For 2013, $472,846 was available for distribution. Given initial approval at the board’s April 16, 2014 meeting was a distribution that sees the county keeping 10% ($47,285) to pay for enforcement of the accommodation ordinance. The remainder will be divided between the Ann Arbor Convention & Visitors Bureau ($319,171) and the Ypsilanti Convention & Visitors Bureau ($106,390).

A final vote on that distribution is expected on May 7.

The county collects the 5% excise tax from hotels, motels, and bed & breakfasts, which is then distributed to the Ann Arbor and Ypsilanti convention & visitors bureaus and used to promote tourism and convention business. The contract calls for the county to retain 10% of that tax to defray the cost of collection and enforcement. (Until 2009, the county had only retained 5% for this purpose.) The remaining funds are split, with 75% going to the Ann Arbor Convention & Visitors Bureau, and 25% going to the Ypsilanti Convention & Visitors Bureau.

In December 2009, the board approved five-year contracts with the CVBs, outlining the distribution arrangement and creating an accommodation ordinance commission to oversee the process. A amendment made in September 2011 addressed the process for distributing excess funds that might accumulate from the county’s 10%, if that amount exceeds the expenses required to administer and enforce compliance with the tax. Beginning in May 2013, the county retained 10% of the tax proceeds, plus 10% of any remaining fund balance. If additional funds accumulate in the fund balance, they are to be returned proportionally to the two convention & visitors bureaus – 75% to Ann Arbor, and 25% to Ypsilanti.

Subsequently an ordinance change was made in October 2012, when the board voted to shift responsibility for collecting and enforcing accommodation tax from the county treasurer to the county finance director. The ordinance amendment transferred a 0.7 full-time equivalent accounting job from the treasurer’s office to the county finance department, and amended the accommodation tax policy to clarify that the tax is only assessed against the actual price of a hotel, motel or other rental – not against other amenities that the business might charge its customers, such as Internet access or an extra cot in the room.

This brief was filed from the boardroom of the county administration building at 220 N. Main St. in Ann Arbor. A more detailed report will follow: [link]

Nancy Heine, president of AFSCME Local 3052, Caryette Fenner, president of AFSCME Local 2733, the county government’s largest union. (Photos by the writer.)

The working session included presentations by one of the county’s Lansing lobbyists; labor attorney Paul Gallagher; and Mary Kerr – president of the Ann Arbor Convention & Visitors Bureau. Kerr told commissioners that Washtenaw County brings in an estimated $12 million annually from the training conferences held here by three major unions. She said the CVB – which is funded through an accommodations tax levied by the county – will work to ensure that the unions feel welcome, but she has not had any conversations yet to gauge their reactions to the new right-to-work law.

Gallagher was less circumspect, saying he’s concerned about the potential loss of business if unions decide to move their training to a state that doesn’t have right-to-work laws.

The Michigan legislation – supported by the Republican-controlled House and Senate and Republican Gov. Rick Snyder – made it illegal to require employees to support unions financially as a condition of their employment. It’s viewed by Democrats as a way to undercut support for labor organizations that have historically backed the Democratic Party. On the Washtenaw County board of commissioners, seven of the nine commissioners are Democrats.

The legislation, which will take effect in March of 2013, received national attention and followed a failed ballot initiative by labor to protect collective bargaining rights in the state Constitution. That effort – Proposal 12-2 – was not supported by a majority of voters in the Nov. 6 election.

At the Jan. 3 working session, Conan Smith questioned Gallagher about details of state and federal labor laws, exploring the latitude that the county might have in supporting unions that represent 85% of the 1,321 employees in county government. He floated several ideas that commissioners might consider pursuing.

For example, most current union contracts expire on Dec. 31, 2013. Because the right-to-work law doesn’t take effect until March of this year, the county has until then to work with the unions and possibly extend their contracts beyond the end of 2013. If that happens before March, then the unions could continue to collect “agency fees” from employees who don’t want to join the union but who are still part of the bargaining unit that the union represents. Though the practice would be illegal for future contracts, it could remain in place for the duration of the extended agreements.

Additionally, Smith said there are items in the union contracts that might set the stage for a division of employees into three distinct groups. Two of those groups exist now: (1) unionized employees, and (2) non-union management employees. There’s the potential for a third group, Smith said: Non-union, non-management workers who have made the choice to opt-out of the union and the benefits that the union provides, be it economic, social, protective or anything else. Those benefits, in his opinion, shouldn’t accrue “to those people who don’t pay to play.”

Smith told commissioners: “I hope we are comparatively aggressive in our stance of supporting our labor partners and finding innovative ways that we can test this new world.” He hopes to make sure that the benefits of union membership are clear before people make the decision about whether to join. The point is not to coerce them to join or discourage them from joining, he said, but just to make sure they understand very clearly what opportunities they have as union members.

Smith said there are a number of places in the current union contracts where the county can make that “imminently clear.” And there are a number of places in the county’s practices where they can make that clear, too, he said. “I think if we do that through practice, undoubtedly we’ll be challenged – and I for one am quite comfortable taking that challenge forward and being the test case to determine the extent to which this law applies to our public employees.”

Smith – who is married to state Sen. Rebekah Warren – does not believe the majority of legislators would be willing to amend the right-to-work law, and that lobbying them to do so would probably be a waste of time.

Commissioners also heard from two labor leaders on Jan. 3: Caryette Fenner, president of the American Federation of State, County and Municipal Employees, AFL-CIO (AFSCME) Local 2733, the county government’s largest union with about 700 members; and Nancy Heine, president of AFSCME Local 3052, which represents about 50 supervisors. Both Fenner and Heine expressed concerns amid an uncertain future. “What could potentially happen with this law is that it will render us useless,” Heine said. “We will have no resources to defend any of our members.”

It’s unclear how far the majority of commissioners would be willing to go in challenging the right-to-work law. At the Jan. 2 board meeting, the two Republican commissioners – Dan Smith and Alicia Ping – indicated they did not want to debate the issue. However, there was more clear support for sending a signal to the labor unions that do their training in Washtenaw County that they are welcome here. Andy LaBarre, who led his first meeting as chair of the working session, offered to draft a resolution to that effect for the board to consider.

Legislative Update

Gary E. Owen of Governmental Consultant Services Inc. (GCSI), the county’s lobbying firm, briefed commissioners about the right-to-work legislation. He began by cautioning that he’s not an attorney or an expert in labor policy, and deferred questions on policy implications to the county’s legal counsel.

Two right-to-work bills were considered by the state legislature: (1) House Bill 4003, which affected public-sector employees, and (2) Senate Bill 116, which addressed unions in the private sector. Both were introduced in 2011 “and just kind of sat there,” Owen said. For the first two years of his administration, Gov. Rick Snyder had made it pretty clear that right-to-work legislation was not part of his agenda, Owen noted. But almost immediately after the Nov. 6, 2012 election, it did become a priority for Snyder. So with only nine days left in the legislative calendar – the lame duck session – the House and Senate leadership declared it was a priority, too. The bills moved through the legislature in about seven days, and Snyder quickly signed them into law. “That’s really how it went down,” Owen said.

Legislative Update: Board Discussion

Yousef Rabhi (D-District 8) wondered how this process compared to typical legislative proceedings. He noted that the legislation creating a regional transit authority (RTA) went through a lengthy process with committee hearings and other input. Did the right-to-work bills go through the same kind of public vetting?

Owen replied that right-to-work was probably an exception to the rule, as far as the process in Lansing is concerned. It’s a very emotional, hotly contested issue, he added, and legislators likely already knew where they stood on it. That’s not an excuse, he said – that’s just the way it is. He said he’d classify the issue as “not lobby-able.” The leadership decided they wanted to do it, and even though there were 15,000 people in and around the capital protesting it, the legislation still moved ahead.

Economic Impact

Mary Kerr, president of the Ann Arbor Convention and Visitors Bureau, was asked to talk about the possible economic impact of the state legislation on Washtenaw County. Tom Lamb, the new chair of the Ann Arbor CVB who also is general manager of the Ann Arbor Ypsilanti Marriott at Eagle Crest, was also on hand.

Kerr started by providing what she described as high-level data. There are three major unions that hold training events in Washtenaw County: (1) the United Association (UA) of Plumbers and Pipefitters, who’ve been coming to the county for one week in August for 23 years; (2) the National Training Institute for electricians, put on by the National Joint Apprenticeship & Training Committee (NJATC), has been coming to Ann Arbor for the past four years during the last week in July and first week in August; and (3) the instructor training program for the ironworkers union – the International Association of Bridge, Structural, Ornamental and Reinforcing Iron Workers – that’s been holding its annual instructor training program at Washtenaw Community College in June for the past three years.

Mary Kerr, president of the Ann Arbor Convention & Visitors Bureau, and Tom Lamb, chair of the CVB board. Lamb is also general manager of the Ann Arbor Ypsilanti Marriott at Eagle Crest.

The estimated total economic impact of these three union events is about $12 million, Kerr said. She also provided a breakdown of that amount. The three unions account for 22,000 hotel rooms, or $2.2 million. They also bring in $2.3 million for local restaurants. Anecdotally, she said, Mike Kabat – the owner of Haab’s Restaurant in Ypsilanti – equates the union business to seven University of Michigan home football games. A combined $3.5 million is spent on entertainment, transportation, recreation and shopping, with the balance of that $12 million paid for facilities and services at local colleges and universities.

The United Association views it as a partnership with the community, Kerr said. The reason they chose this area – and the reason they stay – is Washtenaw Community College, she added. The union also appreciates the support of the community and of the Ann Arbor and Ypsilanti CVBs, she said. And that CVB support is possible because of the county board’s continued support of those entities, Kerr noted.

By way of background, the county is the governmental unit that’s responsible for levying an accommodations tax primarily on local hotels and motels. In 2011 the county collected $3.99 million in accommodation taxes. The majority of those funds are distributed to the county’s two convention & visitors bureaus – in Ann Arbor ($2.69 million in 2011) and Ypsilanti ($898,563).

Kerr noted that this year is the UA’s 60th anniversary of training, and they’ll be bringing additional groups to this area, including some people who will come prior to the training sessions. The UA also has a new training agreement with the union in Australia, so there will be an Australian contingency coming to Washtenaw County this year. The union will also be making additional investments at its training facility at WCC, she said.

Another example of the UA’s partnership with the community is its 5K run to raise money for the Semper Fi Fund, which supports wounded soldiers. Last year they raised about $27,000 for the charity, and they plan to make it an annual event, Kerr said.

It’s the CVB’s goal to keep these events in Washtenaw County, Kerr said, and to share with the unions that the county appreciates their business and will provide the same level of service in the future.

Economic Impact: Board Discussion

Conan Smith (D-District 9) observed that Washtenaw County was able to court the unions away from other states, and he wondered what the impact of the right-to-work law would have on the attractiveness of this area now, for these unions or others who might consider holding events here.

Kerr said she didn’t have any experience with that, so it would be difficult to answer. Smith pressed, wondering if unions have indicated in the past that they’ve been less interested in supporting right-to-work states.

Kerr noted that the NJATC had been recruited from Tennessee, which is a right-to-work state. The union’s director of training has cited the training facilities here and the general community support, she said, but she’s never had any specific conversations with union officials about right-to-work.

Smith ventured that there are likely many reasons that factor in to the unions’ decision to hold their events here, and that the university facilities likely weigh heavily in their decision-making. But he imagined that from a philosophical standpoint, the right-to-work law at least would dampen their enthusiasm for coming here. He asked Kerr to inquire about the issue directly when she talks to union representatives in the future, and to share that information with the county board.

Labor’s Perspective

Paul Gallagher, a local labor attorney, spoke about the impact on Washtenaw County government as an employer. He noted that two of the 17 unions that represent county employees – the Police Officers Association of Michigan (POAM) and the Command Officers Association of Michigan (COAM) – will be unaffected. That’s because a different law applies to public safety unions, and state legislators didn’t touch it. Those two unions account for about 300 of the 1,321 county employees.

In general, about 85% of the entire county government workforce are union members.

All 17 unions for county employees currently have a “union security” clause in their collective bargaining agreements, making the county an “agency shop,” Gallagher explained. The clause requires that employees in job classifications that are represented by unions must either become a full member or pay an “agency fee.” The agency fee is nearly identical to the amount of union dues that members pay, Gallagher said.

For the 15 county unions that are affected by the right-to-work law, the security clause can’t be included in future collective bargaining agreements – the law makes agency shops illegal. So employees won’t have to be union members or pay the agency fee, even though they would still be covered by the union-negotiated contract – as far as wages, hours and working conditions – and the union will be obligated to represent them for situations like discharge or grievances.

Gallagher noted that some of these 15 unions probably won’t be seriously affected, and cited the assistant prosecuting attorneys union – the Assistant Prosecutors Association – as an example. People in those positions are well paid, union dues are relatively low, and the union is run locally – that is, it’s not affiliated with a state or national organization.

But for workers who aren’t as well paid, like clerical staff, Gallagher ventured that many employees will likely opt out of paying the unions, because they want that money in their paycheck instead. So the net effect is that there will be union members working next to people who aren’t in the union, but getting the same level of representation.

Rolland Sizemore Jr., standing, talks with Mary Kerr, president of the Ann Arbor Convention & Visitors Bureau, and Tom Lamb, chair of the Ann Arbor CVB board.

As far as a timeline, Gallagher explained that the new right-to-work law would take effect when new contracts are negotiated. Most of the current union contracts for county employees expire on Dec. 31, 2013.

Gallagher also spoke more generally about the impact of the right-to-work law on the economy. He noted that he has represented UA Local 190 in Washtenaw County since 1988. Before moving to Washtenaw County, the UA had held its training conferences at Purdue University for 37 years, he said. But when a general contractor for Purdue hired a subcontractor that didn’t use union labor – and didn’t relent when the UA protested – a year later the union took its training elsewhere.

Gallagher said he didn’t know if the right-to-work law would attract a manufacturer here from somewhere else, and whether that type of business would offset the loss of these union events, if the unions decide to leave.

For Washtenaw County, the union business comes during the summer when there typically isn’t a lot going on, Gallagher said. The unions love the labor-friendly atmosphere here, he noted – and they love to see the construction-related cranes in the air when they drive into town. His primary concern is for the potential loss of business if unions decide to move their training to a state that doesn’t have right-to-work laws.

Labor’s Perspective: Board Discussion – State and Federal Law

Conan Smith asked Paul Gallagher about the relationship between the federal Taft–Hartley Act, which sets the tradition of having labor unions represent everyone in their bargaining unit, and Michigan’s Public Employment Relations Act. Are they separate, or is one subject to the other?

Taft-Hartley, passed in 1947, was basically an amendment to the Wagner Act of 1935, Gallagher explained. The Wagner Act, also known as the National Labor Relations Act (NLRA), established the right of people to form and join unions. It was legally challenged, but ultimately came under the power of Congress to regulate interstate commerce – and that’s what gave Congress the authority to create labor laws. It was one of the first instances of using the so-called “commerce clause” of the U.S. Constitution, which was also used later for civil rights legislation, he noted.

However, public employers aren’t covered by these federal labor laws, because the workers don’t cross state lines. In Michigan, the state legislature adopted a separate Public Employment Relations Act (PERA). The state and federal laws are similar, but “run on separate tracks,” Gallagher said.

Smith noted that one of the clauses that remains in PERA is the prohibition of the employer to discriminate against an employee on the basis of their status as a union member or non-union member. What’s the general case law interpreting that? he asked.

Gallagher replied that obviously you can’t tell someone they’ll be fired if they don’t drop their union membership. Employers can’t encourage – or discourage – union membership, and are supposed to leave internal union affairs alone. There are certain things that employers aren’t even supposed to inquire about, like how many votes the union leadership got in their elections or who should be the union steward. On the other hand, he said, unions aren’t supposed to tell employers who should sit at the bargaining table, either. It’s supposed to be an arm’s-length relationship, Gallagher said.

Smith then commented on the tradition of the union providing the same benefits to every employee in their bargaining unit, saying “I don’t find basis in PERA for that. I see the tradition emanating from Taft-Hartley. Is it directly indicated in PERA?”

Gallagher explained that the Michigan Employment Relations Commission (MERC), which administers PERA, has ruled in several cases that if an issue isn’t addressed in PERA – but is addressed in the Wagner Act or Taft-Hartley – then the federal law will apply. If MERC hasn’t addressed the issue at all, court cases rely on federal law.

Smith asked who serves on MERC. Gallagher couldn’t recall all the members, but said they were usually all labor attorneys. There are three members appointed by the governor, who obviously appoints people who are friendly to his agenda, Gallagher said. [The MERC commissioners are Nino Erwin Green, a Democrat from Escanaba (term ends June 30, 2013); Edward D. Callaghan, a Republican from Royal Oak (term ends June 30, 2014); and Bob LaBrant, a Republican from Perry (term ends June 30, 2015).]

Smith noted that in labor contracts for the city of Ann Arbor, there a clause that discusses the right of the union to represent everyone in the bargaining unit. “That makes complete sense in a closed shop environment, where everyone is a member,” he said. But in an open shop environment where some people aren’t union members, is there any restriction to labor not representing those non-union workers? he asked.

The union is required under law to be the exclusive representative of everyone in that bargaining unit, Gallagher explained. Smith replied that he knows that’s a requirement written into the labor contracts, “but I don’t see that in PERA.” Gallagher said he’d find the specific reference to that in the state law and send it to commissioners.

Smith pointed to the philosophy behind the support for right-to-work laws. During the debate on this issue in Lansing, right-to-work supporters would say that if the union is good, then everyone will belong – it’s an open marketplace. “But the fact of the matter is that it’s not an open market,” Smith said. “So it makes it quite difficult for our labor unions to show to everybody the true benefit of being a part of that bargaining unit, if everyone gets the benefit that they then go fight for.”

One of the things that Smith said he’s interested in is setting up “opportunities for employees to make the choice – openly, honestly and fairly – about whether or not they want to belong to the union.” But he also wants to establish an open, honest and fair process by which employees see the benefits or lack of benefits when they’re making that choice. The most striking barrier to Washtenaw County, from a policy standpoint, seems to be the exclusive representation clause, he said.

Gallagher pointed out that exclusive representation is the law. Smith replied that this seems to be a MERC issue, as the entity that oversees PERA. “If we were to establish a policy that was then challenged, it would go to MERC,” Smith said. Gallagher indicated that Smith was correct.

As a state statute, Smith said, PERA is quite flexible to the kinds of things that he’s interested in pursuing. It’s MERC’s interpretations of the law in its previous case filings and decisions – prior to enactment of the right-to-work law – that call into question the approach he’d like to pursue. “Perhaps in a post right-to-work environment, MERC might see the fairness issue differently.”

Washtenaw County commissioners Yousef Rabhi (standing) and Alicia Ping. In the background is commissioner Felicia Brabec.

Gallagher noted that in other right-to-work states, unions are still viewed as having exclusive representation. “I’m sure MERC will follow that as it currently stands,” he said.

Smith asked for the justification of that view. Gallagher reported that it’s viewed as the nature of collective bargaining – the employees have a choice, and they express their choice by voting to have a union or not. After a majority of employees in a unit votes to have union representation, the union is the exclusive representative of employees in that unit.

In that situation, if a union negotiates a salary increase for its members, then the increase applies to non-members as well. “I don’t understand the philosophical grounding for the logic there,” Smith said. “What’s the basis for that?”

Gallagher replied that it’s simply the basis of collective bargaining – a group of people bargaining with an employer. At a certain point, if a majority of people didn’t want to belong to the union, then the union would be subject to decertification, he said. The union would be dissolved, and there would either be no union representation, or another union could step in to take its place. By way of example, Gallagher reported that recently in Washtenaw County, the clerical workers at the 14th District Court were represented by the Teamsters, but voted to decertify that union and switch their affiliation to the Technical-Police Officers Association of Michigan.

So the bargaining unit is the arbiter of who receives a benefit, Smith said. How is that bargaining unit established?

Gallagher explained that the unit is established by showing a “community of interest,” based on a common work location, supervision, rates of pay, duties and other factors. You can’t put skilled tradespeople in with custodians, because their jobs are so different. So the idea is to find the most people who share those commonalities within a workplace.

Smith noted that this union process has been in place 70-80 years in a closed-shop environment. When did the right-to-work laws begin to emerge? Have the National Labor Relations Board or labor negotiators adjusted their positions because of it?

Gallagher explained that in a closed shop, everyone is a union member. On the other end, open shops are found in right-to-work states, where you don’t have to join a union. Until recently, he said, Michigan had “agency shops,” where employees aren’t required to be union members, but they have to pay an agency fee. Most states that are open shop (right-to-work) or agency shop states made that decision decades ago, Gallagher said, and have stayed that way.

Smith was curious if Gallagher had seen any trends on the NLRB as states move from being closed or agency shops to being open shop states. Gallagher indicated that it’s too soon to see any trends. Until the recent right-to-work laws were passed in Indiana and Michigan, everything has been “set in stone for decades” regarding these issues.

Smith then directed his comments to other county commissioners: “I hope we are comparatively aggressive in our stance of supporting our labor partners and finding innovative ways that we can test this new world.” He hopes to make sure that the benefits of union membership are clear before people make the decision about whether to join. The point is not to coerce them to join or discourage them from joining, he said, but just to make sure they understand very clearly what opportunities they have, or not.

Smith said there are a number of places in the current union contracts where the county can make that “imminently clear.” And there are a number of places in the county’s practices where they can make that clear, too, he said. “I think if we do that through practice, undoubtedly we’ll be challenged – and I for one am quite comfortable taking that challenge forward and being the test case to determine the extent to which this law applies to our public employees.”

Responding to a query from Rolland Sizemore Jr., Gallagher said that Indiana had passed its right-to-work legislation in 2012. Sizemore then asked if there’s any data showing the differences between states with open shops compared to closed shops. Gallagher replied that typically wages and benefits are lower in open shop states, but it’s hard to trace that specifically to right-to-work laws.

Sizemore said that he’s from a union family, and that unions created the middle class in this country. It makes him “darn sad” that there’s a movement toward creating the haves and have-nots, and “I’m going to miss that middle section.”

In response to a question from Dan Smith, Gallagher said that you need at least two people to make up a bargaining unit, but there’s no upper limit to the size. Based on previous MERC decisions, the intent is to create the largest possible grouping that still makes sense in terms of a bargaining unit of common interest.

Felicia Brabec wondered whether there could be a bargaining unit consisting of people who did not want union representation. Gallagher said that MERC wouldn’t allow a unit to be created based on an unwillingness to pay union dues.

Labor’s Perspective: Board Discussion – Local Union Leaders

Two presidents of unions representing Washtenaw County employees attended the Jan. 3 working session.

Caryette Fenner – president of the American Federation of State, County and Municipal Employees, AFL-CIO (AFSCME) Local 2733, the county government’s largest union – told commissioners that she’d been in contact with AFSCME Council 25 at the statewide level, who are working with national AFSCME representatives. In the meantime, she said she’s been trying to get information out to the membership of Local 2733 so they’ll know what the right-to-work law represents, how it affects the union, and to allow them to make their own decisions. “I think that’s the best that I can do at this point,” Fenner said.

Nancy Heine – president of AFSCME Local 3052, which represents about 50 supervisors – stressed that even though the law has been signed, it doesn’t take effect until March. And because most union contracts run through Dec. 31, 2013, the law doesn’t apply until after that point, when new contracts are in place. “This is an interesting period for us,” she said.

Heine also commented on how the right-to-work law will affect the unions and their work defending employees through the grievance process. Even if a large number of employees decide not to join, the unions will still be obligated to represent them, she said. There are labor attorneys at the AFSCME Council 25 state level, and a Council 25 representative – “all of those folks get paid with union dues,” she said. The local level receives only a small percentage of dues. The majority of funds go to the state, national or international levels, she said. If fewer people are paying dues, Heine noted, the unions will have fewer resources. “What could potentially happen with this law is that it will render us useless,” she said. “We will have no resources to defend any of our members.”

Heine noted that her union has four cases before an arbitration panel, but in the future, the positions on that panel will be cut back and arbitration cases could potentially stay in limbo for years. “This impact is so significant and has such long-term consequences that I can’t even think of everything that may potentially happen with this change.”

Yousef Rabhi responded, saying he wanted to share some of his thoughts. He reported that he had been in Lansing for the large right-to-work rallies last year – and it had been a very moving experience for him. It was a day when the state went the wrong direction, he said, and when people spoke with one voice against it.

His grandfather had been a UAW organizer, and Rabhi said he wouldn’t have been able to go to college were it not for his grandfather’s pension dollars to help pay tuition. So unions are very important to him on a personal level, Rabhi said. In his first term as commissioner – in 2011 and 2012 – unions played an important role in balancing the county’s budget. “They came to the table and made some huge cuts in their compensation.” He didn’t think county commissioners could overstate their thanks for that. It’s an example of how unions work well for the public and for the employees they represent, he said. It’s important for him to support the county’s unions and the work that they do.

Labor’s Perspective: Board Discussion – Possible Response?

Referring to the union training sessions held in Washtenaw County, Andy LaBarre noted that the thought of losing a large percentage of people who drive the economy “is pretty scary.” He thought Conan Smith had done a great job in outlining some of the policy considerations that the board might want to explore.

Andy LaBarre, right, confers with Pete Simms of the Washtenaw County clerk’s office. LaBarre, a county commissioner from Ann Arbor, was preparing to start the Jan. 3 special working session – his first as working session chair.

It’s worth considering some sort of response at some point, LaBarre said, adding that he didn’t want to presume it was an issue they could work out that night.

Conan Smith indicated that LaBarre had previously articulated two separate issues to him “offline.” One is the question of sending a signal to the labor unions that do their training in Washtenaw County that they are welcome here. The board might put together a resolution to that effect.

But Smith also wants to dig  more deeply into the situation with the county’s own bargaining units. He didn’t think the state legislature would take up any amendments to the right-to-work law in the coming year. So asking the legislature and the governor to amend PERA “probably would be a waste of our time,” he said. He’d support making that pitch, if others felt it would be useful. [Smith is married to one of those legislators – Democrat Sen. Rebekah Warren of District 18, which covers Ann Arbor.]

But Smith wanted to look at the options that the county has in terms of “framing the labor practices here in Washtenaw County.” Because the law doesn’t take effect until March, the county has the option of working with the unions to extend their contracts beyond the end of 2013. If that happens before March, then the county would remain an agency shop for the duration of the extended agreements.

Secondly, he said there are items in the contracts that might set the stage for a division of employees into three segments.

At this point, LaBarre interrupted Smith, saying that he had received some advice from Diane Heidt, the county’s human resources and labor relations director, that the board shouldn’t publicly discuss labor strategy.

Smith said he appreciated that advice, but it was an issue on which he disagreed with the administration. “I am a public official – I’m not management. I do vote on your contracts … but what I’m talking about now is public policy. This isn’t about strategy around negotiations. This is about how we set the framework as the policy for this organization – whether we support labor unions or not, and how we move forward as an entity.”

He said he appreciated Heidt’s sensitivity to his statements, and “I know I sometimes freak out our partners in labor as well, when I talk like this. But bear with me – we’re in new times.”

Continuing, Smith said that if the county is going to be in a right-to-work environment, the county should look carefully at three distinct groupings of employees. Two of those groups exist now: (1) unionized employees, and (2) non-union management employees. There’s the potential for a third group, Smith said: Non-union, non-management workers who have made the choice to opt-out of the union and the benefits that the union provides, be it economic, social, protective or anything else.

Those benefits, in his opinion, shouldn’t accrue “to those people who don’t pay to play.” It would be akin to the board putting a tax on the ballot that a majority of voters approve, but then giving people the option of not paying it while still receiving the services. “That is obscene, and we shouldn’t be forwarding that as a policy environment here in Washtenaw County.” In future contracts, the county should be assertive in establishing the baseline “from a values standpoint and a policy standpoint that that isn’t acceptable to us,” he said.

LaBarre indicated that he shared Smith’s view on the first issue – of sending a supportive message to be welcoming to the unions already here and those who come in for special events. He’s hopeful that the board can develop a resolution reflecting those sentiments, not just because of the economic benefit but also because of the mutually beneficial relationships that have been built. He volunteered to help craft such a resolution.

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

Absent: Ronnie Peterson.

Next regular board meeting: Wednesday, Jan. 16, 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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Mark Heusel, vice president of the board for the Humane Society of Huron Valley, with his daughter at the Feb. 15 Washtenaw County board of commissioners meeting. (Photos by the writer.)

After months of uncertainty and sometimes heated negotiations, the county approved an agreement with the Humane Society of Huron Valley through 2012, along with a strategy for a longer-term solution to the county’s animal control services.

A work group, led by the sheriff, is now tasked with determining the cost of animal control services. The work group will involve other jurisdictions in the county that have animal control ordinances – like the city of Ann Arbor and Ypsilanti Township – but do not currently make financial contributions to the county’s animal control services. The group will present a report to the board by Sept. 15 that recommends a final cost methodology and budget for 2013, based on an agreed-upon scope of services.

In an amendment to the resolution that was proposed from the floor, the board also created a separate task force to develop an animal control policy for the county. The policy will be used to guide the scope of services for a request-for-proposals (RFP). Meetings of the task force will be open to the public and to any commissioner who wants to participate. The task force will submit a preliminary report to the board by May 15, with a final report due by Oct. 15.

Following a lengthy discussion later in the meeting, the board also gave initial approval to an administrative restructuring proposal that included a net reduction of four positions, an estimated annual savings of $326,422, and creation of a new “cross-lateral” team of four current senior managers. The issue of pay increases – given as a result job reclassifications – prompted debate about whether the county’s current policy treats employees equitably at the low end of the pay scale.

Commissioner Ronnie Peterson voted against the restructuring. He objected to the 4% increase that will be given to the cross-lateral team, saying the raises aren’t justified in light of concessions that union employees gave in the most recent round of contract negotiations. A final vote on the proposal is expected at the board’s March 7 meeting.

In other board action, commissioners approved allocating $200,000 to the Ann Arbor and Ypsilanti convention and visitors bureaus (CVBs) as part of funding for a Pure Michigan campaign focused on the Ann Arbor area. The funding comes out of revenues from the county’s accommodations tax. The Michigan Economic Development Corp. (MEDC) is developing a Pure Michigan pilot program, entitled “Sense of Place,” to combine support for tourism and economic development. The Ann Arbor/Washtenaw County area has been chosen as the first region to be featured as a partner in this program, which will include a $1 million national TV ad campaign.

The board approved several other items during the Feb. 15 meeting, including: (1) labor agreements with the final four of 17 bargaining units representing county employees; (2) a change in board rules allowing commissioners to abstain from voting; and (3) a Whitmore Lake improvement project.

Animal Control Services

At its Feb. 15 meeting, commissioners were asked to approve a $415,000 contract with the Humane Society of Huron Valley that will provide animal control services for the county just through Dec. 31, 2012. The county’s previous contract with HSHV, for $500,000 annually, expired on Dec. 31, 2011. Since then, the two entities have been operating under a $29,000 month-by-month contract.

County officials said the new contract would provide time for ongoing talks to develop a longer-term solution to animal control services in Washtenaw County, including services that are mandated by the state. During the rest of 2012, the county will work with HSHV and other stakeholders to determine the cost of an “animal service unit” – that is, the itemized per-animal cost of providing animal control services. The county eventually will issue a request for proposals (RFP) to solicit bids for the next contract.

The budget approved by the county board for 2012 cut funding for animal control services to $250,000, although during last year’s budget deliberations commissioners also discussed the possibility of paying an additional $180,000 to HSHV – if the nonprofit took over work previously done by the county’s animal control officers. That brought the total amount budgeted for animal control to $430,000 in 2012. HSHV officials have said that even $500,000 wasn’t sufficient to cover costs for all the work they do.

The new $415,000 contract does not include the $180,000 that the county has budgeted for its own animal control officers. Instead, the county plans to allocate an additional $165,000 from its general fund balance, to be added to the previously budgeted $250,000 for animal control services in 2012.

Animal Control Services: Public Commentary

Mark Heusel, vice president of the board for the Humane Society of Huron Valley, said he wanted to communicate the HSHV board’s support for the resolution that the commissioners would be voting on. He noted that he had spoken to the board last fall, when the differences between the two entities had seemed very significant. [See Chronicle coverage: "Animal Issue Dominates County Budget Talks"]

The message then, Heusel said, was confidence that the county and HSHV could come together for the benefit of residents. With hard work and perhaps a little hand-wringing on both sides, he said, they’ve reached an agreement that can serve as a stepping stone for a new relationship. Heusel described the agreement as one that’s forward-thinking and based on mutual respect. He thanked the county administration, sheriff Jerry Clayton, and county board chair Conan Smith for their work, as well as commissioners who supported HSHV or kept an open mind during negotiations.

Heusel said he was confident they could strike a relationship that’s long-lasting and that moves beyond 2012. He urged support for the resolution that commissioners were considering that night, then joked that if his appeal didn’t work, he’d brought his young daughter to the meeting and she might be more persuasive.

Animal Control Services: Board Discussion

Conan Smith kicked off the discussion by thanking Heusel and other HSHV representatives for their help in crafting the contract language. He also thanked commissioners for their input, saying they’d had some good conversations over the last few weeks, and thanked county administrator Verna McDaniel, sheriff Jerry Clayton, and Stefani Carter, who’s filling in as corporation counsel while Curtis Hedger is on medical leave. Smith said he was glad to have the rest of the year to investigate the public policy side of the issue.

Animal Control Services: Board Discussion – Amendment

Leah Gunn then proposed an amendment to the resolution, saying it had nothing to do with the contract. Rather, she said, the amendment focused on the “internal machinations” of the county and how they’ll handle the process of developing a policy and RFP for future years.

The original resolution called for the creation of an animal services steering committee, led by the sheriff with members including the county administrator, four members of the board of commissioners, the county prosecutor and the county treasurer. That committee would have recommended a final cost methodology and animal control services budget for 2013, based on an agreed-upon scope of services.

Instead, Gunn’s amendment specifies a sheriff’s work group to determine cost, and a separate task force to develop an animal control policy [deletions in strike-through, additions in italics]:

BE IT FURTHER RESOLVED that the Washtenaw County Board of Commissioners authorizes the Office of the Sheriff to develop a methodology to determine the cost of an Animal Service Unit (ASU) on behalf of the County. The Sheriff may choose the members of his work group, with the understanding that the Board of Commissioners will appoint Commissioner Rob Turner to act as a liaison. The work group’s report is due no later than September 15, 2012.

BE IT FURTHER RESOLVED that the Washtenaw County Board of Commissioners hereby establishes an Animal Services Steering Committee (ASSC) for the purpose of reviewing the findings of the Sheriff’s process and recommending a final cost methodology and animal control services budget for 2013 to the Board of Commissioners and establishes the membership of the ASSC as the County Administrator or her designee, four members of the Board of Commissioners, the County Sheriff or his designee, the County Prosecutor or his designee and the County Treasurer or her designee.  a Task Force on Animal Control Policy. This group will exist solely for the purpose of developing an animal control policy for the county. This policy will be reflected in the RFP for a scope of services that the county will purchase. Meetings will be posted. Membership is open to any Commissioner who wishes to attend, and the report will be submitted by May 15th. Once the data from the Sheriff’s work group is published, the RFP will go out forthwith.

Ronnie Peterson wanted clarification between the original resolution and the proposed amendment. He also expressed frustration about the time it’s taken to resolve the process.

Yousef Rabhi explained that the amended resolution would create two separate entities and processes. The sheriff’s work group would focus on identifying the cost of animal services, and would make a recommendation on that. Rob Turner would be a liaison, and report back to the board about the group’s work.

The second entity – the task force on animal control policy – would look at broad issues for setting policy as the county looks toward 2013 and beyond. Rabhi said he’s in favor of separating the two groups because the sheriff’s work group is objective – collecting and analyzing data – while the policy task force will be more subjective. The policy task force will submit a report to the board of commissioners that will be reviewed at a working session before being adopted, Rabhi said.

Noting that politics is the art of compromise, Gunn said this was a good compromise. She noted that the date of Sept. 15 was set at the sheriff’s request – she had originally set it earlier in the year, but moved it back because the sheriff felt it would take longer to collect the data. That’s a fair request, she added, especially since this is a task that the board is imposing on him. Gunn observed that the board of commissioners isn’t a fact-finding entity – it’s a policy-making board. That’s why she proposed the separate policy task force. And by posting the meetings in compliance with the Michigan Open Meetings Act, they don’t need to worry about how many commissioners attend, she said.

Conan Smith said it makes sense to shift the work of determining cost to the sheriff, while creating a separate policy task force. It’s a staff function to collect and analyze data, he said, and the work is in the sheriff’s purview. The findings of that group will come back to the board and guide its budget deliberations, he said.

Regarding the policy task force, its scope should include broader issues that go beyond developing the RFP, Smith said – issues like finding additional revenue sources.

Animal Control Services: Board Discussion – Amendment (Timeline)

Conan Smith was concerned about the proposed May 15 deadline for the policy report. The policy should be informed by the data that the sheriff’s work group will be analyzing, he said, but the work group’s report won’t be done until Sept. 15, according to the proposed timeline. Smith didn’t feel the policy task force could develop an RFP without having a strong sense of the costs for animal control services. So his recommendation would be to have the policy task force report due on Oct. 15 instead – a month later than the sheriff’s work group report.

Smith also observed that without appointed leadership on the task force, he thinks that entity will struggle.

Gunn said she’d accepted the Oct. 15 date as a friendly amendment. But Barbara Bergman expressed concern about pushing back the date, saying she wouldn’t support it. She felt the policy should be determined earlier in the year.

Felicia Brabec asked for a description of the typical RFP timeline. Kelly Belknap, the county’s finance director, said the entire process – including issuing the RFP, soliciting responses, analyzing those responses, and developing a contract – can take two to three months. She noted that a new contract would need to be in place by Jan. 1, 2013.

From left: Washtenaw County sheriff Jerry Clayton, and county commissioners Dan Smith and Barbara Bergman.

Dan Smith said he’d just looked at the board’s meeting scheduled for the remainder of the year. Commissioners have only one meeting in November and one in December, he noted. Their second meeting in October is Oct. 17 – only two days after the proposed Oct. 15 task force report would be due. The board needs to keep these constraints in mind, he said, so that they don’t end up in the same position they are now. He’d rather see them set dates earlier in the year.

Peterson then spoke at length about his frustrations with the project, saying he didn’t understand why the process took so long. He indicated that the board is responsible for making spending decisions, and commissioners should be involved in that. He wondered why the board was able to eliminate Head Start and cut funding for nonprofits in one night, but needed so long to deal with animal control issues. [As part of the 2012-2013 budget process, the board did vote to relinquish its involvement in Head Start. And commissioners also initially reduced funding to human services nonprofits, though that funding was subsequently restored. However, discussions on both of those issues took place at public meetings over a period of several months last year.]

The county has a strong partnership with HSHV, Peterson said, and holds the debt for the society’s new facility. The public wants this issue wrapped up tonight, he said, and he hoped the board would move aggressively.

Peterson also expressed surprise that a resolution of this kind would explicitly name a commissioner – Turner – for a particular role, but said he supported the idea of commissioners being involved.

Conan Smith said the reason he’s suggesting a longer timeline is out of respect for the time commitment required by stakeholders, including HSHV staff and board members, and other local jurisdictions that will be involved in the policy discussion and data collection. It’s not just the county staff and commissioners who’ll be working on this, he noted. The sheriff’s work group will need several months to collect sufficient data that can provide a fair analysis of cost. It doesn’t have to be complex, Smith said, but it does take time.

Rabhi pointed to a central question: Should the cost of animal control inform the county’s policy? Or should the policy be developed independently of cost? He said he doesn’t envision that the policy task force would dissolve after they issue a report on May 15, but it’s important to have a report earlier than October.

Rabhi then proposed keeping the May 15 deadline for the policy task force report, adding that they could issue a second report in mid-October.

Gunn proposed withdrawing the friendly amendment that would have pushed the deadline for the task force report from May 15 to Oct. 15. She moved to substitute this Resolved clause instead [changes from the original amendment in italics]:

BE IT FURTHER RESOLVED that the Washtenaw County Board of Commissioners hereby establishes a Task Force on Animal Control Policy. This group will exist solely for the purpose of developing an animal control policy for the county. This policy will be reflected in the RFP for a scope of services that the county will purchase. Meetings will be posted. Membership is open to any Commissioner who wishes to attend, and a preliminary report will be submitted by May 15th. Once the data from the Sheriff’s work group is published, the RFP will go out forthwith, and the final report of the task force will be published by Oct. 15.

Rob Turner expressed support for this amendment, saying it would put fire behind the effort and keep the task force focused on the work it needs to do.

Gunn then called the question on the amendment – a move aimed at ending discussion and forcing a vote. There was a fair amount of confusion about procedural issues at this point, but the board ultimately voted to call the question. They then took a vote on the amendment to the amendment.

Outcome: The board unanimously approved Gunn’s amendment to her original amendment, characterizing the May 15 task force report as preliminary, with a final report due by Oct. 15.

Conan Smith indicated he was still leery of the May 15 deadline, even for a preliminary report. For example, how the county funds cat-specific animal control issues is a substantive policy question, he said. [The county has contended that the state mandate for animal control does not apply to cats.] Until the county has data on the cost of providing animal control services for cats, commissioners might not be able to make a well-informed policy decision, he said.

Bergman said that many questions – like the county’s mission, mandate and types of services they want to spend money on – could be answered by May 15. It’s just a preliminary report, she said.

Outcome on amendment: Commissioners unanimously approved Gunn’s amended amendment.

Animal Control Services: Final Board Discussion

Saying he’d support the resolution, Dan Smith added that he was concerned because this is the second time the county recently has dipped into its fund balance. The first time was in December, when the board voted to take $257,076 from the county’s general fund balance to restore funding it had previously cut to human services nonprofits in the 2012 and 2013 budget.

Smith noted that the county faces a projected deficit in its next two-year budget cycle – for 2014 and 2015 – and that’s troubling. He said he’s very interested in the data that will be collected to determine the cost of animal control services. He had supported the county administrator’s original proposal to cut HSHV funding to $250,000 annually because of historical payments the county had made – $214,119 in 2006, and $300,000 in 2007 and again in 2008. He said he’d be interested to see if the data regarding costs is closer to those amounts, or is vastly different.

HSHV has always been the preferred provider, Smith said, but the county is facing extreme financial constraints, and that factor should be at the forefront. He said he’s not entirely pleased with how this process has unfolded, but he’s glad to see a plan in place.

Rolland Sizemore Jr. noted that another item on the board’s agenda that night – an initial vote to approve restructuring in the administration – indicated that the restructuring would result in annual savings of $326,000. He suggested using funds from those savings to pay the extra $165,000 for the 2012 contract with HSHV. He did not make a formal amendment to that effect, however.

Outcome: The resolution authorizing a new contract with the Humane Society of Huron Valley and creating a work group and policy task force were unanimously approved by the board, as part of the consent agenda.

Administrative Restructuring

A restructuring of support services in administration, finance, information technology and facilities management was on the agenda for the Feb. 15 meeting. The changes are estimated to save the county $326,422 annually, and result in the net reduction of four full-time jobs – positions that are currently vacant.

The changes include creating a new “cross-lateral” team of four current senior managers: Kelly Belknap, director of finance; Greg Dill, infrastructure management director; Curtis Hedger, corporation counsel; and Diane Heidt, director of human services and labor relations. The proposal also calls for putting two positions – including the job of deputy county administrator – on “hold vacant” status. Another 11 positions will be eliminated, while nine jobs will be created. A total of seven jobs will be reclassified, and will receive a 4% salary increase. [.pdf of staff memo, resolution and job descriptions]

The four cross-lateral positions are among those getting a 4% raise, capped at $126,099. Because of the cap, Heidt’s current salary of $126,098 will remain unchanged. The salaries of the other three managers will increase from $116,758 to $121,437.

The board had been briefed about this proposal by county administrator Verna McDaniel at its Feb. 2, 2012 working session. At that meeting, McDaniel also outlined plans to seek broader restructuring of the county operations, in the wake of more than 100 county employees retiring at the end of 2011.

Administrative Restructuring: Board Discussion

Felicia Brabec noted that some staff and constituents had raised concerns over salary increases that are part of the restructuring, and she asked McDaniel to comment on that.

McDaniel said she was aware of the concerns, but she noted that these are job reclassifications, with increases set at 4% – they aren’t moving to new pay grades. McDaniel told commissioners that she’s following their directive to restructure in the wake of 117 retirements at the end of 2011, including nine retirements in administrative services.

McDaniel said she’s very sensitive to the sacrifices that employees have made, and she did take into account the county’s financial situation. [To overcome a projected two-year deficit of $17.5 million in 2012-2013, the county administration had secured wage and benefit concessions from unions representing about 80% of the county's 1,360 employees.]

McDaniel reminded commissioners that the estimated structural savings from her proposal is $326,422. It will help the fund balance, she said, and shows that the administration is practicing what they’re preaching as they ask other departments to restructure in the coming months.

McDaniel contended that this move means that Washtenaw County is taking the lead among Michigan’s 83 county governments. She promised to return in six months with a report to the board about the impact of the restructuring, both its successes and pitfalls. She also passed out additional information in a handout – which she said she’d share with union leaders – that outlined responsibilities of the cross-lateral team in more detail.

At right, Diane Heidt, the county's director of human services and labor relations, talks with Kelly Belknap, director of finance. If restructuring is given final approval in March, the two administrators will be part of a four-member cross-lateral administrative team, splitting responsibilities formerly held by the deputy county administrator.

Each member of the cross-lateral team will oversee specific areas of the organization. Hedger will handle administration and support services. Belknap will be responsible for civic infrastructure. Dill will manage public safety and justice, as well as land use and environment areas, while Heidt will be in charge of health and human services, and community and economic development. They’ll meet with McDaniel once a week, with the goal of improving communications, providing additional resources for commissioners and other elected officials, and creating a “deep bench” of leadership.

Wes Prater said it’s hard to swallow change, but it’s necessary. He said he’d prefer to keep the deputy administrator position rather than the cross-lateral team, but he would yield to McDaniel and see how things work out. Prater also said there needs to be close scrutiny of the finance staff. The restructuring will decrease the number of accounts payable jobs from three to two, he noted, and the rationale given is that the change allows for better alignment of day-to-day finance operations with the rest of the organization. It makes you wonder what was happening before now, he said. Prater said he hopes it works.

Ronnie Peterson noted that two positions – the deputy county administrator, and a maintenance technician – are on “hold vacant” status, but not eliminated. They could be filled in the future. Those positions have a maximum salary of $144,000 and $52,000 respectively, he said, and if the positions are filled, that would wipe out about $200,000 of the projected $326,000 annual savings.

Saying he respects the individuals involved in this restructuring, Peterson expressed concern about the raises. The argument is that salaries are increasing because of increased responsibilities, he noted. But most people in the workforce are seeing increased responsibilities without a bump in wages. He said he believes in leading by example – if he takes his nieces and nephews to Dairy Queen, he doesn’t buy himself a bigger ice cream cone than theirs. That’s what you do as a team, he said.

Peterson noted that someone who was attending the meeting that night, a long-time county employee who he said he didn’t want to embarrass by naming, took a significant pay cut in order to keep her job. Knowing that, he said, it would be difficult for him to vote for this restructuring. The county is facing a projected deficit in 2014-2015, Peterson added, and he doesn’t know how they’ll be able to ask employees to make concessions again in two years when the union contracts are negotiated. It’s troubling to him, and his vote on this resolution would be no. His remarks received applause from a handful of employees in the audience.

Dan Smith said he also had some concerns about the raises, which he said he’d shared with the administration. That said, he added that he supports McDaniel. The board has hired her to handle day-to-day operations, and if she feels this is the best way to move forward, Smith said, he’ll support that. If the board wants to take a more active role, that’s their prerogative. But for now, she’s operating under the guidelines they’ve given her, Smith concluded.

Yousef Rabhi noted that when this proposal was initially floated, the plan had called for each cross-lateral team member to receive a $15,000 stipend. Now, the proposal was for a 4% raise. He asked for an explanation about how that 4% figure had been set. [A similar restructuring proposal had initially appeared on the Sept. 21, 2011 agenda, but McDaniel withdrew it before that meeting after several commissioners objected to the $15,000 stipend for the cross-lateral team.]

At McDaniel’s request, Heidt responded to the question. The county has policies and procedures in place regarding job changes – these are part of the union contracts, too, and relate to pay increases for temporary assignments, permanent reclassifications and other changes. If a job is reclassified, the salary increases by 4%. If someone is promoted, they’ll generally receive an 8% increase, she said. Temporary assignments – adding responsibilities on top of an existing job – also get an 8% increase. Lateral moves are generally kept at the same salary. These apply to union positions too, she said.

Rabhi clarified with Heidt that when any position is reclassified, it’s handled in the same way. Absolutely, Heidt said.

Conan Smith said he wanted to present a different perspective that he hoped might change Peterson’s mind. Every point that Peterson made is valid, Smith said. But equally important is the consistent application of good, fair policies. The board has operated with a set of policies with regard to job changes that help keep the peace, Smith said, to ensure that people are treated fairly. But there are some employees who are asked to take on more work, yet don’t get higher wages because their jobs aren’t officially reclassified. There’s a set of employees at the lower end of the pay scale who need a different set of protections and policies. But those protections and policies aren’t in place now, he said.

Until that issue is addressed, however, the county needs to implement its current policies, Smith continued. Changing horses midstream isn’t right. The board needs to have a robust policy conversation that they haven’t had to date, he said.

Peterson replied that he had raised the policy question months ago, when the administrative restructuring had first been proposed. He said restructuring happens for a reason – some people are “weeded in,” while others are “weeded out” – and he’s seen it happen over the years. Peterson also observed that it’s different if you’re talking about someone making $40,000 or $50,000 a year, compared to someone making over $100,000. The county must find a way to make a policy that’s more inclusive of all employees, he said. That responsibility rests with the board, he added, not the administration.

Conan Smith, appearing a bit frustrated, noted that the board approves job reclassifications regularly throughout the year. There were six reclassifications as part of the 2012-2013 budget that was passed by the board late last year, he said. It’s standard operating procedure, and the 4% increase is part of that – it’s consistently applied to all reclassifications. All of those reclassifications come to the board for approval, he observed, so it’s commissioners who are making these decisions.

Felicia Brabec asked whether it was possible to have a pay decrease following a reclassification. No, McDaniel said. If your job is reclassified, you get a 4% pay increase because a reclassification is an upgrade – that’s a policy that applies to any job. If you receive a involuntary demotion, she said, your pay remains the same. If you take a voluntary demotion, your pay decreases. If you are promoted, you receive an 8% increase. The county doesn’t have divisive policies, McDaniel said. These salary practices are part of union contracts and apply to non-union employees as well.

Is there any other situation that might result in a pay cut? Brabec asked. If you’re fired, McDaniel quipped. Or if there are concessions made as part of union contract negotiations. In response to a query from Barbara Bergman, McDaniel reiterated that temporary assignments get an 8% bump – for example, if you’re asked to take over the responsibilities of your boss for a limited time. You would return to your original salary when your temporary assignment ended.

Peterson said he hadn’t planned on this being a long conversation, but felt it was important to discuss these concerns. This has been the worst economic period in the county since the Depression, he said. Peterson contended that changes tend to affect minorities and women – who are often heads of households – more than others. The board shouldn’t balance the budget on the backs of county employees, he said.

Conan Smith said his understanding of Peterson’s position is that the county has a policy that creates equality, but not necessarily equity. At the top of the wage scale, concessions don’t hurt as much, compared to an employee who’s making far less. It’s a complicated issue, Smith said, and one he’d like to tackle collaboratively with labor leaders.

Rob Turner asked McDaniel what metrics she would use to measure the performance of the cross-lateral team. McDaniel cited better communications, work on broader organizational restructuring, improved customer service and program improvements as areas that she’ll be measuring. How will those areas be measured? Turner asked. One way is through cost savings, McDaniel said. But it’s not just about money, she added. It’s also about customer service and program improvements. She said she’d provide more details on that as they move forward.

Outcome: Commissioners voted to give initial approval for the proposed administrative restructuring, with dissent from Ronnie Peterson. A final vote is expected at the board’s March 7 meeting.

Pure Michigan Campaign

As part of funding for a Pure Michigan campaign focused on the Ann Arbor area, commissioners were asked to allocate $200,000 to the Ann Arbor and Ypsilanti convention and visitors bureaus (CVBs), out of revenues from the county’s accommodations tax.

The Michigan Economic Development Corp. (MEDC) is developing a Pure Michigan pilot program, entitled “Sense of Place,” to combine support for tourism and economic development. The Ann Arbor/Washtenaw County area has been chosen as the first region to be featured as a partner in this program.

The campaign will feature a $1 million national TV ad campaign. Ann Arbor SPARK, the local economic development agency, is contributing $70,000 toward the campaign, with $200,000 coming from the county, $230,000 from the two local CVBs, and $500,000 from the MEDC. Other elements of the pilot program might include an episode of HGTV’s “House Hunters” program that would focus on the Ann Arbor area, and a national digital ad campaign directing people to Ann Arbor SPARK’s website.

The $200,000 from the county will be paid from the accommodations ordinance administrative fund – an early payment that the county otherwise anticipated making in May of 2013. More than $350,000 is currently in that administrative fund, according to the county.

At the board’s Sept. 21, 2011 meeting, commissioners had voted to amend the contract for the distribution of the county’s accommodations tax. The county collects a 5% excise tax from hotels, motels, and bed & breakfasts, which is then distributed to the Ann Arbor and Ypsilanti convention & visitors bureaus and used to promote tourism and convention business. The contract calls for the county to retain 10% of that tax to defray the cost of collection and enforcement. (Until 2009, the county had only retained 5% for this purpose.) The remaining funds are split, with 75% going to the Ann Arbor Convention & Visitors Bureau, and 25% going to the Ypsilanti Convention & Visitors Bureau.

The contract amendment made in September 2011 addressed the process for distributing excess funds that might accumulate from the county’s 10%, if that amount exceeds the expenses required to administer and enforce compliance with the tax. Beginning in May 2013, the county will continue to retain 10% of the tax proceeds, plus 10% of any remaining fund balance. If additional funds accumulate in the fund balance, they are to be returned proportionally to the two convention & visitors bureaus – 75% to Ann Arbor, and 25% to Ypsilanti.

Several representatives from the groups involved in this campaign attended the Feb. 15 county board meeting: Mary Kerr, president of the Ann Arbor CVB; Debbie Locke-Daniel, executive director of the Ypsilanti CVB; Elizabeth Parkinson, MEDC senior vice president of marketing and communications; and Donna Doleman, Ann Arbor SPARK’s vice president of marketing, communications and talent.

The links between the MEDC and Ann Arbor region are strong. Several MEDC executives – including Parkinson and CEO Mike Finney – are former top staff at Ann Arbor SPARK, which Gov. Rick Snyder helped launch several years prior to his election.

Pure Michigan Campaign: Board Discussion

Several commissioners voiced support for the campaign. Ronnie Peterson said he’s hoped for years to see the joint promotion of tourism and economic development. Rolland Sizemore Jr. indicated that it might be possible to use some of these funds as matching funds for Ypsilanti and Ypsilanti Township’s participation in the Detroit Region Aerotropolis.

Barbara Bergman said if the funds were to be used for the aerotropolis, the board should get a report on that project. She said she wasn’t necessarily opposed to it, but thought it should be monitored.

By way of background, as of Feb. 18, a message on the website for the Detroit Region Aerotropolis stated that the site has been disabled. There have been no posts on the entity’s Facebook or Twitter accounts since April of 2011. Responding to a query from The Chronicle, Bryce Kelley of Wayne County EDGE – which is overseeing the project – said the site is being redeveloped, and that work on the aerotropolis is progressing. Washtenaw County joined the aerotropolis consortium in 2009, and received its last public briefing on the project at its April 21, 2010 meeting. It was more recently mentioned in a memo sent to the board in October of 2011 by Paul Tait, executive director for the Southeast Michigan Council of Governments (SEMCOG). Tait cited SEMCOG’s work on the aerotropolis as one justification for why the county should continue paying dues to SEMCOG. The 2012 and 2013 budget approved in November 2011 eliminated the county’s $125,000 annual SEMCOG membership.

Sizemore said he was simply trying to find ways to do things without spending additional money.

Leah Gunn said it had been smart of the accommodations ordinance commission to recommend setting aside funds for administration, but because it’s not needed for other purposes, the money should be used for an opportunity like this. Felicia Brabec expressed enthusiasm for the possibility of this area being featured on HGTV’s “House Hunters” program, saying that when she watches the show, she’s often interested in visiting the locations that are highlighted. [The Ann Arbor area has previously been featured on the show, most recently in 2009.]

Outcome: The board unanimously approved allocating $200,000 to the local convention and visitors bureaus for the Pure Michigan advertising campaign.

Labor Contracts

The county had previously reached labor agreements with all but four of the 17 bargaining units representing county employees. At the board’s Feb. 15 meeting, an agenda item was added during the meeting to enter into executive session for the purpose of discussing labor negotiations. When commissioners emerged, they added to the agenda two resolutions to approve collective bargaining agreements with the four remaining units.

These final four bargaining units represent a total of 36 employees – the prosecuting attorneys, the prosecuting attorney supervisors, attorneys in the public defenders office, and supervisors of attorneys in the public defenders office. In total, the county employs about 1,360 workers, and more than 80% of them are represented by labor unions.

All four agreements considered on Feb. 15 were identical, covering a three-year period from Jan. 1, 2012 through Dec. 31, 2014. Because these deals weren’t struck before the deadline to comply with Section 4 of the state’s Public Act 152 of 2011, also known as the 80/20 rule regarding health care costs, union members will pay 20% of their health care premiums.

There are some significant differences between these four agreements and the 13 other union agreements that were previously reached with the county. The other agreements are for two-year periods, ending Dec. 31, 2013. Medical costs for the other union-represented employees are lower, because those agreements were reached prior to the 80/20 deadline. However, because of a “me too” clause, the overall package of salaries and benefits is on par with other labor agreements, according to Diane Heidt, the county’s human resources and labor relations director. So while medical expenses are higher, the agreements with these four bargaining units do not include items like reductions in longevity pay, for example.

Outcome: Without discussion, the board unanimously approved the four labor agreements.

Board Rule Changes

A resolution that was tabled from the board’s Jan. 4, 2012 meeting was on the agenda for the Feb. 15 meeting.

The resolution, proposed by Dan Smith, changed the board rules to give commissioners the option of abstaining from a vote. His resolution amended the section on board resolutions, adding the following statement: “Members may abstain from voting on any resolution expressing support (or opposition), but otherwise taking no action.” During a brief discussion at the Jan. 4 meeting, some commissioners had objected to the change, and the board had tabled the item until the second meeting in February.

At the Jan. 4 meeting, Smith did not elaborate on his reasons for proposing the change, but the issue was relevant at the board’s final meeting in December 2011. A resolution brought forward at that time by Yousef Rabhi urged state lawmakers to reject HB 4770, HB 4771 and “any legislation that codifies discrimination.” The state legislation, which was later signed by Gov. Rick Snyder, removed the ability of public employers to extend benefits to same-sex partners. During deliberations on that resolution, commissioners Dan Smith and Rob Turner had objected to bringing forward resolutions that were not focused on Washtenaw County issues – both commissioners ultimately voted against Rabhi’s resolution, though it passed with a majority of support from the rest of the board.

Prior to the Feb. 15 meeting, Dan Smith indicated to The Chronicle that he would withdraw the item if any other commissioner pulled it out of the consent agenda to be voted on separately. But that did not occur.

Outcome: Without discussion, the resolution passed, with dissent from Wes Prater.

Whitmore Lake

Commissioners were asked to give final approval to a five-year, $460,000 project to study and improve conditions at Whitmore Lake. The lake is located in Washtenaw County’s Northfield Township and Livingston County’s Green Oak Township. An initial vote on the project had been taken at the board’s Feb. 1 meeting.

The effort – focusing on removal of invasive weeds – is a continuation of a project that began in 2003, and was renewed in 2007. It’s overseen by the county board of public works. The project’s cost will be recovered through special assessments on over 800 parcels near Whitmore Lake.

Outcome: Without discussion, the board voted to give final approval to the Whitmore Lake project.

Communications and Public Commentary

There are various opportunities for communications from commissioners as well as general public commentary.

Communications: Congratulations to Joe Burke

Board chair Conan Smith congratulated Joe Burke on his appointment as judge to the 15th District Court in Ann Arbor. Burke’s appointment by Gov. Rick Snyder had been announced earlier in the day. Burke currently serves as the county’s chief assistant prosecuting attorney. Smith said that while the county is sorry to lose him, Burke will do justice as a member of the judiciary. And now, Smith joked, ”we should go bribe him.”

Communications: Road Commission, Court Renovations, VEBA

Commissioner Rob Turner gave several updates during the time set aside for liaison reports.

Washtenaw County commissioner Rob Turner.

He serves as the board’s liaison to the county road commission, and reported that revenues from the state transportation fund to the commission have increased 1.5%. It’s the first time since 2007 that there hasn’t been a decrease in state funding, he noted.

The mild winter has resulted in lower expenses for plowing and salt – $1.019 million, compared to $1.9 million a year ago. While that might seem like a windfall, Turner said, the flip side is that warmer weather means more potholes. So spending has shifted to road maintenance. Turner also indicated that the road commission is interested in working with townships to upgrade road conditions.

Turner reported that renovations at the downtown courthouse at Huron and Main are in their final phase. He said that usually by this point some surprises emerge – like unanticipated asbestos, for example – but nothing like that has arisen, and the project remains on schedule. The board had received a briefing on the project at their Feb. 2, 2012 working session.

Finally, Turner mentioned that requests for proposals (RFPs) are being developed to hire an actuary for the county’s VEBA (Voluntary Employees Beneficiary Association) retirement fund. They’d need to wait until the actuarial report is complete, Turner said, but he’s concerned about the performance of the VEBA pension funds, which he said are not meeting projections.

Communications: Public Works, Head Start, Transit, Land Preservation

Yousef Rabhi also gave several liaison reports. Reporting from the most recent meeting of the county’s board of public works, Rabhi said that work on the new recycling facility being built the Western Washtenaw Recycling Authority (WWRA) is moving ahead, he said. At its Dec. 7, 2011 meeting, the board had approved issuing up to $2.7 million in bonds – backed by the county’s full faith and credit – to help pay for a $3.2 million facility, which will allow WWRA to handle single-stream recycling for communities on the county’s west side. Rob Turner noted that WWRA revenues increased by more than $400,000 in 2011. He knew that some commissioners were worried about the financial viability of WWRA and its ability to make bond payments, but the situation seemed good, he said.

Rabhi reported that the Head Start policy council is very interested in writing letters of support to federal officials, encouraging the selection of the Washtenaw Intermediate School District as the next grantee for the county’s Head Start program. The county is relinquishing management of the program later this year, after being the grantee for more than four decades.

In his report from the county’s agricultural lands preservation advisory committee (ALPAC), Rabhi said the committee is recommending the purchase of development rights on six parcels of farmland. Because the county can secure federal funding for these PDRs, the local millage dollars will spread further, he said. ALPAC makes recommendations to the county park & recreation commission, which will make the final decision on these applications. A 10-year millage renewal to support the county’s natural areas preservation program (NAPP) was approved by voters in November 2010, and a portion of millage proceeds can be used for farmland PDRs.

Rabhi said he had a great first meeting as chair of the Washtenaw Urban County last month, adding that he had big shoes to fill by following Leah Gunn, who previously served as chair. He noted that five new local jurisdictions have joined the group this year, adding to the previous 11 members. The Urban County is a consortium of local governments that receive federal funding for programs that serve low-income residents and neighborhoods.

Finally, Rabhi reported that he and Barbara Bergman – as board liaisons to Regional Partners Advocating Transit Here (R-PATH) – had attended a hearing in Lansing held by the Michigan senate’s transportation committee. Board chair Conan Smith had testified at the hearing, Rabhi said. Smith did a great job, “other than giving away one of our votes,” Rabhi joked.

The hearing related to a new regional transit authority (RTA) that’s described in legislation currently pending in the state legislature. The legislation would create a four-county region for the RTA that would include Washtenaw, Wayne, Macomb and Oakland counties. [For coverage of the proposed legislation, see "Michigan Regional Transit Bills Unveiled"] The RTA legislation as introduced would give two seats on a 10-member board to Washtenaw County – with two seats for each of the other three counties, one for Detroit, and one non-voting ex-officio appointment made by the governor.

According to a report in the Michigan Information & Research Service (MIRS), Smith told the committee that he would be willing to give up one of those seats: “Washtenaw County Commissioner Conan Smith not only supported the bills, but expressed an openness to support giving up one of Washtenaw County’s appointments on the RTA to Detroit if ‘that’s what it took” to get the bills passed.’”

Smith’s wife, state Sen. Rebekah Warren, is one of the co-sponsors of the RTA legislation.

Public Commentary

Thomas Partridge said he applauded the board for approving the acceptance of a $299,821 federal grant to fund the county’s foster grandparent program, but criticized commissioners for the administrative restructuring because it eliminated jobs. He argued that the county needs to meet the challenge of diminishing resources by putting a Headlee override on the ballot and advocating for tax reforms that will do away with the county’s reliance on property taxes.

Present: Barbara Bergman, Felicia Brabec, Leah Gunn, Ronnie Peterson, Wes Prater, Yousef Rabhi, Rolland Sizemore Jr., Conan Smith, Dan Smith, Rob Turner.

Absent: Alicia Ping.

Next regular board meeting: Wednesday, March 7, 2012 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. [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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According to a staff memo, the Michigan Economic Development Corp. (MEDC) is developing a Pure Michigan pilot program, entitled “Sense of Place,” to combine support for tourism and economic development. The Ann Arbor/Washtenaw County area has been chosen as the first region to be featured as a partner in this program.

The campaign will feature a $1 million national TV ad campaign. Ann Arbor SPARK, the local economic development agency, is contributing $70,000 toward the campaign, with $200,000 coming from the county, $230,000 from the local CVBs, and $500,000 from the MEDC. Other elements of the pilot program include an Ann Arbor area episode of HGTV’s “Househunters” program, and national digital ad campaign directing people to Ann Arbor SPARK’s website.

The $200,000 from the county will be paid from the accommodations ordinance administrative fund – an early payment that the county otherwise anticipated making in May of 2013. More than $350,000 is currently in that administrative fund, according to the county.

At the board’s Sept. 21, 2011 meeting, commissioners had voted to amend the contract for the distribution of the county’s accommodations tax. The county collects a 5% excise tax from hotels, motels, and bed & breakfasts, which is then distributed to the Ann Arbor and Ypsilanti convention & visitors bureaus and used to promote tourism and convention business. The contract calls for the county to retain 10% of that tax to defray the cost of collection and enforcement. (Until 2009, the county had only retained 5% for this purpose.) The remaining funds are split, with 75% going to the Ann Arbor Convention & Visitors Bureau, and 25% going to the Ypsilanti Convention & Visitors Bureau.

The contract amendment made in September 2011 addressed the process for distributing excess funds that might accumulate from the county’s 10%, if that amount exceeds the expenses required to administer and enforce compliance with the tax. Beginning in May 2013, the county will continue to retain 10% of the tax proceeds, plus 10% of any remaining fund balance. If additional funds accumulate in the fund balance, they are to be returned proportionally to the two convention & visitors bureaus – 75% to Ann Arbor, and 25% to Ypsilanti.

This brief was filed from the boardroom of the county administration building, 220 N. Main St. in Ann Arbor. A more detailed report will follow: [link]

The county collects a 5% excise tax from hotels, motels, and bed & breakfasts, which is then distributed to the Ann Arbor and Ypsilanti convention & visitors bureaus and used to promote tourism and convention business. The contract calls for the county to retain 10% of that tax to defray the cost of collection and enforcement. (Until 2009, the county had only retained 5% for this purpose.) The remaining funds are split, with 75% going to the Ann Arbor Convention & Visitors Bureau, and 25% going to the Ypsilanti Convention & Visitors Bureau.

The contract amendment addresses the process for distributing excess funds that might accumulate from the county’s 10%, if that amount exceeds the expenses required to administer and enforce compliance with the tax. Beginning in May 2013, the county will continue to retain 10% of the tax proceeds, plus 10% of any remaining fund balance. If additional funds accumulate in the fund balance, they are to be returned proportionally to the two convention & visitors bureaus – 75% to Ann Arbor, and 25% to Ypsilanti.

This brief was filed from the boardroom of the county administration building at 220 N. Main in Ann Arbor. A more detailed report will follow: [link]

The county collects a 5% excise tax from hotels, motels, and bed & breakfasts, which is then distributed to the Ann Arbor and Ypsilanti convention & visitors bureaus and used to promote tourism and convention business. The current contract calls for the county to retain 10% of that tax to defray the cost of collection and enforcement. (Until 2009, the county had only retained 5% for this purpose.) The remaining funds are split, with 75% going to the Ann Arbor Convention & Visitors Bureau, and 25% going to the Ypsilanti Convention & Visitors Bureau.

The contract amendment addresses the process for distributing excess funds that might accumulate from the county’s 10%, if that amount exceeds the expenses required to administer and enforce compliance with the tax. Beginning in May 2013, the county will continue to retain 10% of the tax proceeds, plus 10% of any remaining fund balance. If additional funds accumulate in the fund balance, they are to be returned proportionally to the two convention & visitors bureaus – 75% to Ann Arbor, and 25% to Ypsilanti.

This brief was filed from the boardroom of the county administration building at 220 N. Main in Ann Arbor. A more detailed report will follow: [link]

Mary Kerr, president of the Ann Arbor Convention & Visitors Bureau, talks with Rolland Sizemore Jr., chair of the county board of commissioners, before Wednesday's meeting of the board. (Photos by the writer.)

Commissioners heard from leaders of the Ann Arbor and Ypsilanti convention and visitors bureaus, who explained how they’ve been using revenue from a hike in the county’s accommodation tax, which raised $3.039 million in 2009.

That tax also came up during a report by the county treasurer, Catherine McClary. Collections have been more difficult because of the economy, she said, but all hotels are up to date on their payments. Five bed & breakfasts in the county are not. McClary’s report also included updates on the county’s investments and foreclosures, and a preview of a proposal for dog licenses.

Two other financial reports were given during Wednesday’s meeting, by interim finance director Pete Collinson and Mark Kettner of Rehmann Robson, who performs the county’s financial audits. The county was also presented with an award for its 2008 financial report – it has received the same award for 19 consecutive years, given by the Government Finance Officers Association.

Another presentation marked a transition, as the county handed over leadership for a literacy coalition it had spearheaded. Now, the campaign to end illiteracy will be handled by a community group. Read about it below.

Accommodation Tax: How is It Used?

At its Dec. 3, 2008 meeting, the board unanimously approved an increase in the county’s accommodation tax from 2% to 5%. Revenues from the tax – which is levied on rooms at hotels, motels and bed & breakfasts – fund the convention and visitors bureaus in Ann Arbor and Ypsilanti, in a 75/25 split. The increase took effect March 1, 2009.

Mary Kerr, president of the Ann Arbor Convention & Visitors Bureau, and Debbie Locke-Daniel of the Ypsilanti CVB both gave reports to commissioners, explaining how they allocated those tax dollars in 2009.

Kerr’s presentation gave an overview of Ann Arbor/Washtenaw market last year. The hotel occupancy rate was 58.9% for the year, down 6.7% from 2008. Though that’s a decrease, she noted that the occupancy rate in Washtenaw was the highest of all metro areas in Michigan. The statewide average occupancy rate was 47.5%.

For the Ann Arbor CVB, which employs 10 people, 89% of its income comes from the accommodation tax. Last year, the bureau’s share of the tax amounted to $2.159 million. All of the funds from the tax increase went toward marketing, sales and programs, Kerr said. She highlighted local participation in the Pure Michigan campaign, and – after waiting several minutes while a staff member struggled with some technical issues – played both a radio ad and a TV commercial focused on Ann Arbor and featuring voiceovers by the actor/comedian Tim Allen.

The radio ad can be heard here – scroll down to the “Original-Ann Arbor” section. It’s the same ad that Kerr played for commissioners at their Nov. 19, 2008 meeting, when she lobbied for the tax increase. [A second radio spot has also been developed, but wasn't played at Wednesday's meeting.] The TV commercial – which includes shots of Michigan Stadium, the Ann Arbor Farmers Market, Nickels Arcade and other spots around town – will begin airing in May in three markets: Cleveland, Cincinnati and Indianapolis.

Other initiatives for 2009 included an online marketing campaign, an emailed monthly newsletter, and the hosting of 50 travel writers and editors from around the country.

The Ann Arbor CVB also launched a new website – Film Ann Arbor – designed to attract filmmakers to the area. It features testimonials from directors who’ve already filmed here, including Rob Reiner (“Filming in Ann Arbor was the best time I’ve ever had making a movie”) and Drew Barrymore (“I felt like it was a blessing we got to shoot there”). Eleven films have been based or shot in Washtenaw County, Kerr said, bringing an estimated 24,500 hotel room nights, or $6 million in economic impact.

Kerr said the Ann Arbor CVB has been designated an official film office by the Association of Film Commissioners International (AFCI) – staff from the bureau will have an exhibit at next week’s AFCI locations trade show in Santa Monica, Calif. The CVB is also advertising in Variety, a film industry trade publication.

In addition to increased activity from filmmakers, Kerr highlighted the work her bureau has done in attracting labor union conferences to the area. The ironworkers union – the International Association of Bridge, Structural, Ornamental and Reinforcing Iron Workers – will hold its annual educational conference in Washtenaw County for the first time this year, after 23 years in San Diego, she said. It’s the third major union to bring its educational conference to the county. Others are the United Association of Plumbers and Pipefitters, and the National Joint Apprenticeship and Training Committee for electricians. Kerr estimated an annual economic impact of $12.5 million from these events, which include classes held at Washtenaw Community College, the University of Michigan and Eastern Michigan University.

The Ypsilanti CVB received $719,711 from the accommodation tax in 2009. The bureau’s president, Debbie Locke-Daniel, told commissioners that they used some of the additional funding to hire another full-time sales manager – now they have two of those positions.

In addition, funds were used to redesign its website, as well as to develop YAA Life, a blog that highlights communities throughout the county. Since the Internet is the primary way that travelers do research for their trips, Locke-Daniel said they’ll continue to optimize their online presence. ”My hope is that when you Google Ann Arbor, you’ll get Ypsilanti first,” she joked.

Commissioner Comments

Rolland Sizemore Jr. said he’s asked Kerr and Locke-Daniel to encourage filmmakers who come to this area to work with local schools, donating film equipment or allowing students to job shadow.

Mark Ouimet, who serves on the county’s accommodation ordinance commission, said he was impressed with the work of the CVBs, and that they’d had a dramatic impact on the local economy.

Noting the decrease in hotel occupancy, Conan Smith wondered whether the CVBs could say whether their marketing efforts had any impact on lessening the decrease, compared to what it could have been. Kerr said they’d be meeting on April 30 with members of the Washtenaw County Hotel/Motel Association – that group has already reported that the marketing has had a significant impact, she said. Locke-Daniel added that business from the film industry and unions were really the “saving grace” for the hospitality sector last year.

Smith observed that when the county first started discussing an increase in the accommodation tax, there was some concern that it might drive away business, but it appeared that the reverse was true. The CVBs haven’t heard any negative feedback from hotels about the tax increase, Kerr said.

Treasurer’s Report

Catherine McClary, the county treasurer, reported on four issues handled by her office: 1) the accommodation tax, 2) the county’s cash position and investments, 3) delinquent tax collection, and 4) potential changes to dog licenses.

Accommodation Tax

McClary explained the treasurer’s role in collecting the accommodations tax was to receive and bank the money, investing it until payouts are made each month to the two CVBs. Last year, the county collected $3.039 million from that tax – an increase of $1.5 million from 2008. [.pdf file of 2009 accommodation tax annual report]

Washtenaw County treasurer Catherine McClary talks with commissioner Ronnie Peterson before the start of Wednesday's board of commissioners meeting.

Part of the increase was due to stepped-up enforcement, which McClary described as very difficult. In November 2009, the board approved a five-year agreement with the CVBs, from 2010 through 2014 that increased the county’s share of the accommodation tax revenues from 5% to 10%. In 2009, the 5% share totaled $160,929. The additional revenue coming to the county will be used by the county treasurer’s office to help administer and enforce the accommodations tax ordinance. [See coverage of this change in the Chronicle's report of the Nov. 11 administrative briefing.]

McClary reported that the county had obtained judgments against two hotels last year that were delinquent on the tax, but that now all hotels are current on their payments. Five bed & breakfast establishments are behind in their payments, however – she said her staff is working with them on a collections plan.

[When the board of commissioners held a public hearing on the tax increase at their Dec. 3, 2008 meeting, the only two people to speak were the owners of a bed & breakfast in Chelsea. From The Chronicle's report of that meeting:]

Only two people spoke, standing together at the podium: Jim and Kim Myles, who’ve owned the Chelsea House Victorian Inn for eight years.

Jim Myles said they were concerned about the impact of this room tax, which is being raised from 2% to 5%. He said they’d planned to lower their rates to attract more customers, so the proposed tax hike would force them to take an even greater income hit. Myles also said that since their business was on the western side of the county, they didn’t feel they benefited from marketing done by the Ann Arbor and Ypsilanti convention & visitors bureaus, which are funded through this tax. Kim Myles pointed out a trickle-down effect on the local economy: the lower income they’ll have because of the tax would result in them spending less money at other local businesses. She also said that the tax should be phased in over several years, rather than raised dramatically all at once.

The Chelsea House Victorian Inn was not among those listed as delinquent in the treasurer’s 2009 accommodation tax payment report, submitted to the county’s accommodation ordinance commission [.pdf of payment report].

Cash Position and Investments

McClary reported that the primary goal in her cash investment strategy is to safeguard the public funds, following state law and the board’s policies. Last year, her office managed nearly $150 million in investments and earned over $2 million off of that amount. At the end of 2009, $101.7 million was in CDs and money markets, $12 million was held in commercial paper, $26.66 million was in treasuries and agencies, and $7.69 million was in bank accounts.

The county invests for diversification, cash flow and yield, McClary said. Currently, the county has $250,000 in insured CDs at each of 15 banks – including locally based Ann Arbor State Bank and Bank of Ann Arbor.

She noted that the investment portfolio is lower in part because the county has been spending funds it had previously set aside for construction. [One example is the county jail expansion, which is set to open this summer.] Investments are also down because of the decrease in revenues coming into the county from property taxes, due to the economic downturn [.pdf of 2009 treasurer's report].

Delinquent Tax Collection

In 2009, the treasurer’s office collected $4.473 million in delinquent taxes and fees. Since 1999, the office has collected delinquent real property taxes on just over 92,000 parcels, McClary told the board. Of those, her office has foreclosed on 164 parcels. But those numbers are climbing, she noted.

It takes three years to get to the point of foreclosure, beginning when a taxpayer is delinquent on their taxes. In 2008, there were 26 tax foreclosures, from tax year 2005. Last year, there were 102 tax foreclosures, with 45 of those ultimately sold at auction. This year, there are 515 properties in tax foreclosure, McClary said.

The good news is that for March, delinquent taxes – a leading indicator of eventual foreclosures – were slightly lower than a year ago, McClary said. It’s the first time that’s happened in seven years. However, she still expects to see higher foreclosures in the coming months, especially on commercial properties.

The treasurer’s office runs programs for both tax foreclosure prevention and mortgage foreclosure prevention. Regarding mortgage foreclosures, McClary said her office will be holding three educational seminars in April, May and June aimed at helping people who are “under water” in their mortgages – who owe more on their mortgage than their home is currently worth. Even educated people, she said, can be financially illiterate and find themselves in difficulty.

McClary also noted that a new state law mandates that lenders give homeowners a 90-day extension if they’ve defaulted on their loan. She urged people to call the foreclosure prevention program at 734-222-9595 or email mfpp@ewashtenaw.org to get counseling and advice.

Dog Licenses

Through the treasurer’s office, the county collected $31,195 in dog licenses for 2009. Currently, the licenses must be renewed annually. [The licenses cost $5 for a dog that's spayed or neutered, and $10 for an "unaltered" dog. There's no charge for service dogs.] McClary said she plans to bring a proposal to the board of commissioners this summer, creating the option for residents to get a three-year license. That way, owners could renew licenses on the same cycle as the dogs’ rabies shots, she said. [A valid rabies vaccination certificate is required for the license.] It would also help her office better manage the workload, she said.

In addition, McClary is working with the sheriff’s department to explore the possibility of an ordinance that would allow law enforcement officers to ticket owners of unlicensed dogs for a civil – rather than criminal – infraction. Currently, not having a valid license is a misdemeanor, and officers are reluctant to issue tickets for that, McClary said.

The cities of Ann Arbor and Ypsilanti, as well as Ypsilanti Township, issue their own dog licenses. Rolland Sizemore Jr. asked why there isn’t a single licensing procedure for the entire county – McClary said she didn’t know. He asked how the county’s rates compared to those charged by other municipalities. McClary said the other rates were higher. [Ann Arbor and Ypsilanti charge $16. Ypsilanti Township charges $6.]

Other Financial Reports

Commissioners heard from both Pete Collinson, the county’s interim finance director, and Mark Kettner of the accounting firm Rehmann Robson.

Comprehensive Annual Financial Report (CAFR)

Pete Collinson dedicated the 2009 comprehensive annual financial report (CAFR) to Peter Ballios, the long-time finance director who recently retired. Ballios taught the staff to work as a team, Collinson said, and it was under his leadership that the report has been completed in a timely manner – by March 31 – for the past 13 years.

Giving an overview of the county’s finances, Collinson noted that they ended 2009 with a $584,000 surplus. He said that showed the measures approved by the board to cut costs and raise revenues were effective in addressing a projected shortfall for the year. The county’s unreserved fund balance was $9.8 million, representing 9.4% of general fund expenditures – or a little over a month’s worth of money to pay the bills, he said. While good, Collinson noted that the Government Finance Officers Association (GFOA) recommends a minimum two-month reserve. He pointed out that over the years, general fund reserves have steadily increased, from less than $4 million in 1992 to nearly $10 million last year.

Several other funds in the county ended the year with a surplus, Collinson said: facilities management ($646,355), child care ($566,260), self-insurance ($421,481), Friend of the Court ($298,524) and environmental health ($106,604). He pointed out that the graphic on the slide he displayed for this information was a picture of a nest egg: “I really like clip art, I must say.”

In 2009, the county drew down about $6.5 million out of its state revenue-sharing reserve fund, leaving a balance of $24 million. Projecting ahead, the fund will be depleted sometime in 2013, he said. It’s possible that the state will refund that reserve, he said, but they can’t count on it.

Collinson said that upcoming projects for the finance staff include examining the county’s general fund cash flow, in light of the decreasing revenue-sharing reserve fund. They’ll also be making a presentation on internal controls at the board’s April 22, 2010 working session, he said. And the staff will be looking at the county’s cost allocation plan, with the goal of simplifying how it is calculated.

There are four capital projects that are slated to be finished this year, and Collinson briefly reviewed those costs: $23.8 million for the county’s enhanced emergency communication system (the 800 Mhz project), $21.7 million for the jail expansion, $12.9 million for construction of the new district court building, and $2.8 million for a fiber network.

Despite the economy, the county has maintained a solid bond rating, Collinson reported. He noted that county administrator Bob Guenzel and deputy administrator Verna McDaniel traveled to Chicago last month to meet with ratings agencies. Standard & Poor’s rates the county at AA+ and Moody’s has given the county an Aa2 rating.

Auditor’s Report

Collinson then introduced Mark Kettner of the accounting firm Rehmann Robson, which conducts the annual audit of the county’s financial report. Kettner noted that the audit gives an unqualified – or “clean” – opinion about the county’s financial statements. It’s an opinion on those statements, he said, not an opinion about the county’s financial controls or conditions. He said there were a few minor items that they reported to administration, who will be following up in writing with commissioners. [.pdf of Rehmann Robson management letter for the audit]

Commissioners had only a few comments and questions for Collinson and Kettner. Jeff Irwin said he always enjoys getting the CAFR, calling it a “tremendous cure for insomnia.” Leah Gunn congratulated Collinson for being appointed interim finance director – he was previously the county’s accounting manager. She noted that she’d first met him when she was on the Ann Arbor library board, and he had come to a meeting and explained the county’s budget to them. She also noted that the county had pinched its pennies, which resulted in the 2009 surplus – it speaks well for being careful about their finances, she said.

Mark Ouimet asked about the county’s Money Purchase Pension Plan. He said that he and Gunn feel it’s time to close the plan and move the remaining $1.9 million in assets somewhere else. There are only a dozen people in the retirement plan – all of the county commissioners, and a judge. He asked Kettner to explain how it might be terminated.

Kettner said it was his understanding that commissioners couldn’t make changes to their salaries or benefits until the beginning of their next term.

Wes Prater objected, saying there needs to be some discussion about what to do with the pension plan. Nobody has convinced him that eliminating the plan is the best option. “I, for one, am not ready to go that route,” he said.

[Retirement benefits for most county employees have been shifted out of the MPPP, a defined contribution plan, to the Washtenaw County Employees’ Retirement System, known as WCERS, which is a defined benefit plan. Commissioners contribute 7.5% of their salary on a pre-tax basis to the MPPP and receive a 100% employer match. The county also contributes to a voluntary employee beneficiary association (VEBA) on behalf of each commissioner.]

Literacy Coalition: Passing the Book

Several people who’ve been working on the Literacy Coalition of Washtenaw County attended Wednesday’s meeting. The co-chairs of that coalition – county administrator Bob Guenzel and Josie Parker, director of the Ann Arbor District Library – both spoke briefly to commissioners.

Guenzel called the evening a kind of graduation. He recalled that several years ago, commissioners Leah Gunn, Ronnie Peterson and Conan Smith had supported an administrative effort to strategically coordinate the various literacy activities in Washtenaw County. That led to a board resolution in July of 2007 to create the coalition [.pdf of 2007 board resolution forming the Literacy Coalition of Washtenaw County and appointing its members]. Guenzel said the county wasn’t abandoning the effort, but was really just giving it back to the community.

Josie Parker, director of the Ann Arbor District Library, talks with county commissioner Leah Gunn before the start of Wednesday's board of commissioners meeting. Parker was co-chair of the Literacy Coalition of Washtenaw County, a county government initiative that was officially handed over to a community group at Wednesday's meeting.

Parker echoed those sentiments, and thanked the board for its vision in believing that it was possible to eliminate illiteracy. Like the county, the library isn’t backing out of the effort, she said, and will continue to support the coalition in this next stage.

As part of this transition, the coalition has hired its first coordinator, Vanessa Mayesky, who also spoke to the board. She described the Blueprint to End Illiteracy as the group’s “action plan,” with three main goals: 1) increase public awareness, 2) enhance the delivery of services, and 3) build an infrastructure to support these efforts. “We’re making progress in all three of these areas,” she said.

Among the coalition’s current projects are developing a directory of literacy providers and services; launching a local program of Dolly’s Imagination Library, which distributes free books to pre-school kids and their families; and forming a comprehensive family literacy program.

Mayesky told commissioners that the coalition plans to hold board elections at its May 10, 2010 meeting. [The meeting runs from 2-3:30 p.m. at the NEW Center's 2nd floor conference room, 1100 N. Main St. in Ann Arbor.]

To achieve 100% literacy, the coalition needs 100% community engagement, Mayesky said. They’re pursuing a path of “literacy infusion,” putting literacy development at the heart of all activities, not just in its own box. “You have put us on that path,” she said.

Month of the Young Child

Also during Wednesday’s meeting, the board approved a resolution declaring April 2010 as the Month of the Young Child. In brief remarks to the board, Mary Phillips-Smith – chair of the county’s Head Start policy council – said that as parents, they were excited about the literacy coalition’s efforts. She specifically cited Dolly’s Imagination Library, which is eventually expected to serve 21,000 children in the Ypsilanti area.

Extra Jail Staffing

Without discussion, the board approved a staffing recommendation for the expanded county jail that will add 39 full-time positions to the payroll. The corrections division currently has a staff of 103 people.

At the board’s March 18, 2010 working session, sheriff Jerry Clayton gave a detailed presentation about the recommended staffing changes. [See Chronicle coverage: "Sheriff Requests More Staff for Expanded Jail"] The main concern expressed by commissioners at that meeting was the projected nearly $2 million two-year budget shortfall in 2012 and 2013, resulting from the additional staff.

Clayton attended Wednesday’s meeting, but did not address the board. Initial approval of the staffing change was voted on at Wednesday’s Ways & Means Committee meeting, which is held immediately prior to the regular board meeting. A final vote will be taken at the April 21 board meeting.

Public Hearings Set

As part of its consent agenda, the board set upcoming public hearings on two issues. There was no discussion of these items:

• At the board’s April 21, 2010 meeting: A public hearing to get citizen input on the 2010/2011 annual action plan that the county will submit to the U.S. Dept. of Housing and Urban Development. The hearing is required in order for the county to receive federal Community Development Block Grant (CDBG) and HOME Investment Partnership program funding, administered by the Urban County. [See Chronicle coverage: "Urban County Allocates Funding"]
• At the board’s May 5, 2010 meeting: A public hearing to get citizen input on an amendment to the county’s brownfield plan, related to the city of Saline Automotive Components Holdings’ brownfield redevelopment plan. From a memo distributed to the board: “The Saline Automotive Components Holdings, LLC project will provide economic assistance to support the continued economic viability and growth of a large manufacturing facility in the City of Saline. This Amendment is to enable MBT Credit application to the State of Michigan Treasury Department for approximately $1.2 million in MBT credits. Other brownfield eligible activities related will be addressed through private financing.”

Present: Barbara Levin Bergman, Leah Gunn, Jeff Irwin, Mark Ouimet, Ronnie Peterson, Wes Prater, Rolland Sizemore Jr., Conan Smith

Absent: Kristin Judge, Jessica Ping, Ken Schwartz

Next board meeting: The next regular meeting is Wednesday, April 21, 2010 at 6:30 p.m. at the County Administration Building, 220 N. Main St. The Ways & Means Committee meets first, followed immediately by the regular board meeting. [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 comment sessions are held at the beginning and end of each meeting.