Left: Stumps (black) and vacant sites (gray). Right: Maples (purple), Crabapples (red) and oaks (blue). Maps by The Chronicle from the city’s 2009 tree inventory. The city administrator’s proposed FY 2015 budget includes a one-time $1 million expense to address the backlog in pruning and removal of trees that are dead or in poor condition.

Funded as part of the FY 2015 budget are five new full-time employees, four of them in public safety: one additional firefighter; three additional police officers; and an additional rental housing inspection position. The additional positions were all presented as possibilities at a Feb. 10 city council work session. The additional police positions will bring the total number of sworn officers in the city of Ann Arbor to 122.

Not previewed as a possibility at that February work session is a one-time expense of $1 million to address a backlog in critical pruning and removal of trees that are in the public right of way. The allocation comes in the context of the development of an urban forestry management plan.

The $1 million one-time expense for street trees brings the total of non-recurring expenses in the FY 2015 general fund budget to about $2.8 million. Other one-time expenses budgeted for FY 2015 are: $80,000 to cover transitional costs for art administration; $606,000 for repairs and maintenance of the city’s hydroelectric dams; $100,000 for consultants to assist with completing the downtown zoning amendments and sign inventory; $300,000 for demolition of city-owned buildings at 415 W. Washington; $200,000 for a corridor studies; and $209,000 in operational support for the Ann Arbor Housing Commission’s (AAHC) transition to a rental assistance demonstration program.

The housing commission also accounts for the bulk of a $13.8 million (17%) increase in general fund recurring expenditures compared to last year. That’s due to an accounting change that recognizes 22 AAHC employees as city employees. By recognizing revenue and expenses for AAHC employee compensation through the general fund, the AAHC can avoid the negative impact of a new accounting rule. The GASB 68 rule requires unfunded pension fund liabilities to be recorded in the financial statements for proprietary funds (like the AAHC) but not for governmental funds like the general fund.

Also included in the FY 2015 budget proposal is about $3,000 for a pilot program for closed captioning of public meeting broadcasts on the Community Television Network. According to city of Ann Arbor communications manager Lisa Wondrash, the cable commission meeting recommended approval of the money at its Feb. 25 meeting, and she notified the commission on disability issues about the pilot on April 16. The pilot will begin with meetings of the city’s commission on disability issues, with a goal of testing out a closed captioning system in July this year.

The $98.1 million of general fund expenditures in FY 2015 will include $95.3 million in recurring expenditures and $2.8 million in one-time expenses.

When the general fund is added in with the rest of the city’s budget – the street fund, water fund, sewer fund, parking fund, and the like – the total expenses proposed for FY 2015 come to $334,434,101.

Powers will present the proposed budget to the city council at its April 21 meeting, the second meeting this month. The council will need to adopt the budget, with any changes, at its May 19 meeting, also the second meeting of the month. That timeframe is specified in the city charter.

The Chronicle sat down with Powers and city CFO Tom Crawford for a conversation about the FY 2015 budget. That conversation is presented here as a Q&A. Within the context of the budget, other issues discussed include state funding, long-term planning, affordable housing, animal control, and fund balance policy. [.pdf of April 21, 2014 pre-dated memo from Powers to city council]

Public Safety

Q: On the topic of safety services, the budget includes an additional 1 full-time position for fire safety and three new FTEs for police. What will the duties be for the fire safety position?

Steve Powers: Nothing different or unique. It will be an additional body to deploy for fire suppression. It will be a firefighter, not a fire inspector.

Q: Last year, the city council asked the Ann Arbor Downtown Development Authority to consider funding three beat cops for downtown. Is the intent to deploy the three police positions in FY 2015 to the downtown? Is there a relationship between the request to the DDA and these three new positions?

SP: Chief Seto is recommending, and I’m supporting his recommendations, that the positions be allocated this way: Two to the community engagement unit, and one to traffic enforcement. Community engagement includes downtown foot and bicycle patrols, but also in business districts outside the downtown area, as well as other neighborhood and community events and working with Ann Arbor Public Schools. So there’s not a direct connection to adding three officers to the downtown, but two of the three will be available for downtown.

The traffic enforcement position is related to the concern that the chief and I have been hearing, that councilmembers have been hearing, about speeding and other traffic-related violations, in addition to pedestrian safety. So it’s for traffic enforcement generally, more so than just focused on pedestrian issues.

Public Housing Commission

Q: The proposed FY 2015 includes a transfer of employees from the Ann Arbor Housing Commission and public market fund, which increases the total number of city employees paid for out of the general fund. Can you talk about how that will work?

Tom Crawford: We are not adding new employees. This is the inclusion of the Ann Arbor Housing Commission FTEs, which previously were not included at all in the count of city employees. Legally, the housing commission is distant enough that we have not included their FTEs historically. With this change, we are rolling them into the general fund. That’s being driven by GASB 68. If they remained employees of the housing commission, then the commission would incur a pension expense which would be higher and much more volatile, and it wouldn’t be reflective of how we’re funding the pension – because we are funding it. By doing this, they would incur an expense related to the funding level.

The public market fund is moved into the general fund for multiple reasons. Pension accounting was one of them, but the market fund also has not been making money. The pension expense was going to make it worse.

Steve Powers: A different accounting rule is advising local governments to close enterprise funds that really aren’t enterprises – that require ongoing subsidy. The public market and golf funds are examples that under GASB aren’t really enterprise funds.

Perceptions of Public Safety Spending

By way of background, the city’s total budget for FY 2015 is proposed to be about $334 million, of which the general fund makes up $98.1 million. As a percentage of the general fund, public safety spending over the last couple of years has been around 49%. Despite the hiring of four additional public safety positions (1 firefighter, 3 police officers) for FY 2015, that percentage will drop to around 40% – because of the way Ann Arbor Housing Commission employees are accounted for, starting this year.

Makeup of the FY 2015 Ann Arbor general fund budget.

Total city of Ann Arbor budget for FY 2015. The orange wedge is the general fund.

Q: Including the AAHC and market fund employees in the general fund results in an $11 million increase to the general fund. Because of that, the percentage of general fund expenditures for safety services – police and fire – drops from about 50% to about 40%. What’s your strategy for explaining that to people who might think it represents a decrease in spending for police and fire services?

Tom Crawford: That’s something that’s crossed our minds. I think we answer that with an apples-to-apples comparison. These expenditures [from the AAHC] have 100% offsetting revenues that fluctuate with the expenses – as does the pass-through that the city sends to the AAATA. So we’ll just explain that it’s just a pass-through for the housing commission. Historically in our budget presentations, we adjust numbers to be comparable. The question will come up.

Steve Powers: Tom and I started briefing the committees of council about GASB 68 about a year and a half ago, and with all of council this January at the first budget work session. So they have an understanding that it’s not a change in city priorities. It’s a change in how we have to account for existing expenditures for existing city services. We had a similar question when we brought the golf fund back into the general fund. The numbers didn’t change – it was still the same general fund support for golf. It was just showing it differently in our books.

Why Trees?

By way of background, city urban forest and natural resources planning coordinator Kerry Gray has been working on a management plan for the city’s urban forest. Gray updated the park advisory commission on the work at PAC’s Feb. 25, 2014 meeting. [.pdf of Gray's presentation] Then on April 15, PAC recommended approval of the plan, which will now be forwarded to the city council. [.pdf of Urban & Community Forest Management Plan]

The city manages 43,240 street trees and about 6,900 park trees in mowed areas. A tree inventory conducted in 2009 didn’t include natural areas, so there are thousands of trees that aren’t counted. The urban forest includes over 200 species, representing 82 genera.

At the Feb. 25 PAC meeting, Gray described a range of benefits provided by the urban forest, estimating that the benefits in stormwater management, air quality, energy conservation and quality of life total $4.6 million annually. As an example, studies show that people tend to spend more money in shopping areas that have more trees, she said.

Over the last decade, the urban forest has faced two major challenges, Gray told PAC: the emerald ash borer, and budget reductions. The city lost over 10,000 ash trees, and had to focus its constrained resources on removing those trees. That resulted in deferred maintenance for other aspects of the urban forest, she said.

That deferred maintenance didn’t affect park trees, because the parks millage provided funding, she said. But for street trees, she reported a significant backlog issue. As of July 1, 2013 – the start of the city’s current fiscal year – there was a backlog of 1,412 street trees that needed removal; 3,110 trees that needed priority pruning; 38,471 trees that needed routine pruning; and 1,371 stump removals. The figure for routine pruning includes “training prunes,” which are done on young, newly planted trees to help them develop proper form and structure. Gray reported that the city removes about 550 trees each year, and plants about 1,000 trees annually. No routine pruning cycle or proactive maintenance occurs at this time, she said.

To address these challenges, the city began developing its first-ever urban and community forest management plan. The planning process and public outreach, using the consultant Smith Group JJR, included staff, a working group, an advisory committee, stakeholder groups and the general public, as well as feedback from an online survey.

The plan was finalized in April, followed by review by both the environmental and park advisory commissions at their April meetings. Each of those commissions has been asked to pass resolutions recommending that the city council adopt the plan. It’s expected to be on the council’s agenda in June or July.

Last year, at its July 15, 2013 meeting, the city council approved a two-year $509,125 contract with Margolis Companies Inc. to plant 750 trees in FY 2014 and 1,000 trees in FY 2015. The work is to be paid for from the city’s stormwater fund and reimbursed with a state revolving fund (SRF) loan that has been obtained through the Washtenaw County water resources commissioner’s office.

City administrator Steve Powers responded to a Chronicle query about the nature of the work to be funded with the $1 million by explaining that there are currently 5,239 sites classified in the tree inventory as places where trees need to be planted. Of those sites, 350 will be planted this spring and 1,000 of the sites will be planted in FY 2015 – which means fall 2014 and spring 2015 of the calendar year.

The $1 million in the FY 2015 budget designated for street tree maintenance will eliminate the backlog of Priority 1 and Priority 2 removals, according to Powers. In the Priority 3 removal category, it will also remove the backlog for trees greater than 12-inches in diameter (measured at breast height). It will also support the pruning of trees in the Priority 1 prune category, eliminating the backlog in that category.

Q: The budget includes a new non-recurring budget line of $1 million for street trees.

Steve Powers: This is the second year of a two-year budget. We try very hard not to deviate from that second year of the two-year plan. For FY 2015, the significant changes are the three police officers and the firefighter positions – those changes were shared with the council at a February work session. As we moved through 2014 after that budget work session, it became clear that we should be addressing the street trees. We have a draft urban forestry management plan, and it was recommended to me – and I concur – that we should use $1 million of our fund balance to eliminate the backlog of priority tree removals and high-need pruning.

Map of selected tree variety by The Chronicle from city of Ann Arbor 2009 survey. Image links to dynamic map hosted on geocommons.com

Ann Arbor trees in public right of way by their condition. Chart by The Chronicle with data from 2009 city of Ann Arbor inventory.

Ann Arbor trees in public right of way by their type of maintenance needed. Chart by The Chronicle with data from 2009 city of Ann Arbor inventory.

Q: So it sounds like the decision is driven by a need, rather than the availability of funds that weren’t previously anticipated.

Steve Powers: Over the past two years, the council has been setting priority areas.

I’ve been pushing the city’s service areas to think about how to align our resources with those priority areas. One of the priority areas is fiscal stability and budget discipline. So there’s a tension between maintaining that two-year financial plan integrity, and the infrastructure priority area that says we need to do more maintenance of the city’s infrastructure. Street trees are a vital part of our stormwater management infrastructure, as well as just the fact that we’re a tree city, and the tree canopy and the trees themselves are an important part of our community. So the funding for street trees was because of an identified need, and the result of services areas looking for ways to move forward on council priorities.

Third, we don’t have an identified funding source for the street tree backlog. That’s unlike streets and roads, where we have a dedicated street millage and we get Act 51 gas tax revenues from the states. So from a policy perspective, while those two sources might not be enough, we do have identified specific revenue sources for streets. We don’t have that for the trees. So this [budget allocation] was seen as a way to reduce a significant backlog. It’s a one-time, non-recurring need. It will address Priority 1 and 2 removals – diseased, dead heavy branches or trees that are greater than a foot in diameter.

Tom Crawford: The street trees used to be the responsibility of the general fund. A few years ago, that responsibility was transferred to the stormwater fund – recognizing that street trees were part of stormwater management.

SP: And to help out the general fund.

TC: At the time of the transfer, we had not recovered from the impact of the emerald ash borer, Dutch elm disease, and the financial cutbacks that we’d had. This is actually taking that deferred maintenance that was given to the stormwater fund, and making it whole. So going forward, that stormwater fund has to maintain that asset.

Q: Are there any other areas that might have similar needs, and that would require tapping the fund balance?

SP: After this winter, one could certainly say that we have some needs. I’m not recommending that the city of Ann Arbor – beyond what citizens have already chosen to do through the street millage – take on the responsibility. That really should be the state of Michigan’s responsibility, through the gas tax. The trees are our responsibility. The city chose to move an important part of our living infrastructure from the general fund to the stormwater fund, without at that time transferring the resources necessary to maintain that infrastructure.

Q: So there’s not a parallel situation with any other city infrastructure, that doesn’t have a dedicated funding source?

SP: I don’t think so. One might argue parks, but we have park millages. If the discussion is about other priorities – like energy or sustainability – this is a one-time transfer of fund balance to meet a one-time need. This is not to add on an ongoing basis $1 million of additional foresters or contract services. It’s a one-time use of fund balance for deferred maintenance.

Q: If the council had exercised the city’s right of first refusal to buy the Edwards Brothers property, would this $1 million funding for street trees have been available from the fund balance?

TC: That’s speculative. With that, it would have depended on how things transpired. If we got it, what if we sold it? Would we have made money or lost money? There’s many scenarios that could have come out of it, so to tie that to the street tree funding, you’d have to pick a scenario. If we lost money, that would probably not have put us in a position – from a fund balance perspective – to have as much discretion as we have now.

Washtenaw County Context, Fund Balance

Q: What’s the status of the city’s fund balance now, in terms of the city’s policy?

Tom Crawford: The official policy is to have a fund balance that’s in the range of 8% to 12% of the general fund expenditures. I generally recommend more in the 15% to 18% range, but that could get more confusing with the addition of the housing commission employees. After the $1 million on street trees, the fund balance would be around 12%, which is still a good fund balance.

Steve Powers: Tom would like it higher, as I would want the city’s chief financial officer to be advocating. I look at it as we do have needs. Our current financial condition is improving. The city’s tax base is growing. The state’s economy is improving. So the judgment is that with an improving economy, a 12% fund balance is prudent and a good balancing of maintaining that fiscal discipline and meeting an unmet deferred maintenance need. I was walking to work today and we had a tree down across Packard, right by Forsythe Park and the hardware store. It’s a need that’s been documented very well in the urban forest management plan.

Q: The fund balance level is one that Washtenaw County also has discussed. The argument for a higher fund balance is that it helps achieve higher credit ratings.

TC: I think the council has less financial flexibility than it’s had historically, as a result of the changing laws and economics. My recommendation [regarding the fund balance level] stems from a desire for them to have more flexibility, in the event of another downturn. Credit rating agencies look at the amount of fund balance as one factor. But for us to aggregate just fund balance is not necessarily the way to get a good bond rating. And by the way, we do have a very good rating.

SP: We’re AA+. We’ve looked at going triple A, but…

TC: That’s a lot of resources to tie up to move to triple A, with a very small benefit.

SP: Another reason why I’m comfortable with a 12% fund balance is that council has been very supportive of staff’s recommendation to have recurring expenditures be funded by recurring revenues. The four additional FTEs, for example, are funded by recurring revenues that Tom and his team have very conservatively estimated are going to continue. I’m very, very confident that the recurring expenditures we’re adding to the 2015 budget are going to continue to be funded through recurring revenues. Council has also been very supportive of staff recommendations for one-time or non-recurring expenditures to be funded by non-recurring revenues. That is, to use non-recurring revenues – if we got a windfall of some kind – on a one-time expenditure, rather than building it into the base budget.

Some organizations are nowhere near as disciplined, when it comes to their actual budget policies and practices. If you’re not tight on those, an administrator or CFO might very well want to see the fund balance up near 20-25%. For some managers, their goal is to have a year in the bank. I’ve always felt that if you’re putting that much away, maybe you should look at returning it to taxpayers or putting it into services or capital items.

Q: Washtenaw County has moved to a four-year budget, to help with longer-term planning. Is that something the city has considered?

TC: We do a five-year projection, in the context of our two-year plan. We update it every year. I need to keep that radar acute, because if something long-term pops up in an off year, we need to know it – we won’t wait for the next two-year cycle. Earlier [in this interview] we mentioned staff reductions. One of the reasons we started doing two-year budgets was that it allowed time for us to get into the bigger picture stuff. In the second year, the operations staff don’t have to be as engaged as when we do the full two-year budget. In part, that allows the organization to be more productive and get more services done and planned.

Regarding a four-year budget, for us there’s a trade-off of the efficiency of the budget versus the accuracy. In my personal view, going out three or four years, our radar capability is not sufficient for it to be worthwhile. We ought to look at it as a parameter, as we do our two-year process. But I’m personally not a huge fan of planning that far out. It’s a lot more work, and is more of a vision. We’re in an environment that moves enough that we all really need to buckle down every two years and go through the budget process – whether we like it or not – to stay focused.

SP: We also have a six-year capital improvements process. We’ve unlinked the budget and the CIP, and focused on what is needed. The planning commission owns that, then Tom and his team slide in available resources. Ultimately, the council does the final balancing of the needs and the resources.

TC: We have to look at it annually. The city has so much infrastructure that we do have to look at it frequently, because things could change.

SP: There are also some of our operations – specifically, the wastewater and water treatment plants – that are looking three to five years ahead. Compared to the county, we have different organizational challenges. The county board’s only real authority over the elected constitutional officers is the budget. [In addition to the elected county board of commissioners, elected county officers are the sheriff, prosecuting attorney, clerk/register of deeds, and water resources commissioner.] That’s different from a city, where the departments are all clearly accountable to the city administrator, who is accountable to the city council, which is ultimately responsible for the budget and for deciding what services to provide.

Also, planning out for four years for some of the city’s operations – like the police, for example – could be a little difficult. It might be a useful exercise, but I’m not sure how practical it would be.

But we certainly do multi-year planning with financial projections. Now that we have some money for affordable housing, for example, we’re developing a plan for that.

Q: The issue of addressing homelessness has been discussed recently at the county board and city council. The county hopes to update the 10-year Blueprint to End Homelessness. Affordable housing is obviously a big piece of that. What’s the city’s role and strategy for addressing this issue?

SP: The blueprint is an important planning document. I think the city needs to drill down and develop plans that make sense for Ann Arbor, though it’s a regional issue. With the funding that’s available from the sale of the old Y lot, there’s some money to work with. So it’s important to develop a plan that includes specific actions that make sense for Ann Arbor but that are part of a larger plan. For the city, an important part of affordable housing is the housing commission, and much of the city’s financial and policy support has been toward the housing commission for the past two years. I expect this larger affordable housing priority will generate more momentum, as it’s become a clear priority area identified by council.

I’m anxious – and I believe council is as well – for the results of the updated needs assessment. While we know that affordable housing is a need and a problem, I think having more detailed information will help us, particularly as transit will be part of the review – the connectivity between housing and transit. Council has also talked about workforce housing, although it hasn’t crystallized into anything yet. We spent a lot of time talking about the 30% of AMI [area median income]. The city and region has some challenges at the upper end of that spectrum.

So we’ll be looking at affordable housing as a priority in the next two-year budget cycle.

Q: How much is in the current budget for animal control?

SP: $28,000 for FY 2015 – the same as in FY 2014. I’m still working through the contractual relationship between the Humane Society [of Huron Valley], Washtenaw County and the city. At this point, the $28,000 is a contractual obligation with the county.

Q: The county is beating the drum to get more funding from other communities that haven’t historically contributed as much to animal control. What’s your perspective on that, and do you see the city’s contribution increasing in future years?

SP: I’m hearing those drumbeats. We are working through invoices from the Humane Society for specific services, for specific sheltering of animals. There were some factual errors in the invoices from January and February, and we’ve just received March. I anticipate that the amount [of $28,000] will change, but it’s not at a point where I was comfortable including anything more for the FY 2015 budget. There may be the need for an amendment later, but at this point it’s $28,000. I need to bring a recommendation to council that will be separate from the budget.

It’s kind of an odd relationship where the Humane Society and the county negotiated an agreement that includes provisions pertaining to other local governments without other local governments being at the table. The Humane Society is receiving a half million dollars from the county, and part of the review has been our attorneys looking at the county attorney’s opinion of the 1919 dog law. It’s taken a while and I need to bring closure to it, one way or the other.

Overall Health, Role of State

Q: Can you talk in broader terms about the highlights of the FY 2015 budget? What would you like the public to be aware of? What’s the financial status of the city, coming out of some difficult years financially?

Tom Crawford: I think the city is financially healthy. Different people may measure health in different ways, but I am cautious about the future. We still operate in an environment where the funding of local government is still restrained. We see our revenues going up in the 1.5% to 1.75% range. And given general inflation trends of 2.5% to 3%, that’s upside down. And while that doesn’t sound like a lot, when the organization has reduced its FTEs by 30% and then you look forward, it’s meaningful and it could affect the ability of the city to deliver services.

I remain frustrated that the state hasn’t spent more time than it has figuring out a better way to fund local governments, though it has spent some talking about it.

Steve Powers: You’re a lot more optimistic than I am on that.

TC: They’re talking about it – I haven’t said they’ve done anything yet. I worry about that going forward. It’s a structural problem that needs to be fixed. Locally, I think we’ve done a lot to remain healthy in this environment of resource constraint and reduction.

SP: The state economy is improving, and we’re seeing that in increased sales tax revenue.

TC: We’re not assuming an increase in gas tax. It’s a difficult thing to project, but it has been a weak source of revenue.

Q: What are your assumptions about personal property tax revenue?

TC: We have incorporated the status of the legislation, although that doesn’t affect 2015, as I recall. My long-term projections assume that it will pass in November. We lose money from this deal, but for this community, personal property tax revenue is not a game-changer in terms of finances. For some other communities, it’s huge.

Q: So in general, it sounds like you’re optimistic but still very cautious.

TC: I’m pleased with where we are financially, but I’d like the city to have more money. Given the environment we’ve been through, we are in good financial condition.

SP: As a small example, we put more toward our VEBA than is required. The amount is tied to our growth in revenue, so we’re dedicating a portion of our revenue growth to our payment on that liability. [VEBA stands for Voluntary Employees Beneficiary Association – a pension plan.]

Q: That seems like an unusual approach.

TC: It has been unusual. We talked about it with council in February, and had our actuaries come in. Actuaries tell you what you need to put in. It’s about $80,000 this year. The policy recognizes that this is a liability that needs to be paid down, and so as resources become available, the policy commits the city to paying it down before the money is freed up for other uses. It’s just like a debt, and we’re paying it down.

This particular approach works for us. It all works together. The way we budget is based on the resources we have available, and so this policy dovetails with the way we operate.

SP: Tom is like the Lorax for the numbers. He speaks for our city’s financial condition. He’s concerned about the city’s ability to deliver services, but there are others who have that as their primary responsibility.

Q: If you could set aside your CFO role, what ambition would you have for the city that isn’t necessarily related to the city’s finances?

TC: I don’t set aside my CFO hat. That would be getting too close to policymakers – that’s their job.

SP: Tom has helped me better understand what the city might do in terms of engagement with the community on priorities. We’ve brought this up in earlier council planning sessions. Some of the feedback from the council’s priority-setting was that it wasn’t really robust enough. Tom has helped strategize about how to engage the community and council in aligning what they’d like to see for the city with the financial resources.

TC: I love strategy. Strategy and engagement have been my objectives, to support council’s goals and priority-setting, as well as Steve’s. The budget is just a plan, and it needs direction. The priority setting that they’re doing is helpful.

Q: Are both of you involved in advocacy at the state level, in terms of funding for local government?

TC: We have a lobbyist in Lansing – and we use them.

SP: The Michigan Municipal League is talking about it, but there isn’t much discussion in Lansing.

TC: There are a lot of issues the state has been tackling – whether you agree with them or not, they’re tackling issues. But this [funding of local government] needs to be one on their radar. Not just because I’m in local government, but because I’m a long-term resident. There are multiple areas of government that need to be addressed, not just the state issues.

Q: What’s are some issues that you’d like state legislators to deal with?

SP: One thing would be changing the sales tax allocations, so that the areas where the sales are generated actually receive the tax revenues. I would bet that we’re a donor.

Q: Back to the city’s FY 2015 budget. Is there anything else you’d like to highlight?

SP: We go through a very in-depth review every two years. This is the second year, looking at what has changed in our revenue projections. What are some truly significant service needs? But these are tweaks. Some people will have wanted us to do more, but that’s not the direction I gave to staff for this budget. We followed that two-year discipline.

Second is that we followed the discipline of recurring revenues for new positions. We’re not deficit spending. And I don’t think it’s a contradiction, but the budget is also recognizing council priority areas – most notably the infrastructure item – by saying we’ll put $1 million of the balance toward street trees. That’s significant. And while $1 million is a lot of money, our total expenditures – including some capital items – is $334 million. The general fund expenditures are $98 million.

TC: I wouldn’t lose sight of affordable housing. We’ve sold the Y lot and affordable housing is getting some recurring funding to do the RAD conversion. Those are getting addressed in this fiscal year, and those are resources that weren’t in the original two-year plan. So there’s been significant assistance given to affordable housing in this two-year period.

Q: Any other highlights?

SP: There are a few smaller items, trying to respond to council priority areas. There’s $100,000 for a one-time inventory of existing signs and for developing the text amendments for D1 and D2 zoning. We’re also providing $209,000 from the general fund to the housing commission.

Economic health is an example of a council priority where we’re waiting for the first year of the two-year budget cycle to drill down. We’re going through a redevelopment readiness review by the Michigan Economic Development Corporation. There may be some recommendations from that that would suggest some resources.

We’re certainly becoming more active at looking at selling city-owned property. To do that well requires resources.

Another priority area that the council added in December is community health and quality of life. That doesn’t have much to it yet.

Q: In terms of economic health, does that mean the financial benefit to the city from selling, or the benefit to the tax base from private development of that property?

SP: Both. Going back to how local government is funded in Michigan, for Michigan cities, unless you’re growing your tax base, you’re declining – because cities can’t rely on the state of Michigan through revenue-sharing or grants or other forms of aid. You need to be growing your tax base. And because of constraints on the growth from Proposal A and Headlee on existing value, the way to grow your tax base is to add taxable value. Even that is restrained, but certainly you get more return to your budget through adding value.

The citizens are still expecting services. And while the mountain was reduced [a reference to the 30% cut in city staff over the past few years] without too much impact on services and infrastructure, that is still a reduction. This is probably another hour discussion, but we believe – the city’s management team believes – that there’s not much more we can do to enhance or add new services without revenue. There’s not much more we can do on the expense side. There may be a few tweaks. But really, to meet the citizens’ service expectations – which aren’t decreasing – we need to increase our revenues.

Although Ann Arbor is somewhat unusual in Michigan in that we seem to not mind taxing ourselves, there are still limits on how much the citizens are willing to pay in taxes. What’s left is increasing our tax base. We have some properties that are underutilized. What is a higher and better use is ultimately for council to decide, but it’s certainly the responsibility of staff to present those options to council and the community, rather than just leaving these properties on the shelf.

Q: There are several possible millage proposals that have been discussed, in addition to the transit tax that’s on the May 6 ballot. Other ideas that have been floated are countywide millages for public safety or human services. Are there city-specific tax proposals that you think would be viable? Or is that a non-starter?

TC: We always look at working within our resources first. There is not a concerted effort to look for more taxes that I’m aware of – not that I’m actively working on, I can tell you.

SP: Nor me.

TC: It wouldn’t surprise me if something comes up on human services. I’m not going to say it doesn’t get mentioned. But we come with the presumption that the citizens are giving us this much, and we deliver services within that.

SP: With that comes the presumption that the taxes we have will be renewed. We take that very seriously.

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The council’s action came at its June 3, 2013 meeting, two weeks after the council set its FY 2014 budget – during a May 20, 2013 debate that ultimately rejected funding for three additional police officers. The proposed budget amendment, which failed on a 5-6 vote, had been brought forward by Jane Lumm (Ward 2). The amendment would have reduced the budget of the 15th District Court by $270,000.

The resolution on June 3 was brought forward by Lumm and Sumi Kailasapathy (Ward 1), who both supported the unsuccessful attempt to reduce the 15th District Court budget to fund police. The June 3 resolution came partly in response to the sentiments expressed during the FY 2014 budget debate, when some councilmembers on the prevailing side had said they’d prefer for additional police to be paid for by the DDA.

The DDA itself has designated $300,000 in its parking fund budget for the next year as “discretionary” and has previously discussed allocating that money to a “clean and safe” initiative – which could include funding police officers. However, sentiments on the DDA board have been mixed about the exact nature of the staffing the DDA would like to pay for. Some DDA board members have indicated a preference for hiring staff who would act as “ambassadors” – not police.

The DDA board meets next on June 5, 2013. For a Chronicle op-ed on this general topic, see: “Counting on the DDA to Fund Police?”

Dissenting on the June 3 resolution were Christopher Taylor (Ward 3) and Margie Teall (Ward 4).

This brief was filed from the city council’s chambers on the second floor of city hall, located at 301 E. Huron. A more detailed report will follow: : [link]

From left: Chuck Warpehoski (Ward 5), Christopher Taylor (Ward 3) and Stephen Kunselman (Ward 3). Budget deliberations pushed the meeting until nearly 2 a.m.

The council considered several amendments to the FY 2014 budget. But the total impact on the general fund of all the successful amendments was not significant, leaving mostly intact the “status quo” budget that had been proposed by city administrator Steve Powers a month earlier. That was a budget with $82.9 million in general fund expenditures. [.pdf of one-page summary of possible amendments] [.pdf of longer detail on FY 2014 budget amendments]

Most of the successful amendments were voted through with relatively little debate, and involved amounts of $100,000 or less. For example, the Washtenaw Health Initiative received an additional $10,000 allocation, and the Miller Manor senior meals program received a $4,500 boost. Allocations to human services nonprofits were increased by $46,899. And the general fund balance was tapped to conduct a $75,000 study of sidewalk gaps so that projects could be prioritized.

The affordable housing trust fund received an infusion of $100,000 from the general fund reserve. The council also approved an amendment prohibiting the spending of $326,464 that was set aside in the FY 2014 budget for public art, in anticipation of a final affirmative vote on a change to the public art ordinance. A vote on amending that ordinance is likely to take place on June 3, before the fiscal year begins on July 1.

The “parks fairness” amendment, which came after deliberations on all other amendments, was a straightforward calculation in accordance with a city policy. The policy requires that any increase in general fund spending be matched by a parallel increase for parks. The council approved that $22,977 amendment with scant remark.

Just three issues took about 80% of the council’s roughly 4.5-hour budget deliberations: (1) the budget of the Ann Arbor Downtown Development Authority, (2)  the possible reduction of the 15th District Court budget in order to pay for three additional police officers, and (3) the proposed restoration of loose leaf collection in the fall.

Of the most time-consuming items, the change to the DDA’s budget was ultimately approved – after escalating political rhetoric led to a kind of compromise that had almost unanimous support. The DDA compromise budget amendment called for a $300,000 transfer from the DDA’s TIF (tax increment finance) fund to the DDA’s housing fund, and a recommendation to spend $300,000 of TIF money on the replacement of Main Street light poles. Only Christopher Taylor (Ward 3) dissented.

The lone dissenting vote on the budget as a whole was Jane Lumm (Ward 2), who issued a verbal spanking of her colleagues and the city administrator – for proposing and approving a budget she did not feel reflected a priority on public safety. Countering Lumm was Taylor, who pointed out that roughly half of the general fund expenditures are related to public safety.

Budget: Time Overview

For a time-stamped chronological account of the deliberations that was posted live during the meeting, see “May 20, 2013 Ann Arbor City Council: In Progress.” The summary of deliberations below is presented in the rough order of time spent on each of the amendments.

FY 2014 budget: Time spent on deliberations, by topic. The proportionate times are estimated from time stamps from The Chronicle’s live updates. Time from the roughly 10-minute recess was assigned to the immediately preceding item of discussion, which was the DDA budget debate.

Occupying most of the council’s time – around an hour and a half – was discussion of the Ann Arbor Downtown Development Authority’s budget. The council wound up with a compromise that transferred $300,000 from the tax increment finance (TIF) fund to the housing fund, and a recommendation from the city council to spend $300,000 on replacement of light poles on Main Street. The sole dissent on the compromise was Christopher Taylor (Ward 3).

The second-longest amount of time spent in the council’s budget deliberations related to a service previously provided by the city but discontinued a few years ago: collection of loose leaves in the fall. The loose leaf collection program invited residents to push leaves into the street, where the leaves were collected on a neighborhood-by-neighborhood schedule. That’s been replaced with collection through carts and bags – a purely “containerized” approach. The discussion lasted over an hour and did not result in the restoration of the mass leaf collection service. The proposal got support only from Jane Lumm (Ward 2), Sally Petersen (Ward 2), Mike Anglin (Ward 5), and Sumi Kailasapathy (Ward 1).

And taking a bit under an hour’s worth of deliberations was a proposal to reduce the 15th District Court’s budget by $270,000 and to use the recurring savings to hire three additional police officers. That proposal failed on a 5-6 vote – with support only from Lumm, Anglin, Kailasapathy, Stephen Kunselman (Ward 3) and Marcia Higgins (Ward 4). A proposal to fund a single police position – by eliminating an FTE in the city attorney’s office through a retirement – received shorter debate and less support, with yes votes coming only from Lumm and Kailasapathy.

DDA Budget: Background

In the summary of possible amendments compiled for the council before the meeting, there were competing amendments on the DDA budget – one championed by mayor John Hieftje, with the other put forward by Stephen Kunselman (Ward 3). Both dealt with the fact that the DDA’s tax increment finance (TIF) capture is now expected to be $568,000 more in FY 2014 than the roughly $3.9 million on which the DDA based its FY 2014 budget.

Hieftje’s version of the amendment specified three areas on which the additional revenue was supposed to be spent: housing, replacement of failing Main Street lamp posts, and the economic development agency Ann Arbor SPARK. It specified a $100,000 transfer to the DDA’s housing fund. Kunselman’s version was confined to housing, and transferred $500,000 from the DDA’s TIF fund to the DDA’s housing fund.

The council considered Kunselman’s amendment, and ultimately approved it in amended form – transferring $300,000 to the housing fund from the TIF fund and recommending that an additional $300,000 be spent on light poles on Main Street.

By way of background, the DDA is financially a “component unit” of the city. The DDA captures some of the taxes that would otherwise go to the jurisdictions that levy taxes within a specific geographic area. But it’s just the initial increment – between the taxable value of an unimproved property and the value of a property after improvements are built – on which the Ann Arbor DDA captures taxes.

The Ann Arbor DDA was established under a city ordinance in Chapter 7 of the city code, which appears clearly to limit the amount of the TIF revenue the DDA is supposed to receive to an amount that’s a function of the forecasted revenue in the TIF plan – a foundational document of the DDA.

The Ann Arbor DDA has given Chapter 7 a different interpretation since 2011, when the implications of Chapter 7 were reportedly first noticed. On the Ann Arbor DDA’s interpretation, the relevant language does not actually limit the amount of TIF revenue that the DDA receives. That led to an attempt earlier this spring by the city council to clarify the language of the ordinance so that the DDA did not have the flexibility of interpretation in the future. At its May 6, 2013 meeting, the council postponed that effort at clarification until September 2013.

The Ann Arbor DDA also operates the city’s public parking system under a contract with the city. Under the terms of that contract, the city receives 17% of gross revenues from the parking system.

With respect to the DDA’s budget, the state’s enabling statute for downtown development authorities indicates that an authority is supposed to adopt its budget after the governing municipality approves it [emphasis added]:

125.1678 Budget; cost of handling and auditing funds. Sec. 28. (1) The director of the authority shall prepare and submit for the approval of the board a budget for the operation of the authority for the ensuing fiscal year. The budget shall be prepared in the manner and contain the information required of municipal departments. Before the budget may be adopted by the board, it shall be approved by the governing body of the municipality. Funds of the municipality shall not be included in the budget of the authority except those funds authorized in this act or by the governing body of the municipality. (2) The governing body of the municipality may assess a reasonable pro rata share of the funds for the cost of handling and auditing the funds against the funds of the authority, other than those committed, which cost shall be paid annually by the board pursuant to an appropriate item in its budget

However, the Ann Arbor DDA board has typically adopted its budget before the city council approves the city’s fiscal year budget, of which the DDA’s budget is a component. That was the case this year as well, when the DDA board adopted budgets for FY 2014 and 2015 on Feb. 6, 2013. [.pdf of DDA FY 2014-15 budget]

DDA Budget: Deliberations

Stephen Kunselman (Ward 3) led off the deliberations by reminding his council colleagues of some proposals he’d mentioned at the council’s May 6, 2013 meeting. That was the occasion on which the council postponed the DDA ordinance amendments until Sept. 3.

On May 6, Kunselman had sketched out a number of possible proposals: (1) 10% of the DDA’s TIF capture would be earmarked for affordable housing; (2) the DDA’s housing fund would be reserved for affordable housing at 30% of the area’s average median income; (3) 50% of the city of Ann Arbor’s TIF “rebate” would be deposited into the city’s affordable housing trust fund; and (4) for the FY 2014 budget, $0.5 million of the DDA’s TIF would be transferred to the DDA’s housing fund.

On May 20, Kunselman continued deliberations by specifying how he wanted to see the DDA spend the $500,000 that his budget amendment would transfer into the DDA housing fund. Kunselman wanted it to be used on Miller Manor, an Ann Arbor housing commission property located at 727 Miller Ave. Miller Manor is not located within the DDA district.

Ann Arbor Housing Commission properties. The size of the dot is proportional to the number of units in the location. The largest dot is Miller Manor. (Map by The Chronicle. Image links to interactive map.)

However, under an adopted Ann Arbor DDA policy, investments of DDA TIF can be made outside the geographic boundary of the district, as long as they are within 0.25 miles of the boundary. The western edge of the DDA district boundary on Miller Road is Chapin Street, and Miller Manor is located about 0.21 miles from Chapin – within the area described in the DDA’s policy. But Kunselman noted that the city could not tell the DDA how to spend the money – saying the city could simply put the money into the housing fund. And that meant it would have to be spent on housing.

Leaving most of the additional money in the TIF fund – as mayor John Hieftje’s proposed amendment would do – still provided complete flexibility for the DDA to spend the money as it wished, cautioned Kunselman. Under his own amendment, Kunselman argued, the DDA would need to spend it all on housing. But he argued for spending the money on Miller Manor, because it was public housing stock, which was meant to be accessible to those with incomes of 30% of the area median income (AMI). Kunselman described the kind of housing the DDA had supported with City Apartments, a private development under construction at First and Washington, as supporting the 80% AMI level.

Kunselman also contended that it was not a surprise to anyone that the DDA would be receiving the additional $568,000, and he didn’t understand why the DDA had not put that additional revenue in its proposed budget when it was adopted in February. Kunselman called it a “lowballed” budget. The additional funds had not been brought up until he’d advanced his proposed amendment to the DDA ordinance earlier in the spring, he said. Kunselman’s contention was that the DDA could have reasonably known that its TIF revenue would be closer to $4.5 million than to the $3.9 million it budgeted near the end of February.

Hieftje invited city CFO Tom Crawford and Susan Pollay, executive director of the DDA, to the podium to answer questions. Hieftje asked Pollay when the numbers for the tax assessment are available to the DDA. She said that the DDA saw the numbers when the council did – April 1. Pollay contended that the DDA is not privy to the estimates that are being formulated. So the DDA does its best to estimate based on previous years, she said.

Kunselman asked Crawford to confirm what Crawford had told Kunselman in response to the question of when estimates of assessed value were available – saying he’d been told it was Jan. 1. Crawford said there are a lot of things that go on between January and April. It’s closer to April when it’s final, explained Crawford. But Kunselman pointed out that the board of review notices are sent out in March, which means that the numbers are available before then. Crawford responded by saying that “they have to process that stuff.” It’s around April that the numbers are actually known. Crawford allowed that estimates can be done on fairly good data in January, but the final numbers are available in April.

Pollay then responded to Hieftje’s prompting about the nature of the DDA board’s discussion at a special meeting on May 13. Hieftje contended that the DDA achieved a quorum on that occasion and reached a consensus on the allocation of additional TIF revenue. A quorum would be seven of the 12-member DDA board.

Later in the meeting, Hieftje described his own resolution as based on the “DDA action last week.” [In an email to the council, DDA board chair Leah Gunn had characterized the May 13 meeting as "informal." That description is consistent with the fact that no resolutions were voted on or discussed. Gunn's email indicated that seven board members had attended. The Chronicle recorded only the following six board members as present: Leah Gunn, Joan Lowenstein, John Splitt, Sandi Smith, Roger Hewitt and Newcombe Clark.]

Pollay told the council that there’s an interest on the board in replacing the lamp posts on Main Street, which are rusting from the inside.

Ann Arbor Main Street rusted light pole. (Photo from April 2012 by city of Ann Arbor staff.)

Pollay also indicated that the DDA wants to support some affordable housing efforts and economic development, which are council priorities. She described the possibility of sending DDA board members and SPARK officials to other communities to find out what they’re doing better than Ann Arbor. Specific places to visit, for example, were Chapel Hill, North Carolina, and Madison, Wisconsin. [.pdf of DDA's summary of May 13, 2013 meeting]

Sabra Briere (Ward 1) noted that the amendment proposed by Kunselman is to allot 100% of the additional TIF revenue to affordable housing. She asked Pollay how those funds would be used in the future.

Pollay responded by saying that that the DDA is planning to meet with housing providers in the near future, and that will help determine how the board might spend the $500,000 on affordable housing.

Briere asked if the DDA has a plan for housing that has criteria to determine how grants are made to housing. Pollay responded to Briere by describing the “full spectrum” of housing. The DDA is interested in housing at all levels for all people, Pollay said.

Sally Petersen (Ward 2) contrasted the alternative amendments – Kunselman’s compared to Hieftje’s. She wanted to see if they could be combined. She asked Kunselman if he’d consider lowering the amount to $300,000 – as a friendly amendment to his budget resolution. [Amendments that are considered friendly by the sponsors don't require a vote.] Kunselman rejected Petersen’s offer by saying he felt a vote should be taken on that.

Sumi Kailasapathy (Ward 1) reminded the council that the public hearing on the DDA ordinance – on April 15 and May 6 – made clear there’s a gap that’s perceived by the community in affordable housing. [Several members of the homeless community spoke during that hearing in support of the DDA.] Some residents have been left behind, she said. Not everybody is meant to be a Google worker. She wanted to stick with the $500,000 for affordable housing that was in Kunselman’s resolution.

Hieftje then invited public services area administrator Craig Hupy to the podium to talk about the urgent need to replace the light poles on Main Street. Hupy indicated that no provision has been made in the city’s budget to replace them. Up to now, Hupy said, the discussion has been centered on the idea of the DDA paying for the light pole replacement, because the DDA did the original installation. He identified the general fund as the source of the funding, if the city were to pay for the light pole replacement.

[At the May 13 gathering of the DDA board, Pollay indicated that she'd been informed that if the city undertook the installation, it would take a more functional approach and install a fewer number of replacement light poles – using "cobra head" fixtures, instead of the decorative lamp posts currently in place. That cost for the functional approach was estimated at $50,000.]

Responding to a question from Kunselman, Hupy described an interest in not having the same “design error” going forward. [At the May 13 gathering of the DDA board, Pollay had described how the light poles that are rusting sit flush on the concrete and may sit in water. A newer design has the base of the poles elevated on "fingers."]

The cost is estimated to be around $465,000, Hupy said. [In a follow-up email responding to a query from The Chronicle, Hupy indicated that no detailed specification and bidding has been done at this point. So the pricing is somewhat "soft," indicating that when staff puts initial estimates together, they try to make sure they can do the job for the price that's estimated.]

Chuck Warpehoski (Ward 5) got clarification from CFO Tom Crawford about how much the council could control in the DDA’s spending. Essentially, Crawford indicated that the council could make transfers between funds, but could not mandate which projects the money was spent on or in which year it was spent. Warpehoski said the light pole replacement is important – as they’ve been falling down. He proposed a change from $500,000 to $400,000 for the transfer to the DDA’s housing fund, with $100,000 for light poles. Kunselman indicated that would be a friendly amendment. Kunselman stressed that it would actually just reduce the amount of the transfer to $400,000, but not specify the $100,000 be designated to light poles.

Some back-and-forth ensued between Crawford and Christopher Taylor (Ward 3) about the nature of one of the resolved clauses and the importance of recognizing the additional revenue to the TIF fund.

Briere drew out the fact that the unbudgeted TIF amount, not originally anticipated by the DDA in its budget, is actually $568,343. She wanted to know why the full amount is not being dealt with. City administrator Steve Powers explained that it’s because $500,000 is the amount Kunselman put in the resolution and city staff didn’t take the liberty of changing it. Briere wanted to change the amendment to reflect the actual amount. The council was amendable to revising the amount of additional TIF revenue recognized to $568,343.

Briere highlighted another project the DDA wants to undertake – South University improvements. Pollay also mentioned that the brick streets of North Fifth Avenue are “waiting for us” to be improved.

Kailasapathy described the additional TIF revenue as a “windfall.” Pollay countered Kailasapathy by saying that $3.4 million will go toward debt service. Pollay also brought up the $508,000 that the DDA gives the city annually – as part of an $8 million grant the DDA awarded toward the bond payments for the new Justice Center.

Warpehoski introduced an idea promoted by Dave DeVarti and Alan Haber – that the DDA would pay off the loan on the former Y lot, located between Fourth and Fifth avenues, north of William. Such an action would free up the proceeds of the eventual sale of that city-owned land to be dedicated to affordable housing. This approach has the advantage that the proceeds wouldn’t have to be spent on properties within the DDA district, he noted.

Alluding to Hieftje’s version of the DDA budget amendment, Briere indicated that she’s not a 100% fan of SPARK. But she’s still concerned about allocating funds for some kind of economic development.

Referring to a resolution approved by the council earlier in the meeting, Petersen indicated she’s not expecting the need for the economic development task force to incur expenses by traveling to other cities. The task force was not set up with a budget, she noted. She was grateful for the spirit of generosity in Hieftje’s amendment that would put the DDA in a position to provide those funds. But she figured any expenses would be nominal and would be shared among the entities represented on the task force – the city, the DDA, and SPARK.

Hieftje returned to the issue of the light poles on Main Street. Hupy indicated that it would not be possible to hang banners on the poles until the poles were replaced. Responding to Warpehoski’s idea that the light poles could be replaced over a period of time, Hieftje asked Hupy if efficiencies would be gained by replacing them all at one time. Essentially, Hupy’s response was yes. He identified issues like a need to inspect the light poles that were in need of replacement, and the possibility that replacing only selected poles could result in mismatches in the style of poles.

As far as other projects the DDA is looking to pursue, Hieftje returned to the issue of South University and Pollay described wanting to finish off the Fifth and Division street project in the Kerrytown area.

Hieftje then said he had some concerns about trying to tell the DDA what to do. He referred to Kunselman’s approach as a command-and-control strategy. He reiterated his concern about the light poles on Main Street.

Taylor concurred with Hieftje, saying that the resolution was an attempt to micromanage the DDA. Downtown is a complex place, Taylor said, and the city doesn’t understand the downtown as well as the DDA – “that’s just the truth.” He called on the council to approach the DDA’s budget with humility, in light of the fact that the council does not have all the information – but the DDA does. He contended that the amendments offered by Hieftje and Kunselman took different approaches. [The original amendments differed materially only with respect to the dollar amount to be transferred from the DDA TIF fund to the DDA housing fund – $500,000 versus $100,000. With the friendly amendment that was in place at the time of Taylor's remarks, the difference was $400,000 versus $100,000.] Taylor called Kunselman’s amendment a blunt instrument for a delicate task, and stated that he’d vote against it.

Jane Lumm (Ward 2) responded to Hieftje’s characterization of the amendment as a “command-and-control” approach. She stressed the fact that the message the council had heard in response to the proposed DDA ordinance changes was clearly about affordable housing.

Kailasapathy disagreed with Taylor’s assessment of the DDA as a sophisticated organization. She quoted from an email Pollay wrote back in October 2008 to a resident. [The resident was Peter Zetlin, who subsequently pasted Pollay's email to him in a comment on The Chronicle's live updates filed from the meeting.] Pollay wrote:

For what it’s worth, the proposed parking structure would be paid for with parking revenues (not tax dollars), and unnoted in the local press, the demand for public parking has been increasing every year – including this year, where the numbers of people paying to park exceeds the numbers in all previous years.

Kailasapathy noted that it did not prove to be the case that the new Library Lane parking structure was paid for only with parking revenues. This year, she noted, 87% of the TIF dollars went to bond payments. She disagreed with the idea that the DDA was a sophisticated organization. She said it was good to have oversight of the DDA and important to give guidance.

Hieftje reminded Kailasapathy that she wasn’t serving on the council back in 2008: “Just to point out, Councilmember Kailasapathy, because I know you weren’t here, the underground parking structure was fully supported by city council.”

[The Feb. 17, 2009 vote on issuing the bonds for the underground parking structure was 10-1, with dissent from Mike Anglin. Hieftje's remark was reminiscent of one he made at the council's Dec. 1, 2008 meeting, in reminding Sandi Smith, Kailasapathy's predecessor in that Ward 1 seat, that she had not served on the council at the time the former YMCA property had been purchased.]

Kunselman then told Hieftje, “Of course, you’re not going to support anything that I bring to the table.” [Kunselman was in some sense echoing Hieftje's opening to an email that Hieftje had sent to Kunselman a few weeks earlier, which Hieftje began with: "I understand your need to automatically oppose anything I may be in favor of but wanted to reply just to try and put us all on the same page."]

Kunselman pointed out that there’s only a $300,000 difference between the amended amendment Kunselman was proposing and Hieftje’s proposal. Kunselman indicated he felt that Hieftje’s criticism of the approach as “command and control” could be applied to Hieftje’s own proposal. Kunselman contended that “This is about loyalty to the DDA; this is not about loyalty to the citizens of Ann Arbor.”

Kunselman pointed out that next year, the DDA’s bond payments made out the TIF fund will go from $3.4 million down to $2 million – $1.4 million less. That could be spent on all kinds of light poles, he said. Kunselman discounted the idea that $300,000 was a big difference in that context. He ventured that Hieftje would not have even proposed a DDA budget amendment if Kunselman had not indicated his intent to bring one forward.

Kunselman then addressed Hieftje’s description of the DDA’s board meeting on May 13 and the attendance by the press. From what Kunselman understood from the press, the board didn’t pass a resolution at that meeting, and the DDA didn’t amend its budget. He characterized it as “all talk.” Kunselman accused Hieftje of playing politics.

Marcia Higgins (Ward 4) then said she was not opposed to putting more money toward affordable housing. But she was not sure that this support for affordable housing should come through the DDA. Even if the council transfers $400,000 to the DDA housing fund, the council has no guarantee that the DDA will spend that $400,000 in the way the council would like to see it spent. If the council really wants to support affordable housing, it should simply take money out of the general fund, she said, and put it in the city’s affordable housing trust fund. If the council wants the DDA to be independent, she didn’t see how the resolution did that.

Higgins noted that the light poles fell down a year ago, so she wondered why it had become a crisis situation that had to be dealt with. She didn’t remember hearing about how it was a crisis. She indicated a lack of support for either Kunselman’s or Hieftje’s amendment.

Margie Teall (Ward 4) said she had the words “micromanagement” in her notes as well. She wanted to work with the DDA collaboratively, not by directing the DDA. She wanted the city to be the entity that supports affordable housing. She didn’t want the city to tell the DDA “how to run their business.”

Briere responded to Kunselman’s remarks about the resolution being about “loyalty to the DDA” – saying she didn’t believe the vote is a litmus test on blind support for the DDA or not. She was disappointed by the direction the rhetoric had taken. Responding in part to Higgins’ question about why the light poles had suddenly become a crisis, Briere reported that she’s been nagging about the light poles for a year. City staff have said they don’t have it in the budget, she said. The Main Street Area Association asked the DDA if the DDA could pay for the light poles, and Pollay had responded by saying the DDA would have to find a way to pay for it, Briere reported. Briere stressed that the DDA is responsible for downtown infrastructure. For her, spending the money on infrastructure is the most important part of the DDA’s work.

Briere stressed the fact that the DDA’s housing fund is not specifically designated for affordable housing. She again rejected the idea that the vote on the resolution is a loyalty test.

Hieftje responded to Kunselman’s earlier remark by saying he didn’t disagree with everything Kunselman brought forward. Hieftje just wanted to make sure the light poles are fixed. He suggested a compromise, splitting the amounts between light poles and affordable housing.

Kunselman agreed to the split, saying it was a nominal difference anyway.

Lumm then proposed to divide the question on affordable housing and to vote separately on affordable housing and light poles. Hieftje responded to Lumm by saying that’s not what he was proposing to do.

The specifics of the compromise budget amendment resolution were to transfer $300,000 of the additional TIF to the DDA’s housing fund and to request that the DDA spend $300,000 on Main Street light poles.

Outcome: The council approved the DDA budget amendment, with dissent only from Christopher Taylor (Ward 3). After the vote, the council went into a short recess.

Leaf Collection

By way of background, leaf collection is now provided as part of the city’s containerized compost pickup program. Residents can place yard waste, including leaves, in carts – which can be emptied with automatic robot-arm-equipped trucks. The city also collects yard waste in paper bags.

In the past, the city invited residents to push their leaves into the street after they fell every autumn. The pickups occurred on a predetermined schedule, with each area of the city serviced twice per autumn. The city then used street sweepers equipped with pusher adaptations to pile the leaves together, and then used front-end loaders to load dump trucks with the leaves. Eliminating the loose leaf pickup program was originally estimated to save $100,000 a year starting in FY 2011. According to the city, it’s proven to save closer to $300,000 a year.

From left: Jane Lumm (Ward 2), Marcia Higgins (Ward 4) and public services area administrator Craig Hupy.

The solid waste fund is supported by a millage levied at a rate of 2.4670 mills. A mill is $1 for every $1,000 of taxable value. That millage generates roughly $11 million a year. The funds are used for compost collection, recycling collection as well as garbage collection. [.pdf of solid waste fund status]

Details of the resolution brought forward by Jane Lumm (Ward 2) were as follows: Use $395,000 of the solid waste fund balance to buy two street sweepers; use projected savings from reduced tipping fees and other expenses to cover the $311,000 annual recurring cost. The proposal also included the restoration of holiday tree pickup. It was essentially the same proposal she’d brought to the council last year, when it approved the FY 2013 budget. Last year in Lumm’s bid to have fall loose leaf pickup restored she was joined only by her then-wardmate Tony Derezinski and Mike Anglin (Ward 5).

This year, Ward 2 was again unified in its support – with recently-elected Sally Petersen substituting for Derezinski. Anglin was also consistent in his support. The effort picked up one other vote – from Sumi Kailasapathy (Ward 1). So Lumm’s attempted resolution was defeated on a 4-7 vote, but not before the council took an hour and 10 minutes to debate the issue.

Leaf Collection: Council Deliberations

When she introduced the amendment, Lumm described her attempt the previous year, as well as the technical details of the funding. She contended that for some areas of the city, taking away the service had been a hardship. She contended that loose leaf pickup is a basic service that residents reasonably expect the city to provide – especially in light of the fact that they pay a dedicated solid waste millage that generates over $11 million a year. The holiday tree pickup, she allowed, might not be considered a “core” service, but she felt that it’s a nice, convenient service that can be provided cheaply, for $26,000 a year. Bagging and mulching for some residents isn’t a feasible option, she said. So residents still wind up paying someone to haul their leaves away, which loses the economy of scale that the city could achieve, Lumm contended.

She allowed that there are risks to the fund balance of the solid waste fund. [In round numbers, of the $28.6 million solid waste fund balance, only about $8.6 is "available" for use. Up to $9.4 million in risk has been identified by city staff just to cover the cost of building a replacement drop-off station and to cover requirements of GASB 68, a new accounting standard that must be implemented starting in FY 2015.] But Lumm felt that using $395,000 of the fund balance was appropriate, characterizing it as 4% of the fund balance. The recurring cost was only 2% of the revenue brought in by the millage, she said. Lumm saw value in restoring the service.

After the amendment was introduced by Lumm, Anglin was first to be called on to speak by mayor John Hieftje. Anglin said that in certain areas of the city, leaf pickup is a problem. Ward 2 makes a contribution to the city with its plentiful trees, he indicated, through regulation of stormwater runoff and temperature regulation. He said he wanted to see the amendment approved and “see how it works out.” He said he’d continue to rake his own leaves and put them in the compost carts – because he lives in that kind of neighborhood. In a limited part of Ward 5, he said, there’s a similar problem to Ward 2 for leaf pickup. He cited the stress that the aging population feels about the situation.

Kailasapathy argued from the perspective of economies of scale. She stated that the role of a local government is to provide good services to its citizens. She compared privatizing a certain part of the leaf collection to school busing: If you eliminate school busing, a few children might walk instead, or a few might ride their bicycles, but most parents will drive their children in cars. She stated that it’s more efficient to pick up holiday trees all at one time, instead of thousands of people taking their individual trees to a drop-off point.

Petersen, Lumm’s wardmate, also said she’d support the amendment. She compared the leaf pickup service in its monetary impact to that of the service the city provided recently – on Feb. 28 – when a storm hit and brought down a lot of branches. The city’s effort to pick up storm debris after that happened had been extended to residents citywide, Petersen pointed out, not just to Ward 2 residents. The city was able to absorb that into the budget, and she felt that the city could absorb leaf pickup into the budget as well. Leaves would fall onto the street, whether the city picks them up or not, so she figured it made sense to try to pick them up and take advantage of the economies of scale.

Margie Teall (Ward 4) noted that she’d previously argued against continuing this kind of leaf pickup service. She noted that the city still provides leaf pickup, but it’s done differently now – with compost carts. She felt that the community’s values are in keeping the Huron River as clean as possible and in keeping the streets as clean as possible.

Responding to photographs that Lumm had circulated of piles of leaf bags, Teall said she was sorry that’s happening – but said she didn’t know why those leaves were in the street, because they were not supposed to be in the street. She noted that leaves can be raked every week and a few bags can be put out every week. “There are ways to do this.” She expressed concern about bike lanes – when leaves freeze in the street. She advised keeping holiday trees in your backyard for the birds. So there are ways to deal with the issue that don’t cost the city any money, she ventured.

From left: Sumi Kailasapathy (Ward 1), Sabra Briere (Ward 1), Sally Petersen (Ward 2) and mayor John Hieftje.

Teall argued against Petersen’s point about the city’s effort this year to pick up storm debris – by saying that if the city spends money on loose leaf pickup, it might not have the capacity in the future to implement pickup of storm debris as it did this year.

At Briere’s request, public services area administrator Craig Hupy and solid waste manager Tom McMurtrie came to the podium to field questions. Briere asked Hupy for an explanation of why the city had changed its policy. She reported she’d received emails from people that same day advocating for keeping things the way they were – with no loose leaf pickup. Hupy told Briere the change to the current system of containerized pickup originally had been advocated by those who were concerned about pollution loading to the streams, but that argument had never gained traction.

However, when the “Great Recession” occurred, the city was forced to look at it from an economic point of view, Hupy said. Using only the containerized approach had been expected to save $100,000, Hupy said. Now that the city has gained some experience with that approach, the city saves about $300,000, he said. Community feedback has been heard on both sides, he said. Some people miss being able to rake the leaves out into the street, Hupy said. Others say the streets are cleaner and neater. If he were asked which sentiment was more prevalent, he felt that unscientifically, the “cleaner streets” had it by a margin. But the reason for the change was the economic reality, he reported.

Briere ventured that the amount of compost collected has decreased as a result of the change in leaf pickup method. McMurtrie explained it’s been reduced in part because people mulch the leaves into their lawns or compost leaves in their backyards. Hupy also noted that the amount of leaves picked up by the city is measured by the ton. And when leaves sit in the street, they pick up moisture, making them heavier. When they’re bagged, they stay drier. So the staff believe, Hupy said, that less weight is being recorded on the scales due to drier leaves.

McMurtrie allowed that the tonnages have declined since the containerized program was implemented. He also added that there are seasonal variations. Briere offered an anecdote about a mother and her kids who now use a tarp to drag the leaves out to the back of the house into the woods.

Lumm asked about the private contractors who are now hauling leaves for people: Are they hauling the leaves to the city’s compost site? Yes, said McMurtrie. He noted that haulers are not being charged a tipping fee for bringing in the material.

Chuck Warpehoski (Ward 5) inquired about the quality of the composting product you get from a cart-based approach versus storing the leaves on the street for a while. He recalled reading in the city’s “Waste Watcher” publication that the advice to residents is not to put street leaves into their home compost. Hupy reported that the city has sampled the quality of the leaves. There’s not a difference revealed in the testing so far, he said.

Warpehoski’s question was motivated by the fact that the product resulting from the city’s composting operation is sold. Hupy said that nothing has triggered Michigan Dept. of Environmental Quality (MDEQ) regulations. Hupy indicated that the city’s concern was actually with the reduced amount of organic material that was swept up by street sweepers in the fall – because the leaves were not being swept into the street as a result of the leaf pick up program. So far things are ok, Hupy said. There’s one more round of sampling to be done this fall.

Chuck Warpehoski (Ward 5).

Warpehoski asked about an anticipated revenue shortfall in the city’s solid waste fund. It’s anticipated to come in FY 2016, he said. Later clarification confirmed that a $375,000 shortfall is projected for that year.

Warpehoski asked Hupy to comment more on pollution-loading issues. Hupy explained that back in the timeframe of the early 2000s, there was more concern about pollution loading, with a focus on phosphorus. Hupy indicated that the concern is at the level of TSS (total suspended solids) – the particulate matter itself, not necessarily the chemical makeup. Warpehoski referred to a letter that the council had received from Washtenaw County water resources commissioner Evan Pratt about the impact of sedimentation in places like the Sister Lake area. Hupy indicated that leaves on the bottom of such lakes don’t necessarily decompose. He ventured that the containerized approach would cause less sedimentation. Hupy also ventured that the approach of sweeping leaves into the street could lead to a detrimental effect on stormwater detention facilities – like the one at Pioneer High.

Stephen Kunselman (Ward 3) got clarification that the city sweeps the leaves that happen to fall naturally into the street. Residents aren’t asked to sweep those leaves. Hupy indicated that whatever falls into the street naturally is well within the capability of a street sweeper to handle. Kunselman described last winter seeing places where no sweeping had been done. He ventured that it’s just a guess as to the environmental loading. He felt it would be a great service if the city could provide the loose leaf collection. He also understood the environmental issues.

Kunselman’s statement “I don’t bag leaves by any means” prompted Warpehoski to kid him: “Do you burn ‘em?” This was a reference to a discussion the council had previously about the fees charged to residents for open burning.

Kunselman questioned whether there is now any enforcement against people pushing leaves into the street. Hupy said that people are given a door-tag notice. Kunselman said when he lived on Seventh Street near Pauline, he watched the neighbors push the pile of leaves down in front of somebody else’s house. “Have you ever actually issued a ticket?” Hupy told Kunselman he didn’t think so. The city had, however, made repeated “educational visits.” Kunselman concluded that enforcement is a cost.

Kunselman got clarification that the $311,000 recurring cost would be for two pickups in the fall. On the $395,000 one-time purchase cost for sweepers to push the leaves, Hupy also explained that the pushers the city had used in the past were modified with a blade for pushing. Renting wasn’t an option, because the rental companies would not accept the vehicles being returned with weld and burn marks on them from the necessary modifications. Kunselman indicated he was not sure how he would vote.

Mayor John Hieftje asked Hupy to explain the capital expenditures in the solid waste fund budget. Hupy described an expansion of two programs – residential recycling into multifamily residences, and the addition of food waste to the composting stream. A long-term goal is concern about the drop-off center at Platt and Ellsworth. It’s sitting on the old landfill, Hupy said, and it’s slowly becoming part of the landfill. One corner is sinking and will need to be rebuilt.

McMurtrie described discussions with Recycle Ann Arbor and other jurisdictions to see which of them might be willing and able to partner on construction of a new facility. In the coming months, he hoped to be able to bring forward some proposals. The draft solid waste plan needs to be approved by the council, McMurtrie indicated. After that, there can be some capability added for food waste composting. Hieftje asked Hupy and McMurtrie to confirm that there was, in effect, a plan to spend the fund balance in the solid waste fund.

Hieftje then explained that he’d be opposing the restoration of loose leaf pickup. He reiterated Teall’s point that the city still does pick up leaves – in compost carts and paper bags. Hieftje then described how he lives in a relatively leafy neighborhood, but is able to dispose of them with the compost carts and by composting them in his back yard.

Sumi Kailasapathy (Ward 1) and Mike Anglin (Ward 5).

Kailasapathy then inquired about the cost savings that were supposed to have resulted from a conversion to single-stream recycling. McMurtrie confirmed that collection costs have gone down, even with an upwards contract adjustment with Recycle Ann Arbor. But he allowed that revenue has declined. Two factors contributed to that. First, the market has dropped. And the material the city previously processed from Lansing and Toledo no longer comes to Ann Arbor, McMurtrie explained. That’s due to competition, he said.

Petersen then opened up a line of inquiry about alternative solutions to pushing the leaves into big piles, and asked about the possibility of using trucks equipped with large vacuums. She mentioned Cummins engines as the possible power plant for such trucks. [That's a reflection of employment with Cummins early in her professional career.] She wanted to know why the city can’t explore that kind of approach?

Hupy explained that “pushing and loading” is more efficient than vacuums. He explained that sticks, branches and pumpkins after Halloween get included in the piles that are put on the street, which clogs the vacuums. This has been demonstrated by vendors who’ve sought to sell the city on the idea of using large vacuums, but then discover that when the “pushing and loading” method is matched against vacuuming, the “pushing and loading” method has proved superior – to the surprise of the vendors.

Briere inquired if other options exist besides pushing or vacuuming. Responding to Briere, Hupy described a conveyer system as a possible alternative. Briere ventured that whatever method the city uses, it’s still labor intensive for her. She reported that of the various methods, she prefers bagging or putting leaves in the carts. About the current containerized approach, she keeps asking herself, “Is it broken?”

At that point Hieftje indicated that he was hoping the council could soon move to a vote on the question. However, Christopher Taylor (Ward 3) asked for a more detailed explanation of the impact that Lumm’s amendment would have on the solid waste fund.

Hupy reviewed Lumm’s list of cuts, which she proposed to offset the expense of loose leaf collection. The $105,000 reduction in tipping fees might or might not be achievable, Hupy explained. He indicated that street leaf pickup could have the impact of heavier loads, which based on his previous remarks would result from increased moisture. And that would cause increased tipping fees.

For the $14,000 in contingencies for field operations, those are step increases based on labor contracts if they progress in their skill levels, Hupy explained. The $25,000 in solid waste systems planning would take away from the consultant work to be done on an educational campaign. Hupy described the retirement of a person in the solid waste department who works on communication issues. The city is proposing that some of her work would be picked up by a consultant. The $15,000 in printing of promotional material would be for “Waste Watcher,” a publication that is sent out each year to residents. The $76,500 in other service budgets identified by Lumm as a source of savings is for equipment and contracted services – which he described as a difficult cut to make.

Teall then followed up on her earlier point about the storm debris collection this year. She asked how much the storm debris pickup cost earlier this year. Hupy reported that cost at about $375,000. The staff would be coming to the council with a request for an appropriation from the solid waste fund balance, Hupy said. Teall ventured that storms generating debris that might need to be picked up could be happening more frequently. Hupy allowed that if money had to be taken out of the fund balance, then it left less in reserves to deal with various issues.

Teall also highlighted the problem that in-street leaf collection had caused for streets like White Street, where there is parking on both sides of the street. It’s a student neighborhood where the vehicles aren’t moved frequently.

Lumm then defended the savings that she’d identified to fund the restoration of loose leaf pickup, responding to Hupy’s assessment of the impact of her identified savings. She gave a shout-out to the Ann Arbor Newshawks’ satirical treatment of the loose leaf pickup issue – inviting people to look for the video, which is posted on YouTube. She described living in her neighborhood for 35 years, saying that previously the leaves didn’t sit as long in the street before they were picked up. Eventually, she declared: “I think I’ve exhausted this topic.”

Hieftje reiterated his objections, based on the stress it would place on the solid waste fund, given the projection of a shortfall in FY 2016.

Stephen Kunselman (Ward 3).

Kunselman asked for a description of practices in comparative communities. McMurtrie listed off communities that collect leaves in a containerized way (Lansing, Ypsilanti, Beverly Hills, Hazel Park, Troy, Saugatuck, Plymouth Township, Douglas, Tecumseh), compared to loose leaf collection (Berkeley, Birmingham, Clawson, Ferndale, Huntington Woods, Oak Park, Pleasant Ridge, Royal Oak, Adrian, Midland and Holland).

Taylor stated that if the city could provide the service perfectly, he might have a different position – but he stressed “might.” Even with the city’s best efforts, however, he felt there’s no possibility the city would be able to perform the service well. “Leaves will not cooperate, rain and wind and snow will not cooperate,” he said. The costs are material, he said. The cost and benefit were not right for him, so he wouldn’t support the amendment.

Anglin then contended that the failure to provide this service targets those who take virtually no services from the city – the elderly. Even though their kids are out of school, they still pay school taxes, he said. They don’t use the parks, yet their taxes go to support that. The elderly are asking what they get from the city in the way of service.

The council should look at all the demographics of people and ask what services are provided by the city to them. The elderly feel they’re not being fairly treated, he said. The projected shortfall is just a projection, not a reality, he said. So Anglin indicated he’d vote for the amendment.

Warpehoski said he still wasn’t sure how he’d vote. He asked for more information about the financial impact of leaf pickup in the context of freezing weather. Warpehoski also asked about the impact of flooding due to clogged storm grates. Hupy said it’s more labor intensive to clear storm grates when the approach to leaf collection is to push leaves into the street.

Hieftje called on Petersen to speak, but Higgins offered a mild objection, venturing that the councilmembers were exceeding their allotted two speaking turns. Hieftje contended Petersen had a speaking turn left.

Petersen countered Taylor’s point about the ability of the city to perform the task well. She ventured that the city doesn’t do snow plowing well, either, but it’s still a basic service that the city should try to provide.

Kunselman then stated he’d vote no. He cited technological advancements that people can use to take care of their lawns: “Why anybody would vacuum their lawn I have no idea, but they do.” He didn’t want to base leaf collection policy just on the needs of the older population. They’d still have to rake their leaves or hire someone to do it, he said. He suggested that if the city were to provide the service, then some kind of subscription service might be best.

Outcome: The vote on the leaf collection budget amendment was 4-7, getting support only from Jane Lumm (Ward 2), Sally Petersen (Ward 2), Sumi Kailasapathy (Ward 1), and Mike Anglin (Ward 5).

Police Officers/15th District Court

Another amendment put forward by Jane Lumm (Ward 2) was to provide funding for three police officers, with $270,000 taken from the 15th District Court budget.

Lumm indicated that she’d been encouraged by the city council’s identification of public safety as a priority at its December 2012 retreat. She’d also been encouraged by a success statement embraced by the council that defined success in terms of police officers having 25-30% of their time available for proactive policing.

Lumm said the amendment was not meant to “pick on the courts.” She cited the court’s decreasing caseload as one reason to decrease the court’s budget compared to the previous year’s amount.

By way of background, Ann Arbor’s caseload downward trends are in line with the overall trend for other comparable courts [.pdf of caseload trends for 15th District Court]:

               Misdem       Civil Inf    Gen Civil
D15 Ann Arbor  3,109 ‐31%   13,894 ‐49%  1,742 ‐16%

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In her proposal, Lumm was comparing the FY 2014 request of $4,379,290 to the FY 2013 budgeted amount of 4,066,865. She reasoned that the $270,000 by which she was proposing to reduce the FY 2014 budget still left the court with more money than was budgeted in FY 2013.

Sumi Kailasapathy (Ward 1) compared 2002 and 2013 FTE levels across departments. The police department has been reduced by about 40%, she said, which was the most of any department. She wanted to restore FTEs. She pointed out that Lansing and Ann Arbor have comparable populations, but Lansing has 226 sworn officers. She allowed that Ann Arbor also has the University of Michigan campus police, but contended that Lansing does as well. She said it was an “apples to apples” comparison. She noted that Ann Arbor’s police force was effective on a reactive basis, but she wanted to make sure it was also able to be proactive, to enhance quality of life and a sense of security that Ann Arbor residents deserve.

Mayor John Hieftje pointed out that Lansing doesn’t have campus police, because Michigan State University is in East Lansing.

Keith Zeisloft, the administrator for the 15th District Court, was asked to come to the podium to answer questions.

Sabra Briere (Ward 1) asked Zeisloft what the impact would be of a $270,000 reduction. He replied that the court would need to look at the only area that’s not mandated by law – the probation department. He felt that a $270,000 would mean losing three of six probation officers. He felt that would mean the loss of the “eyes and the ears of the court.” Without probation officers, the judges would have less ability to sentence offenders in a way that was thoughtful and had any real meaning, he said.

Zeisloft also raised the possibility of impacts to the specialty court dockets: veterans court, sobriety court, domestic violence court, and street outreach court. He said the loss of probation officers could “severely cripple” those programs. The court would lose a probation officer who arrives at work at 6 a.m. every day to conduct preliminary breath tests. That ensures that participants in the sobriety court start the day sober. Zeisloft also pointed out that there’s a reduction in revenue that would come from probation fees. Reducing probation officers might reduce the recovery rate of fines, he said.

Chief financial officer Tom Crawford and Sumi Kailasapathy (Ward 1).

Kailasapathy highlighted the 49% decline in civil infractions – from 2007 to 2011. Responding to Kailasapathy, Zeisloft allowed that there’s been a dramatic decrease in the number of cases. In the last six months, however, there’s been a one-third increase in citations. He described how the workforce has also somewhat declined as the caseload has declined.

Zeisloft called the court “frugal.” Lumm responded by saying she had a different definition of frugal. She listed out increases in various categories.

Lumm and Zeisloft went back and forth about an executive secretary position that was restored last year. She told Zeisloft that historically, the 15th District Court has not met its budget reduction targets.

Then Lumm cited an average 9.6% pay increase given to court workers in October 2012, which was authorized by chief judge of the 15th District Court – Libby Hines. Zeisloft allowed that’s correct. But he pointed out that until then, the court employees had four-and-a-half years of a wage freeze, with a decrease in one of those years. Retention of workers had become an issue.

Zeisloft described how human resources had been asked to do a comparative analysis, and that some of the workers had been found to be dramatically underpaid – in some cases $10,000-$16,000 less than their counterparts in other courts. The increase brought them up to a competitive wage. He ventured that this “softened the blow” of a 9.6% average wage increase. Lumm seemed unpersuaded: “It doesn’t soften the blow for me.” She pointed out that the council had heard from the Ann Arbor Housing Commission director about her struggles with keeping her staff’s pay at a competitive level.

Kailasapathy pointed out that the wage increase given to court workers was an average of 9.6% increase – which meant that some workers would have received an even higher increase.

By way of background, this increase did not apply to judges’ salaries, which are reimbursed to jurisdictions based on state statute. However, the district courts in Michigan fall under the administrative orders of the state Supreme Court, and do not have complete latitude to set wages of their employees independently of their governing municipality.

From Administrative Order No. 1998-5, which applies to district courts, among others.

II. COURT BUDGETING If the local funding unit requests that a proposed court budget be submitted in lineitem detail, the chief judge must comply with the request. If a court budget has been appropriated in line-item detail, without prior approval of the funding unit, a court may not transfer between line-item accounts to: (a) create new personnel positions or to supplement existing wage scales or benefits, except to implement across the board increases that were granted to employees of the funding unit after the adoption of the court’s budget at the same rate, or (b) reclassify an employee to a higher level of an existing category. A chief judge may not enter into a multiple-year commitment concerning any personnel economic issue unless: (1) the funding unit agrees, or (2) the agreement does not exceed the percentage increase or the duration of a multipleyear contract that the funding unit has negotiated for its employees. Courts must notify the funding unit or a local court management council of transfers between lines within 10 business days of the transfer. The requirements shall not be construed to restrict implementation of collective bargaining agreements.

It’s not clear if the 15th District Court is required by the city of Ann Arbor to submit a “lineitem detail” budget.

Mayor John Hieftje asked Zeisloft to review the cuts that would have to be made. Zeisloft again identified non-mandated services – probation. He reviewed how three out of six positions would have to be eliminated.

Lumm pointed out that the cut would still leave a slight increase comparing the FY 2013 budget to the FY 2014 budget.

Hieftje asked chief of police John Seto to field questions. In 2011, Ann Arbor crime levels were at a record low, Seto reported. In 2012 there was a slight increase, but it was still relatively low.

Hieftje argued that 226 Lansing officers compared to the 179 in Ann Arbor – when you count UM campus safety officers – is comparable, when you consider the reduced crime in Ann Arbor compared to Lansing.

Briere said she sees both the courts and the police officers as safety services. We need the police officers but we also need the courts as well, Briere said.

Christopher Taylor (Ward 3) agreed with Briere that this amounts to a service cut. His focus was not the change in the budget from this year to last year, he said, but the amount of services those budgets could purchase. He didn’t think the three police officers who would be added would add to the actual or perceived safety in the community. The total city budget for FY 2014 reflects around 50% in support of safety services, so he felt the administrator’s budget reflected the council’s priority on public safety. He wouldn’t support the amendment.

Stephen Kunselman (Ward 3) asked where the court revenue goes. It’s based on a state formula, Zeisloft explained.

Kunselman ventured that there would be other ways to accommodate the $270,000 reduction besides laying people off. Zeisloft countered Kunselman by saying that the main costs of the court, like any governmental entity, is personnel.

Hieftje recited some statistics in support of the idea that Ann Arbor is safe. Hieftje indicated he’d be supporting the allocation of DDA budget funds for police in the downtown area. He didn’t think that the proposed budget amendment would have a net public safety benefit when it would have a negative impact on the probation system.

Lumm drew out the fact that in the last 10 years, the DDA hasn’t provided any money for beat cops. She did this by asking CFO Tom Crawford how much money the DDA had allocated for downtown beat cops. Crawford, who was visibly under the weather at the meeting, said he didn’t know off the top of his head. Lumm told Crawford it was a softball question. She’d previously submitted that question to staff, she said, and “The answer is zero.” [.pdf of memo from Crawford on beat cops]

Kunselman asked Hieftje how the DDA could provide recurring revenue to support downtown beat cops, when it can’t plan to replace light poles.

Susan Pollay, executive director of the DDA, traced the original parking agreement from 2005 between the city and the DDA as originating in a desire to provide support to downtown beat cops. A $300,000 allocation escalated to $1 million a year, she noted, but even that did not result in the preservation of beat cops downtown.

Kunselman objected to the idea that increases in parking rates might be used to fund police officers. He cited $1.20/hour parking in Pasadena, which he recently visited, compared to $1.50/hour in Ann Arbor.

Mike Anglin (Ward 5) wanted to send a message about support for public safety that would come from hiring more police officers.

Sally Petersen (Ward 2) observed that there seems like a lot of agreement that more police are needed downtown, but she wonders what that would mean for this amendment.

Kunselman indicated he’d support the amendment. He didn’t take the possible cut to three probation officers lightly but thought there could be other ways to deal with a reduced budget. He pointed out that the 15th District Court had a nice new building. And responding to Hieftje’s count of UM campus safety officers with the total number of sworn officers in Ann Arbor, Kunselman said the campus police don’t help Ann Arbor neighborhoods.

Outcome: The amendment to reduce 15th District Court funding by $270,000 failed on a 5-6 vote, getting support only from Jane Lumm (Ward 2), Stephen Kunselman (Ward 3), Mike Anglin (Ward 5), Marcia Higgins (Ward 4), and Sumi Kailasapathy (Ward 1).

Police Officer/City Attorney

Another public safety amendment was to allocate $90,000 of the recurring savings from the retirement of assistant city attorney Bob West to the police services area – to pay for an additional police officer. The recommendation associated with the amendment was to eliminate an FTE from the city attorney’s office for next year – that is, FY 2015.

In introducing the amendment, Sumi Kailasapathy (Ward 1) noted the attorney’s office has had the least amount of decline in FTEs over the last 10 years.

From left: Ward 1 councilmembers Sumi Kailasapathy and Sabra Briere.

Sabra Briere (Ward 1) seconded Kailasapathy’s amendment. But she offered a friendly amendment that specified the assignment of the saved funds simply be returned to the general fund. That is, the outcome of the amendment was simply to reduce the FTE count by one, without specifying that a police officer would be added. Briere was interested in staying consistent with the argument that she’d given against the 15th District Court budget reduction, which was based on the idea that she didn’t favor shifting funds between two positions that served public safety.

Kailasapathy appeared amenable to the amendment.

Then Jane Lumm (Ward 2) said she had been set to support the original amendment, but only because it would have added a police officer. Lumm knew from her experience serving on the liquor license review committee that West played a significant role in that. If it meant that West’s position would have to be absorbed with no hire of an additional police officer, Lumm would not support the budget amendment.

Faced with a choice between having Briere’s support or Lumm’s, Kailasapathy reverted to her original amendment – which specified that a police officer would be hired with the savings.

Christopher Taylor (Ward 3) asked chief of police John Seto to come to the podium. Taylor wanted to know if he’d been asked about this change. Seto indicated that the police department worked closely with West.

City attorney Stephen Postema explained that West did more in his job function than just prosecute civil infractions. Among those duties was the defense of police officers in lawsuits and the training of the officers. In contemplating West’s replacement, that person would take more time than West does to complete those duties, Postema said. It’s incorrect to say that the attorney’s office has been reduced less, he contended. He described going from 14 FTEs to 12 FTEs. He said that eliminating the position “willy nilly” would do a disservice to the police department and the city attorney’s office.

Outcome: The amendment to eliminate the retiring assistant city attorney position failed on a 2-9 vote. Only Sumi Kailasapathy (Ward 1) and Jane Lumm (Ward 2) supported it.

Affordable Housing

This budget amendment brought forward by Sabra Briere (Ward 1) tapped the general fund for $100,000 and placed it in the city’s affordable housing trust fund. She led off deliberations by saying that before she was elected to the council, the city transferred $100,000 every year into the city’s affordable housing trust fund. That practice had ended even as the city continued to spend money in the fund, she said.

Mayor John Hieftje hoped there’d be agreement and that the vote could be taken quickly. Briere called the $100,000 a modest amount. She said that in the context of the earlier discussion about altering the DDA’s budget to transfer $300,000 from the DDA’s TIF fund into its housing fund, she wanted the city to demonstrate that it, too, had some “skin in the game.” She wanted it to be a recurring amount each year, not just a one-time allocation.

Jane Lumm (Ward 2) said she wouldn’t support the budget amendment. She asked that her name be removed as a sponsor, saying that had been mistakenly attached. She supports affordable housing, she said, but did not support the amendment. She would prefer to use the increased DDA TIF revenues as the funding source for additional affordable housing support.

Sally Petersen (Ward 2) indicated that if Lumm’s name was coming off as a sponsor, that would leave room for Petersen’s name to be added as a sponsor. Like Briere, Petersen felt the city should have “skin in the game.” Affordable housing is one of the council’s priorities, she noted. One of the outcomes of the economic development task force, she said, was to help determine when support for affordable housing would come from the DDA and when it would come from the city. Until that could be done, both entities should have skin in the game.

Lumm reiterated that she supported affordable housing and also thought the city should have “skin in the game,” but stated that it matters where the “skin is found.” She felt the $100,000 should be transferred from identified savings, not simply by making an additional expenditure – saying that in this regard she was a fiscal conservative. She asked CFO Tom Crawford if he could identify $100,000 in savings. Crawford was circumspect: “Staff’s work is reflected in the city administrator’s recommendation.”

Hieftje ventured that early in his service as mayor, the city’s budget was such that $100,000 could be found somewhere. Now that the city is leaner, it’s not easy to find that $100,000, he said.

Marcia Higgins (Ward 4) indicated that she’d support the $100,000 transfer because the direction is for staff to find a way to put it in the budget every year.

Outcome: The $100,000 transfer from the general fund reserve to the city’s affordable housing trust fund was approved, with dissent only from Jane Lumm (Ward 2).

Washtenaw Health Initiative

This amendment, brought forward by Sabra Briere (Ward 1), was to allocate $10,000 to the Washtenaw Health Initiative (WHI), a countywide collaboration focused on how to make healthcare more accessible and improve care coordination for disadvantaged populations. It was meant to help prepare for federal healthcare reform.

The WHI is co-chaired by former county administrator Bob Guenzel and retired University of Michigan treasurer Norman Herbert, along with Ellen Rabinowitz, executive director of the Washtenaw Health Plan. The city joined the WHI on July 2, 2012. Washtenaw County is also a member of WHI.

Outcome: The council unanimously approved the $10,000 for WHI without debate.

Public Art Funding

The amendment proposed eliminating $326,464 in spending on public art. This anticipates possible approval of revisions to the public art ordinance. If the council enacts those revisions – likely on June 3, 2013 – it would require a subsequent vote with an eight-vote majority to restore the public art monies to their funds of origin.

By way of background, the current Percent for Art funding mechanism sets aside 1% from all capital projects, to be used for public art. Those monies are pulled from numerous funding sources, depending on how the capital project is funded. The ordinance revisions that are being brought forward would, if approved, eliminate the Percent for Art approach.

Chuck Warpehoski (Ward 5) questioned whether it’s possible to make this amendment, under the existing ordinance. Assistant city attorney Abigail Elias explained that the amendment continues the public art set-aside, but prevents spending it.

Christopher Taylor (Ward 3) indicated that he expects there’ll be a change in the public art ordinance, but until it’s changed he wants to stay the course and support the existing program. So he’d oppose the amendment.

Mayor John Hieftje concurred with Taylor’s reasoning.

Outcome: The vote on preventing the spending of the FY 2014 public art set aside was 7-4, with dissent from Chuck Warpehoski (Ward 5), mayor John Hieftje, Christopher Taylor (Ward 3) and Margie Teall (Ward 4).

Sidewalk Gaps

This budget amendment would tap the general fund for a one-time use of $75,000 to fund a sidewalk gap prioritization study.

Sabra Briere (Ward 1) asked why neither Act 51 money nor the sidewalk millage could be used for new sidewalk construction. Public services area administrator Craig Hupy explained that millage money is supposed to be used only for repair and maintenance of existing sidewalks. Act 51 is not for first-time improvements, Hupy said.

Citywide, there’s more than $25 million worth of sidewalk construction that could take place, Hupy explained. That’s why it’s important to prioritize.

Mayor John Hieftje said that reductions in transportation by the Ann Arbor Public Schools have highlighted where some of the sidewalk gaps are. Stephen Kunselman (Ward 3) noted that some neighborhoods have no sidewalks at all. How does that fit in? Hupy indicated that’s the reason the prioritization study is needed. Kunselman wanted to know if the study will be done in-house. Hupy thought it would require a fair amount of community engagement. So outside assistance would be tapped for that.

Jane Lumm (Ward 2) said she’s inclined not to support it, but probably will.

Mike Anglin (Ward 5) told Hupy that he’s glad conversations are happening between the city and AAPS.

Outcome: The council unanimously approved the sidewalk gap prioritization study.

Miller Manor Senior Meals

This amendment would replace $4,500 in funding lost due to federal sequestration for a senior meals program. Miller Manor is an Ann Arbor housing commission property.

Outcome: Without debate, the council unanimously approved the $4,500 for Miller Manor senior meals

Human Services

This item increased by $46,899 the amount of funding available for human services nonprofit entities. The city allocates this money through a coordinated funding process with the Ann Arbor Area Community Foundation, the United Way of Washtenaw County, Washtenaw County and the Washtenaw Urban County. The city has participated in this coordinated funding approach for three years now. Initially the agreement was for two years, and the partners extended for a year.

In introducing the amendment, Sabra Briere (Ward 1) noted that the total amount of funding allocated in the budget for human services nonprofits could change after this year. The additional $46,899 brings the amount to $1,244,629, which is the same as the last two years.

Outcome: Without discussion beyond Briere’s introductory remarks, the council unanimously approved the $46,899 increase in funding to nonprofits that provide human services.

Parks Fairness

Under Ann Arbor city policy policy, the general fund allocations to parks and recreation must not suffer any decrease beyond what other areas in the general fund do. So in the course of making amendments to the other parts of the budget, that can have implications for adherence to this policy.

At the end of all the amendments, financial services staff provided the council with the adjustment that needed to be made to the parks budget, in order to comply with the policy. This year, that amount is an increase of $22,977.

Outcome: The council approved the “parks fairness” adjustment without debate.

FY 2014 Budget Deliberations

Jane Lumm (Ward 2) explained why she’d be opposing the budget again this year, like she did last year. She contended that this year’s budget makes no progress toward making public safety a priority.

Stephen Kunselman (Ward 3) understood Lumm’s position, but said that politics is the art of compromise. He’d seen a lot of compromise that night. He pointed to the small increases in the number of firefighters. [This was an increase by four firefighter positions compared to FY 2013, but the positions had been added after the FY 2013 budget was adopted.] He pointed out that there’s no longer a plan to close fire stations, which he counted as progress. Kunselman said he believes in patience and putting his shoulder to the pile, as in rugby, and pushing toward a score.

Marcia Higgins (Ward 4) as well as other councilmembers thanked staff for their hard work in preparing the budget. Sabra Briere (Ward 1) said she wouldn’t vote against the budget because she has to “own it” even if she doesn’t like every item in it.

Outcome: The council voted 10-1 to approve the FY 2014 budget. Dissenting was Jane Lumm (Ward 2).

Present: Jane Lumm, Mike Anglin, Margie Teall, Sabra Briere, Sumi Kailasapathy, Sally Petersen, Stephen Kunselman, Marcia Higgins, John Hieftje, Christopher Taylor, Chuck Warpehoski.

Next council meeting: Monday, June 3, 2013 at 7 p.m. in the council chambers at 301 E. Huron. [Check Chronicle event listings to confirm date]

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The arbitration panel worked through the binding arbitration procedure for labor disputes in police and fire departments, which in Michigan is governed by Act 312 of 1969.

The new contract is retroactive for the period from July 1, 2009 to June 30, 2013. In an email to The Chronicle, Tom Crawford, the city’s CFO, wrote that the panel’s determination does not include any liability for the city dating back to the start of the contract.

Highlights of the new deal include a redesigned health care plan which offer options for health care contributions, based on a calendar year. For single-person coverage, for example, the “low plan” would include no monthly premium but a $1,000 deductible. The “high plan” would include a 10% monthly contribution with a $300 deductible.

The new contract includes no across-the-board wage increases.

Pension contribution by employees would increase from 5% to 6% of pay on a pre-tax basis starting Jan. 1, 2012. Employees hired after Jan. 1, 2012 would not be vested in the pension program until 10 years, and their final average compensation (used to determine pension benefits) would be based on the last five years of service. Retirees would have an access-only type retiree health care plan with a retiree health care reimbursement account. Each employee would receive a one-time deposit of $500 in a health retirement account on Jan. 1, 2012.

John U. Bacon

If you’re not a Michigan football fan, you probably haven’t heard of Vada Murray, but you might have seen his picture. It’s one of those iconic images of Michigan football, along with Tom Harmon standing in his mud-soaked, torn-apart jersey, and Desmond Howard diving to catch a touchdown pass against Notre Dame.

But the photo I’m talking about shows Vada Murray and Tripp Welborne soaring skyward to block a field goal. They were a kicker’s nightmare. But even when they got a hand on the ball, it simply denied their opponent three points. That’s not the kind of thing that wins you a Heisman Trophy or an NFL contract. They don’t even keep records of those things.

But more than two decades later, something about that photo still resonates. Maybe it’s because it captures their effort, their intensity, their passion – all of it spent just to give their teammates a slightly better chance for success. There is something noble in that. And we recognize it – which is why they’ve been selling that photo at the frame store on Ann Arbor’s Main Street for years, right along side the legendary poses of Harmon and Howard.

Murray prepared for life after football. And, like a few other big-time athletes in town, he joined the Ann Arbor Police Department, where he rose to the rank of detective. Even students he busted for hosting parties years ago remember him fondly, which is saying something.

Whenever his former coach, Bo Schembechler, left town, he would tell Vada, “If anything happens to my home while I’m gone, I’m holding you personally responsible!” Bo picked the right man. His place was always safe.

Vada married Sarah, and together they were raising a beautiful family. Life seemed perfect. But three years ago, while he was taking a shower, Vada noticed his left love-handle was a little bigger than his right side. Vada, who had never smoked a cigarette in his life, had lung cancer.

When he gave a guest lecture for my students at the University of Michigan in late 2009, he started by saying, “I’m Vada Murray, and I’m dying of cancer.” If there’s a gutsier opening to a speech, I have not heard it. The students were stunned, and captivated.

But he didn’t dwell on it. He used it to point out how, if you’re a Michigan man in good standing, your football friends will come to your aid – and that’s exactly what they did. It wasn’t about football, he said. It was about family.

The police department proved to be another supportive family. But from people they didn’t know as well, they still had to endure the occasional well-meaning but misplaced comments. Things like: It will all work out. Everything’s for the best. God has a plan for you.

When I visited their home a few months ago, their youngest daughter was playing in Vada’s lap. Their middle child had her arm around Sarah and their oldest kid was playing in the backyard with a friend. Vada looked me in the eye and said, “If God’s plan is for me not to see my little girls grow up and walk down the aisle, you can tell God, his plan sucks.” We were all getting a little choked up at this point, but I couldn’t help but grin at that.

A few weeks ago, Sarah called me and said, “Vada can’t speak to your class this semester.” She didn’t have to say any more. I knew what she meant.

Vada passed away on Wednesday.

If you’re walking down Ann Arbor’s Main Street some day, doing a little window-shopping, you might want to take a moment to look at the photo in the frame store display. You’ll see what a man living fully looks like.

You don’t get to see that every day.

About the author: John U. Bacon lives in Ann Arbor and has written for Time, the Wall Street Journal, and ESPN Magazine, among others. He is the author of “Bo’s Lasting Lessons,” a New York Times and Wall Street Journal business bestseller, and “Third and Long: Three Years with Rich Rodriguez and the Michigan Wolverines,” due out this fall through FSG. Bacon teaches at Northwestern’s Medill School of Journalism, and the University of Michigan, where the students awarded him the Golden Apple Award for 2009. This commentary originally aired on Michigan Radio.

A range of other recommendations include closing Mack pool for the summer, eliminating funding for the civic band and Project Grow, and increasing the water utility’s safety services fee by 4%.

The timeline for the budget’s adoption will include an April 14 town hall meeting at 7 p.m. at the CTN studios on South Industrial. That will be followed by public hearings on May 4, with council adopting a budget with any amendments on May 18. If council fails to act on the budget or to amend it by its second meeting in May, then per the city charter, the budget as submitted by the city administrator is automatically adopted.

The park advisory commission will hold a public hearing next Tuesday, April 21, on the recommendations related to parks, before voting on its recommendation.

The plan (not the budget per se) for FY 2011 will be adopted at the same time the FY 2010 budget is adopted. In that second year of the two-year plan, 14 firefighters, or the equivalent of one truck company, would make up the majority of the 22 eliminated positions. For this next year, 27 of the 34  positions proposed for elimination would come from law enforcement.

Fraser said that the intent was to avoid a scenario where demotions from lieutenant to sergeant and sergeant to patrol officer would take place, a situation where the newest, most enthusiastic recruits would be shed from the department. [The newest recruits are also the least highly compensated.] Instead, he said, the plan was to spend $4.8 million from the general fund reserve on an early-out retirement program. The reserve fund expenditure would bring the reserve down to 12%, putting it at the lower end of the recommended 12-15% range. Fraser said that 16-18 command officers might participate in the program, and that earlier in the day, the plan had received the support of the Ann Arbor Police Officer’s Association.

The materials provided to councilmembers on the mix of law enforcement positions to be eliminated were: 8 community standards, 6 command, 10 patrol, 1 dispatch, 2 clerical. However, Tom Crawford, chief financial officer for the city, said that the exact mix of those positions would depend on participation in the early-out program.

Fraser said that the reductions were possible because Barnett Jones, chief of safety services, had undertaken a restructuring of the police department to reduce the size of sergeant and lieutenant ranks to focus resources on patrol, with specialty patrols for housing and downtown areas covered by regular patrol officers. The reduction in community standards officers (who write parking tickets, among other things), would be facilitated by patrol officers supporting ticket enforcement.

Not discussed at the council working session was the potential dovetailing of reduced ticket enforcement resources on the city’s side, with the possible purchase of parking meter enforcement rights in the downtown area by the DDA – an idea that was floated at the last DDA board meeting by Rene Greff. Greff chairs the DDA board’s ad hoc committee formed to begin conversations about the parking agreement between the city and the DDA.

Councilmembers sought clarity on some of the more visible proposals for cuts, which would come in 2011, like the closing of the senior center and of Mack pool for the summer. Leigh Greden (Ward 3) and Stephen Rapundalo (Ward 2) were concerned about whether adequate planning had been done to provide for transitioning to other areas for people who use those services. Jayne Miller, director of community services, said that for the senior center such transitioning would be provided – including on an individual basis. For the pool, there needed to be communication with the Ann Arbor Public Schools system, said Miller, to offer the possibility that the pool might stay open with the schools shouldering a commensurate part of the cost.

Fraser followed up Miller’s point on the school system, saying that in the coming week he hoped to finally reach a written agreement on how to jointly operate recreational ball fields with the schools. He indicated that the city had been working hard over the last five years to achieve an equitable and mutually beneficial arrangement, not just for the ball fields. Fraser said that overtures to the schools by the city in other areas had not yet yielded results.

In response to a query by Marcia Higgins (Ward 4), Fraser discussed another area of cost-saving that has not yet yielded dramatic results: regional cooperation. Higgins asked about the overall strategy of collaboration with other government entities in light of some of the proposed cuts for 2011, which she described as “rather unpalatable.” Fraser drew an analogy of government entities to neighbors who live next door, who just choose to live differently – even when it makes sense to collaborate. Two examples of progress offered by Fraser in that category were the city-county data center consolidation and agreements with surrounding townships and the city of Ypsilanti for firefighting response along the corridor between Ann Arbor and Ypsilanti.

Sandi Smith wanted to know what happened to the discussion of increasing revenues that council had had during its budget retreat in January. Otherwise put, where does the city stand with respect to the request for a city income tax study? Fraser said that the state of Michigan was providing income levels for the city of Ann Arbor, and that employers were providing data for  employees who work in Ann Arbor, but who live outside the city limits. By the end of April, Fraser said, the work should be completed by Plante & Moran, the firm tapped to do the study.

Based on some of the specific items identified for cuts, even relatively small savings opportunities were identified in the proposed budget. For example, city clerk Jackie Beaudry, whose office would permanently lose a now-vacant .60 full-time position, identified the publication of council’s agenda in the local newspaper as a move that could save $15,000 a year. Beaudry said after the work session that council would need to change its rules in order to realize the savings. In relevant part, the council rules read:

The approved agenda for all meetings of Council, including Work Sessions, shall be published in a newspaper of general circulation in the City no later than the Sunday prior to each meeting, except those meetings called less than six days prior to a meeting.

The slides from the presentation at the work session are available here in .pdf format. A binder with the detail of the proposed budget will be available on the second floor of the Larcom Building and at the public library. For members of the public who would like own a copy, the cost for reproduction (which includes charts in color) is $26.36.

The April 14 town hall meeting on the budget, which will be held at CTN studios at 2805 S. Industrial, starts at 7 p.m.

Below we’ve reproduced the budget numbers, followed by some highlights identified by city staff in each year.

Recommended Expenditure Budget
Fiscal Year Budget
                                Adopted     Recommended       Projected
                                   2009            2010            2011
General Fund Expenditures
Police                     $ 27,195,233    $ 26,057,095    $ 27,188,966
Fire                         13,928,987      14,176,119      13,516,759
AATA                          9,741,489       9,636,345       9,135,256
Parks Forestry & Operations   4,225,101       4,132,898       4,063,921
Parks & Recreation            3,844,838       3,718,788       3,511,483
Finance                       4,143,302       3,956,114       4,016,264
Courts                        4,507,684       4,226,107       4,357,693
Planning & Development        2,104,163       2,611,699       2,592,084
Community Development         2,076,980       2,428,699       1,950,666
Public Services               2,179,171       2,105,899       2,017,628
Fleet & Facilities            1,287,695       1,316,428       1,599,240
Attorney                      2,082,710       2,041,949       1,988,580
City Clerk                      924,882         885,960       1,039,966
City Administrator              639,695         634,034         607,334
Mayor & Council                 343,502         348,917         350,740
Transfers/Other              10,332,730       6,887,892       5,664,680
  Total GF Expenditures**  $ 89,214,660    $ 84,816,026    $ 83,250,520

General Fund Revenues
Taxes                      $ 52,076,573    $ 51,492,881    $ 48,993,217
State-shared Revenue         10,756,613      10,827,062      10,827,062
Charges for Services          5,866,021       7,333,170       7,704,717
Fines & Forfeitures           6,182,365       5,131,420       4,861,882
Other                        14,333,088      10,413,505      10,481,630
  Total GF Revenues        $ 89,214,660    $ 85,198,038    $ 82,868,508

Net Surplus/(Deficit)      $          0    $    382,012    $   (382,012) 

Undesignated Fund Balance  $ 13,515,463    $ 13,897,475    $ 13,515,463 

     ** Adopted Budget subsequently amended to $90,791,514

_

FY 2010 Ann Arbor City Budget Highlights

General Fund 2010

POLICE

• Reduction in size of sergeant and lieutenant ranks to focus resources on patrol
• Specialty patrols (ie. housing, downtown, etc.) would be covered by regular patrol
• Community standards reduced with existing patrol supporting ticket enforcement
• Add a 3rd School Resource Officer / Reduce 1 Canine / Reduce vehicle fleet by 14
• FTE positions reduced by 27 (8 community standards, 6 command, 10 patrol, 1 dispatch, 2 clerical)

FIRE

• Reduce non-FTE expenditures and overtime

COMMUNITY SERVICES

• Mack pool will close down for the summer (only)
• Eliminate funding for Civic Band ($7k), Project Grow ($7k), & 1 GIS employee
• Reduce hours at Vets Park Fitness Center ($9k) & expand teen camp pilot
• Leslie Science Center becomes fully financially independent of the city ($31k)
• Rental Housing Inspection Fees – 3% increase

OTHER

• Eliminate publication of council agenda in newspaper ($15k)
• Reduce projected cost of employee compensation and benefits
• Energy savings / Reduced maintenance for LEDs ($29k)
• Service drive parking meter revenue, net of set-up costs ($380k)
• 4% Safety Services Fee from water utility ($787k)
• Loading zone permit fees & S. Industrial football parking revenue ($12k)
• Reduce 4.6 FTEs – 1 in Treasury (vacant), 2 in Courts (vacant), 1 in HR, and 0.6 in Clerks (vacant)

Non-general Fund 2010

Act 51 Funds/Weight & Gas Tax (Funds Right-of-Way Maintenance Activities)

• Anticipated revenue decrease [3% major roads, 5% local roads] ($345k)
• Extend street sweeping cycle from 5 to 8 weeks ($148k)
• Traffic calming reduction [50% or 1 program per yr.] ($28k)
• Extend gravel road grading cycle from 6 to 8 weeks ($40k)
• Reduction in overtime costs for snow removal ($65k)

Utility Funds (Water, Sanitary Sewer, Storm Water)

• 3.6% increase in water revenue requirements
• 1.6% increase in storm water revenue requirement
• 3.1% increase in sanitary sewer revenue requirements
• 4% Safety Service Fee to General Fund
• Planting of 600 trees for storm water benefit ($300k)

Other (Constraints of Diminished Tax Revenue)

• Reduction in Parks Maintenance & Capital Improvements Millage revenue by $65k
• Reduction in Greenbelt Millage revenue by $26k
• Reduction in Solid Waste Millage revenue by $135k

FY 2011 Ann Arbor City Budget Highlights

General Fund 2011

FIRE

• Reduce 14 FTEs in Fire ($1.1 mil.) – equivalent to 1 truck company

COMMUNITY SERVICES

• Reduce Human Services allocations by $260k
• Eliminate Historic District contract ($24k)
• Close or turn over Mack pool to AAPS ($59k)
• Eliminate 30 hours per week of seasonal assistant facility supervisor ($12k)
• Close senior center ($141k)
• Reduce 2.5 FTEs (1 in Parks & Rec., 1 Support Specialist in Planning Development, & 0.5 Planner)
• Rental Housing Inspection Fees – 3% increase

OTHER

• Eliminate contracted services for Park Ops. ($31k)
• Include 8 months of utility charges for Court/PD building ($184k)
• Reduce projected cost of employee compensation and benefits
• Increase revenue or reduce 1 FTE in FASA (financial services)
• Revenue: Service Dr. Parking Meter/Net of Maintenance Costs ($460k)
• Revenue: Energy Savings/Maintenance from LED Installations ($12,323)
• Expenditures: Energy Savings/Maintenance from LED Installations ($69,600)

Non-General Fund FY 2011

Utility Funds/Water, Sanitary Sewer, Storm Water

Revenue:

• 3.49% increase in Water Revenue Requirements (Operation & Maintenance Budgets held constant to accommodate capital requirements)
• 1.75% increase in Storm Water Revenue Requirement (Bonding for Capital Improvements)
• 3% increase in Sanitary Sewer Revenue Requirements (Operation & Maintenance Budgets held constant to accommodate capital requirements)

Expenditures:

• 4% Safety Service Fee ($813,750)

Other

• Reduce 3 FTEs in Construction Code Fund – 2 development services inspectors (1 vacant) & 1 support specialist
• Reduction in Parks Maintenance & Capital Improvements Millage revenue by $270k
• Reduction in Greenbelt Millage revenue by $117k
• Reduction in Solid Waste millage revenue by $607k