council would be doing is just putting in more money. She said they should be saying, Hooray, we saved money on mowing and maintenance! The extra money might meet some need of tidiness, but the rest of the city is left in the same state of untidiness, she said. This amendment would be a disincentive to efficiency. But she noted that the city council had asked the parks system to take on more responsibility – to maintain two dams.

Taylor said he felt that reasonable minds could differ on the issue. It’s a desire of the city’s park advisory commission to improve the mowing service – 19 days is suboptimal. It’s perhaps enough to maintain tidiness, but it doesn’t maintain the soccer fields sufficiently for kindergartners who have a tough time knocking the ball around.

Taylor said the fidelity to the promise made to voters in 2006 led him to support the amendment. He allowed that it’s awkward in light of the fact that the savings had been achieved in the area of mowing, and it’s mowing where the additional funds would likely be applied.

Stephen Kunselman (Ward 3) noted that considering how much rain had fallen this spring, it’s obvious they need the extra mowing. Mayor John Hieftje said he did not want to go back on the 2006 resolution. He also noted that the parks system did absorb the extra cost of maintaining Argo Dam, but he cautioned that the extra allocation needs to be a one-time thing.

Outcome: The extra $90,804 allocation to the parks system using general fund reserve dollars passed on a 6-5 vote. Voting for it were: Briere, Rapundalo, Taylor, Kunselman, Anglin and Hieftje. Voting against it were Smith, Derezinski, Teall, Higgins and Hohnke.

FY 2012 Budget: Primary Elections

An amendment receiving only brief discussion was to tap the general fund reserve for $7,000 to pay for one more city council primary election than the proposed budget had forecast. The city administrator’s proposed budget had anticipated primaries in only two of the city’s five wards.

Noting that the resolution stated that the “City Clerk has been notified of a third ward that will need a primary election …” Stephen Kunselman (Ward 3) joked that he figured he needed to support the amendment.

Outcome: The council unanimously approved the amendment to adjust the city clerk’s budget by $7,000 to pay for an additional primary election.

FY 2012 Budget: Public Art

An amendment proposed by Marcia Higgins (Ward 4) directed the city attorney to prepare a revision to the city’s public art ordinance, that would reduce the percentage of all capital projects designated to support public art – from 1% to 0.5%.

By way of background, the public art ordinance has been somewhat controversial, since its approval in 2007. [.pdf of ordinance text as approved on Nov. 5, 2007] As far back as Feb. 1, 2009 at a council Sunday caucus, Higgins publicly expressed her concern about the amount of money the program was generating.

Later that year, at a Dec. 7, 2009 meeting, the council gave initial approval to an ordinance revision that would have reduced the allotment from 1% to 0.5%. But at the council’s following meeting, on Dec. 21, 2009, the council voted down the ordinance revision, with councilmembers citing art as key to Ann Arbor’s identity.

The legality of the program has been questioned by Stephen Kunselman (Ward 3), in its tapping of some funds that are restricted in their use – parks millage funds, and funds that receive revenue from fees. Kunselman has repeatedly asked that the city attorney make public an opinion that would provide a legal basis for the use of restricted funds for the public art program. Kunselman has cited a city charter requirement that such opinions be made public. To date, city attorney Stephen Postema has demurred.

Deliberating on the amendment on May 31, Margie Teall (Ward 4) said it was essentially cutting something for the sake of cutting something. She said she would not support it.

Sabra Briere (Ward 1) suggested that the use of fund balances in each of the funds upon which the public art program draws can be valuable – for unexpected expenses. The city had experienced such unexpected expense last week, in connection with the heavy rains, she said.

Public service area administrator Sue McCormick indicated that the relative amounts as a percentage of the fund balances were decimal points – adding that she’d never say it’s insignificant. However, relative to the fund balances, it’s small, she said. Mayor John Hieftje drew out the fact that $48,000 would be restored to the sewer fund, but the sewer fund has a reserve of $40 million.

Stephen Kunselman (Ward 3) wondered why the city had just borrowed $1.2 million to do footing drain disconnects. Based on $22,000 that was taken out of the water fund, at a cost of $150/foot, he figured that would come to around 150 feet of water main that could be replaced. He said the city had a lot of water main breaks – there’d been four on two blocks in his neighborhood. So the money could actually be used to accomplish quite a bit. Kunselman alluded to the water main consulting proposal for $200,000.

Art is not losing out, Kunselman said – this town has a lot of art. The city’s public art commission is having a hard time finding places to put art, he continued. He supported taking the money and putting it into infrastructure. The funding for art could be brought back when times are better, Kunselman concluded.

Tony Derezinski (Ward 2) said he remembered well the debate the council had had about a year ago – between the first and second reading of the resolution, support had dwindled on the council to only two people who had supported the reduction from 1% to 0.5%. In tough times, you define what you are, Derezinski said. The issue was thoroughly debated before and he was in favor of leaving it as it is. Art is part of the heart and soul of Ann Arbor, he contended. He allowed that for the ArtPrize in Grand Rapids, they’d had a “sugar daddy” who helped. [The ArtPrize is funded by the DeVos family.] He was especially against a cut, Derezinski said, if it’s just symbolic.

Sandi Smith (Ward 1) noted that the council had seen a parade of supporters when the council had previously considered reducing the program. And she allowed that the show of support for art demonstrated that Ann Arbor really takes it to heart. Still, she said it continues to be prudent to look at the program on an annual basis. She agreed with Derezinski’s point that there are private donors in Grand Rapids who contibute to public art. But if Ann Arbor is all about art, she said, she would challenge the citizens of Ann Arbor to be a part of it: Create something like ArtPrize in Ann Arbor.

Carsten Hohnke (Ward 5) said it’s merely a symbolic cut and would only have the effect to decrease what is plainly a part of our civic community. A reduction would not save any jobs, but would only serve to alter funds by a few decimal points. It’s a symbolic move with negative symbolic consequences, he said. Hohnke said he would not support the amendment. In reviewing other programs, there were very few half-percent-for-art programs across the country, he said. Further, it’s been shown to be a very good investment for economic development. It creates a sense of place, he said. The program has no impact on the general fund and there is no crisis within the funds to which the money would be returned.

Mayor John Hieftje said he also wouldn’t support the amendment. He said the fact is that not a penny of the money could be used to pay for salaries in the general fund. It’s appropriate that $6,000 be taken away from parks funding through the public art program, because the city sees art sprout up in the parks as a result, he said. [The Percent for Art program funded tree sculptures in West Park, and murals have been proposed at sites in Allmendinger Park and near the Huron Hills golf course.]

Outcome: The amendement that would have reconsidered the Percent for Art program was defeated on a 4-7 vote. Voting for the reduction in arts funding were: Smith, Briere, Kunselman and Higgins. Voting to preserve arts funding at current levels were: Derezinski, Rapundalo, Taylor, Teall, Hohnke, Anglin, Hieftje.

FY 2012 Budget: Priorities – Home Inspections

Sandi Smith (Ward 1) introduced an amendment that affected priorities set forth in the budget document. She wanted to eliminate the inspection of property upon its sale as a city priority. Stephen Rapundalo (Ward 2) indicated that he’d been the one who’d suggested it [at one of the council's offsite budget retreats five months ago]. He noted that Ann Arbor was one of only a few communities that did not have such a requirement. It was simply a request that the city staff look at it to see if it had any merit at all. The city should explore all potential revenue, he said.

Smith said if they want to have a housing recovery, putting a layer of bureaucracy on top of it would not help. They’d be slowing down what’s beginning to become a recovery. Rapundalo responded by saying that Smith was presupposing a debate, when the council had no information in hand. He reiterated his view that the city should look at all opportunities for revenue. He told Smith he understood how passionate she was about it. [Smith earns her livelihood in the real estate business.] But Rapundalo concluded that if the council was going to have a debate, it should have that debate with full information.

Outcome on the amendment of priorities: The amendment failed, with support only from Smith and Anglin.

FY 2012 Budget: Priorities – Retail Recruitment

Smith continued the discussion on priorities, saying that the city could not cut its way to prosperity. The economic development agency Ann Arbor SPARK does good job, she said, but the direct return to taxpayers is not great. She was not proposing that funding to SPARK be eliminated, but said that the city should dovetail its efforts. The city should look at beefing up its outreach to flesh out a proposal for economic development in the city specifically for retail business.

Hieftje said he thought SPARK is doing a great job and the city is getting an excellent return on the investment.

Derezinski said he agreed on the importance of economic development, but that it’s a discussion for another time. Economic development is not a dirty word, he said. SPARK has done a magnificent job. Their brand of Ann Arbor USA is being accepted as a concept. But the discussion should be deferred to another time.

Rapundalo said he agreed with Derezinski and Smith in that it behooves the city not to try to develop its own priorities independently. That should be done in tandem with SPARK. Rapundalo differed with Smith by saying that SPARK’s outcomes and deliverables have been quite good. Recruitment of retail is not going to get a good return on investment, he said. What’s needed is to get medium-size companies in the tech sector. Briere said the council could have this discussion – on the economic development of non-tech businesses – more fully at a later date.

FY 2012 Budget: Concluding Discussion

Hieftje said the work on the next budget needs to start early, maybe in June, and the council’s goal needs to be not to cut any employees next year. The council needs to sit down and work it out that the city doesn’t lay off anyone. The new 80/20 legislation that has already been approved by the Michigan state Senate might help, he said. The city’s Lansing lobbyist says it’s very likely it’ll pass in the House as well – it would mean that public employees will have to pay 20% of their health care costs effective Jan. 1, 2012. Hieftje said he was a proponent of universal health care, but that didn’t happen nationally, so they need to take what they can get.

Briere said philosophically, people have problems with the idea of different funds as “buckets.” She said she’d heard people suggest eliminating a fund and putting the money into the general fund. She would like for the city council to think about whether dedicated funds are working. If they are working, perhaps they should think about including a dedicated millage for staff health benefits. That would free up general fund dollars, she said.

Outcome on the budget: The council voted unanimously to approve the FY 2012 budget as amended.

Present: Stephen Rapundalo, Mike Anglin, Margie Teall, Sabra Briere, Sandi Smith, Tony Derezinski, Stephen Kunselman, Marcia Higgins, John Hieftje, Christopher Taylor, Carsten Hohnke.

Next council meeting: Monday, June 6, 2011 at 7 p.m. in the council chambers at 301 E. Huron. [confirm date]