A page of notes taken by Andy Brush, the county's knowledge manager, during Tuesday's budget forum.

The handful of business people who attended a Washtenaw County budget forum on Tuesday morning stressed the importance of local investment, and heard a preview of areas targeted for cuts as the county grapples with falling revenues and a potential $26 million deficit over the two-year period beginning in 2010.

County administrator Bob Guenzel gave the small group, which also included several elected officials and department directors, a preview of budget recommendations that will be released later this week and formally presented to the board of commissioners at their June 3 meeting. Though he didn’t provide details Tuesday morning, he said the recommendations will include layoffs and a change in compensation for non-union employees. Meanwhile, union leaders from 17 different bargaining units are being asked to renegotiate contracts in talks that will continue through July. The county employs about 1,300 people – roughly 80% are union employees.

Guenzel outlined four general areas identified to close the $26 million budget deficit: 1) revenue generation, $3 million to $5 million; 2) department reductions, $7 million to $10 million; 3) employee compensation and benefits, $12 million to $14 million, and 4) structural changes, $3 million to $7 million.

He also laid out a wide range of possible cuts, including selling county-owned facilities – he noted that the Zeeb Road building was only half occupied, for example – and even the possibility of not opening the jail expansion when it’s completed in 2010. That expansion, which would provide an additional 112 beds, would cost at least $1 million extra per year to staff. He said that though governments in general are good at finding one-time solutions, “what we need going forward is primarily structural savings.”

Guenzel cited the Wall Street Journal in characterizing the economic crisis as the worst since the 1930s, with no end yet in sight. He said that though this area had the lowest unemployment rate in the state, the magnitude of the problem was dire. “We haven’t hit bottom,” he said.

Much of the budget background that Guenzel reviewed on Tuesday has been discussed at previous county board meetings. Guenzel’s briefing led into a discussion facilitated by county commissioners Conan Smith (D-District 10) and Mark Ouimet (R-District 1). It’s the first of several budget forums intended to engage different parts of the community – this one focused on local businesses.

Bob Guenzel, Washtenaw County administrator.

Smith said the board’s priorities are to provide short-term stability and long-term prosperity. Ouimet, referring to the upcoming budget decisions, said “I think we’ll have very spirited debates, which is a good thing.”

Linda Berry, a local healthcare professional, asked the first question: Are there cuts coming for the county’s health plan, which provides insurance to low-income residents? Guenzel said the county supports the health plan with about $600,000 each year, an amount that brings in three times that figure in matching state and federal funds. About 8,000 people are covered, and there are no plans to cut funding yet. However, he said they decided to close enrollment last week, so it is no longer open for new participants.

Diane Keller, president of the Ypsilanti Area Chamber of Commerce, said that leveraging state and federal funds was important, through projects like the federal Neighborhood Stabilization Program. The county has been a great partner, she said, with efforts like the Eastern Leaders Group and services offered by the Employment Training and Community Services (ETCS) department. It’s important for the county to be an umbrella entity for the region so that services aren’t duplicated, she said.

Paul Hickman, a board member of Think Local First, asked if the county had a policy for buying from local vendors. Smith said that yes, all things being equal, they’d buy local. But, he added, “nothing’s ever equal.” It was something they needed to grapple with, he said. Hickman also asked where the county kept its money. Ouimet said the treasurer has accounts for the county at several local banks, though some investments – certain bonds, for example – wouldn’t be considered local.

Ouimet said that the county’s retirement commission, on which he serves, has started very preliminary conversations about investing up to 5% of its roughly $152 million funds in local businesses. If they did, he said, it would be a first for any local government in Washtenaw County.

Jesse Bernstein, president of the Ann Arbor Area Chamber of Commerce, and county commissioner Kristin Judge. Other commissioners at the meeting included Leah Gunn, Ken Schwartz, Wes Prater, Mark Ouimet and Conan Smith.

Ingrid Ault, director for Think Local First, urged county officials to think about how they spend their money. Citing a frequently quoted figure from buy-local movements nationwide, she said even a 10% shift in spending habits can make a powerful difference in terms of local jobs, wages and economic impact.

Jesse Bernstein, president of the Ann Arbor Area Chamber of Commerce, said he doesn’t think we’ll get the “battleships” back, referring to GM and Ford, which employed thousands of workers. It’s important to invest in the economic development agency Ann Arbor SPARK, he said, to find alternatives for the future of the local economy. Groups like the chambers of commerce, SCORE (the Service Corps of Retired Executives), and the Small Business & Technology Development Center are other resources – the county needs to develop commerce at all levels, he said.

Bernstein said the idea of investing pension dollars locally was huge, but that other options, like microlending, should be considered too. Commissioner Leah Gunn, who also serves on the retirement commission, noted that the county is setting up a microloan program through the Eastern Leaders Group. [The plan is to have two funds, one managed by the Center for Empowerment & Economic Development (CEED) for more conventional loans, the other managed by Ann Arbor SPARK for higher risk loans to businesses with greater growth potential.]

Shawn Keough, president of the Village of Dexter, suggested that coordinating planning resources throughout the county might be one way to help with tight budgets.

Smith asked Tony VanDerworp, the county’s director of planning & environment, to talk about the Ann Arbor Region Success initiative. VanDerworp described it as a 10-year strategy focused on three areas: talent development, economic development and quality of life. Action teams have formed that are each led by a community “champion,” he said, and it’s their responsibility to take leadership and move the projects forward. There are action teams so far for regional transit, a young professionals network, Wireless Washtenaw and several others.

The group spent a fair amount of time talking about public safety & justice, which accounts for about 50% of the county’s general fund budget. Bernstein said that if the county is really looking at structural change, they need to deal with issues like the number of police and fire departments countywide. How many police chiefs are really needed? The municipalities in Washtenaw need to find ways to provide services and not compromise safety while not duplicating efforts, he said.

Gunn said that electing Jerry Clayton as sheriff last fall went a long way toward achieving that goal. He has the respect of other law enforcement officials in the county, she said, and she senses a cultural change under way that will lead to more collaboration.

Diane Keller of the Ypsilanti chamber asked whether fees could be raised for people who are jailed, so that they (rather than taxpayers) would bear the cost of incarceration. Guenzel said the challenge is that a lot of people in jail don’t have money to pay fees. That said, Clayton is looking at the fee structure to make sure that people pay if they have the resources. Smith added that Clayton is also emphasizing work release programs, so that people who are jailed can keep working at their jobs and return to jail after work, allowing them to earn money to pay for their incarceration.

In response to another question about fees, this time related to parks, Smith said the county is considering whether to raise fees for Rolling Hills Park & Waterpark, Independence Lake and Pierce Lake Golf Course. They might also pursue a liquor license for Pierce Lake, he said, as a way to increase revenues there.

As the meeting wrapped up, Smith asked the business people who attended to keep in touch as the county moves through its budget process: “We’re craving innovative solutions.”

The county’s timeline for the 2010 budget:

• June 3: Administration presents recommendations to the board of commissioners
• July 8: Board takes action on recommendations
• June-July: Administration negotiates with unions
• June-August: Internal work on recommendations within departments
• Sept. 16: Administration presents final 2010 budget to board for approval
• Nov. 18: Board votes on 2010 budget

At Tuesday's budget forum, clockwise from bottom left: Commissioners Mark Ouimet and Conan Smith, county administrator Bob Guenzel, county parks director Bob Tetens, county planning & environment director Tony VanDerworp, Diane Keller, president of the Ypsilanti Area Chamber of Commerce.