The county has determined that it is authorized to collect up to 1/10th of a mill without seeking voter approval. That’s because the state legislation that enables the county to levy this type of tax –  the Veterans Relief Fund Act, Public Act 214 of 1899  – predates the state’s Headlee Amendment. The county first began levying this millage in 2008, and collects the tax in December. Services are administered through the county’s department of  veterans affairs.

Since 2008, the county board has slightly increased the rate that it levies each year. In 2012, the rate was 0.0286 mills – or 1/35th of a mill. It was raised to a rate of 1/30th of a mill in December 2013, to fund services in 2014.

The current proposal is to levy 1/27th of a mill in December 2014, which is expected to raise about $540,887 in revenues for use in 2015.

There was no discussion of this item at the board’s Aug. 6 meeting.

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

AATA board member Roger Kerson at the board's Aug. 24, 2011 meeting. (Photos by the writer.)

At the board meeting, CEO Michael Ford announced that McKinley Inc. CEO Albert Berriz and Bob Guenzel, retired Washtenaw County administrator, will be co-chairing a panel of financial and funding experts who will review various funding options for a possible expanded, countywide transportation system.

The board voted to release a funding report to the panel – the third volume of its transit master plan (TMP). [.pdf of Part 1 of Vol. 3 Transit Master Plan Funding Options] [.pdf of Part 2 of Vol. 3 Transit Master Plan Funding Options]. The first two volumes were released previously.

The report describes a range of funding options, which would likely be used in some combination of strategies: fare revenues, advertising, property taxes, sales taxes, payroll taxes, parking taxes, stakeholder contributions, fuel taxes and vehicle license fees.

In anticipation that the panel could recommend funding options that would require voter approval, the board also approved the selection of CJI Research Corp. as the vendor for survey work over the next three years. That survey work can include on-board surveys of bus riders as well as telephone surveys of Washtenaw County voters.

At the Aug. 24 meeting, the board also approved implementation of a new website, which will provide greater flexibility for AATA staff who aren’t computer programmers to push information to the public. The new site is also intended to make it easier for the public to track the real-time locations of their bus.

The board also changed its pricing policy for the go!pass, a bus pass offered to downtown Ann Arbor employees that allows them to board AATA buses on an unlimited basis without paying a fare. The cost of the fares has historically been paid by the Ann Arbor Downtown Development Authority using public parking system revenues, plus a nominal fee per card paid by downtown employers. The revised policy breaks with AATA’s past practice of charging costs for go!pass rides based on its cheapest full-fare alternative. Those costs per ride will now be lower, based on the DDA’s ability to pay and the AATA’s estimate of what employers would be willing to pay.

In other business, the board approved a revision to its contract with the Select Ride company, which provides AATA’s on-demand paratransit service (A-Ride) for those who are not able to ride the fixed-route regularly-scheduled bus system. The upward adjustment was driven by a recent increase in maximum taxicab fares implemented by the city of Ann Arbor.

The board also approved a master agreement that will apply to all of its contracts with the Michigan Dept. of Transportation, and adjusted its capital plan to accommodate changes in three projects: the Blake Transit Center, the bus storage facility, and the bus maintenance facility.

Transit Master Plan Funding Report

The board was asked to authorize the release of “Volume 3: Funding Options Report” of its transit master plan (TMP). The TMP is part of the AATA’s effort to fulfill a countywide transportation mission.

The resolution specified that Volume 3 of the TMP was authorized for release to “a panel of financial and public funding experts to review, refine, and adjust the document.” The first two volumes were released to the public earlier this year. [.pdf of draft "Volume 1: A Transit Vision for Washtenaw County"] [.pdf of draft "Volume 2: Transit Master Plan Implementation Strategy"]

During the Aug. 24 meeting, CEO Michael Ford announced that co-chairing the panel will be Albert Berriz, CEO of McKinley Inc., and Bob Guenzel, retired Washtenaw County administrator.

Funding recommendations made by the panel of experts are to be forwarded to a fully constituted but unincorporated Act 196 board (U196) for further consideration and action. The transition of transportation service from the AATA to an authority formed under Act 196 of 1986 is the most likely scenario under which transit funding would be established on a countywide basis.

At its July 19, 2011 meeting, the board authorized the board chair to appoint three of its members to the U196 board, and authorized the AATA’s CEO to use AATA resources in support of the U196.

Immediately following the Aug. 24 meeting, the AATA made the funding report available in digital form: [.pdf of Part 1 of the Vol. 3 Funding Report] [.pdf of Part 2 of the Vol. 3 Funding Report]

In reporting out from the AATA planning and development committee’s regular monthly meeting, Rich Robben – the committee’s chair – said the committee had expected to vote on the release of the TMP funding report, but it was not finalized at the time of the meeting. Committee members had received it by email and recommended via email that the report come forward to the full board.

During board comment on the funding report, board chair Jesse Bernstein said the third volume of the TMP was the most difficult section to write. He said the AATA staff had made a heroic effort. The report would be helpful in understanding where the AATA is and where it wants to go, he said.

The report describes funding options, he continued, which will need to be developed in conjunction with a service delivery model. He described the collection of people on the funding task force, which will study the report and make recommendations based on it, as an “excellent group of folks.”

Among the funding options described in the report are: fare revenues, advertising, property taxes, sales taxes, payroll taxes, parking taxes, stakeholder contributions, fuel taxes and vehicle license fees.

Charles Griffith called the report valuable, because it lays out how transit funding works generally. He allowed that at certain points, his eyes glazed over trying to get through it, but he did find it illuminating for at least thinking about how to fund different elements of the transit master plan. He said he looked forward to the feedback the board received on the report.

Outcome: The board unanimously approved the release of the funding report.

Voter/Rider Survey Vendor

Before the board for its consideration was authorization of a three-year contract with CJI Research Corp. to conduct survey research. The contract has two additional one-year options.

Of the three respondents to the AATA’s request for proposals (RFP), the one from CJI was the top-rated proposal with respect to the criteria: price, experience, and technical approach. CJI was the firm that conducted the AATA’s most recent on-board and telephone surveys in 2009.

CJI has experience with polling for ballot initiatives. That experience is significant, because at some point it’s expected that a proposal will be put before voters across Washtenaw County that would levy a transit tax, if approved. The draft fiscal year 2012 budget for AATA includes $75,000 for an on-board survey of riders and a telephone survey of Washtenaw County voters.

Outcome: The board unanimously approved the selection of CJI as the vendor for the survey work.

New Website

A resolution on the agenda called for approving the use of $140,000 in federal funds to implement the redesign of AATA’s website. The bid for the redesign had already been awarded to the Michigan firm Artemis Solutions Group Inc.

Among the improvements desired by the AATA is a way for staff – who do not have programming skills – to update the website. AATA also wants its new website to be a tool that staff can use to broadcast information to AATA riders via email, text-messaging, Facebook, Twitter, etc. Among the enhanced information the AATA wants available on its website is real-time bus location information that includes a way for third-party developers to create and distribute smart phone applications using AATA’s real-time data.

AATA board member Anya Dale had some questions about the new website.

The new website will also allow the AATA to provide a “performance scorecard” to display metrics that include finances, operations, ridership, environmental impact, maintenance and safety performance. The website is supposed to allow AATA to comply with section 508 ADA (Americans with Disabilities Act) standards, and provide translation into multiple languages.

During board deliberations, Anya Dale asked if anything would be changed to the way that routes and schedules are looked up. She noted that when she first started riding the bus, she found some parts difficult to navigate. Board chair Jesse Bernstein asked John Gilkey of Artemis Solutions if he could provide a presentation and if so, how long that might last. Gilkey said his last presentation had lasted 45 minutes. Bernstein wondered if it might not be possible to get a five-minute version.

After some back and forth, board members seemed content not to receive a presentation at the board meeting, but they wanted to see a demonstration of some of the working functionality before the new website goes live. Roger Kerson, in particular, was keen to establish that some kind of usability testing would be done before launch. He asked specifically if the budget included a usability study. Gilkey said it was not planned – Artemis had done data collection and collected input in advance of design.

John Gilkey, of Artemis Solutions, was prepared to give a presentation on the AATA's new website that his company will implement. The board blanched at the 45-minute estimated time it would take, and decided to forgo the presentation for that meeting.

Kerson responded to Gilkey saying that he felt strongly that usability testing should be included and that it needn’t be expensive. Gilkey then said that Artemis does a lot of usability testing and would be testing out the implementation with users – he’d understood Kerson’s original question to be whether Artemis would be undertaking a full-blown scientific study, using something like Michigan State University’s usability lab.

Kerson noted that users “always find stuff we don’t find.” Kerson stressed that he’d like to see what’s included in the new website, before AATA rolls it out, so that they can find what the bugs are. Bernstein asked Mary Stasiak, AATA’s community relations manager, to keep the board posted as progress is made on the implementation.

Outcome: The board unanimously approved the implementation of the new website.

Go!pass Rides

The board was asked to vote on a change to the price AATA charges for rides taken under the go!pass program. The go!pass can be purchased by downtown Ann Arbor employers for their employees at a cost of $5 per pass annually.

AATA board member Rich Robben. In the background is Nancy Shore, director of the getDowntown program.

The change authorized by the board might go unnoticed for holders of the passes, who do not pay fares to board the bus. But the change will include an increase from $5 to $10 for the annual fee paid by employers per pass. That’s an increase that will be implemented by the getDowntown program, which administers the go!pass. However, in the action the board was asked to approve on Aug. 24, the AATA was actually in effect lowering the price per go!pass ride.

Here’s why. Holders of the go!pass card can board the bus without paying a fare, and there are no limits on the number of rides that can be taken with the card. The number of those rides is counted as they’re swiped at the fare box. [Before the fare boxes were converted to swipe-able technology, drivers recorded such rides with a button press].

The cost of such rides is funded in small part by the $5/card fee paid by employers, but in largest part by revenues from the city’s public parking system provided through the Ann Arbor Downtown Development Authority. At its June 2, 2010 meeting, the DDA authorized three years worth of funding for the go!pass program. For the second two fiscal years of that funding, approval amounted to $438,565 (FY 2012) and $475,571 (FY 2013).

The number of rides taken using the go!pass has increased each year for the last decade, but has jumped significantly during the last year. In the past, the AATA has priced go!pass rides in a way that matches the revenue per go!pass ride to the amount that bus riders would pay if they paid the full fare under a regular 30-day pass – the cheapest full-fare option. So, as go!pass ridership has increased, the total amount charged to getDowntown by the AATA for the rides has also increased.

In the past, the DDA has increased its level of support to match what the AATA has charged. As the DDA is under increasing financial pressure due to the new public parking system management contract recently signed with the city of Ann Arbor, as well as a possible need to return excess tax increment finance (TIF) revenues that have been collected, it’s not anticipated that the DDA will be able to increase the amount it contributes to the go!pass program.

Given the levels of funding now pledged by the DDA, the price that employers would need to be charged per go!pass per year would be $26 – if the same policy is maintained of charging for go!pass rides so that their cost matches what the cheapest full-fare option would be.

In recent presentations to the DDA, Nancy Shore, director of the getDowntown program, has recommended an increase from $5 to $10, not to $26. The advisory board of getDowntown has approved the increase to $10.

The action the AATA board was asked to take on Aug. 24 essentially sets the charge for go!pass rides at a flat rate – equal to the DDA’s current level of pledged support, plus an estimate that the total employer contribution (at $10/pass/year) would be $71,000 per year, based on the roughly 7,100 go!passes sold to employers so far this year. That is, the price charged for go!pass rides for the next two fiscal years will be $509,565 and $546,571, respectively – independently of the number of rides taken by go!pass holders.

The board’s action translates to a decision to accept a $16/pass/year shortfall in revenues from go!pass rides, compared to what the previous pricing policy has been, or a shortfall of roughly $113,600 (16*7,100).

In introducing the background of the go!pass issue for board members, Chris White, manager of service development for AATA, described how the proposed pricing change was really only an interim solution, for the next two years. Three years from now, he said, the DDA may not have funds to support the program at all.

Shore, who attended the board meeting, noted that in the last 10 years, fares have gone up, gas prices have gone up, and an increase from $5 to $10 per year per pass for the employer contribution seemed feasible. She noted that it’s a “universal pass,” which means that employers must purchase the passes for all their employees, whether employees use the passes or not. It’s not an option to purchase passes for just a subset of employees.

Shore said that very few employers she’d talked with had much of a problem with the increased $10 cost. She compared it to a health care benefit – some employees would use it more and some would use it less. She noted that there’s been a huge uptick in use of the pass and it was important to maintain that benefit to everyone.

Go!pass rides by month, charted year by year. (Links to higher resolution image.)

Charles Griffith wondered if the resolution was worded properly – was the board being asked to approve the increase from $5 to $10? White clarified that the board was being asked to approve the cost for the go!pass program as a whole. That would then be conveyed to the getDowntown advisory board, which sets the cost for employers. White described the situation as one where the AATA essentially sells the go!passes to the getDowntown program.

The proposal before the board would establish a fixed cost for each pass instead of linking the cost to the number of rides that are taken, White explained. White allowed that it’s a bit of a strange relationship, because the getDowntown program is currently part of the AATA – its two staff members are compensated as employees of the AATA. [Discussions are currently taking place about the future of the program, and whether the getDowntown program will become part of the DDA. For recent coverage, see "DDA Board Mulls Absorbing getDowntown Staff into DDA"]

Rich Robben noted that when board members had questioned the issue at the planning and development committee meeting, from the AATA’s perspective, if there’s a dramatic increase in ridership, then the AATA recovers less per ride. Historically, Robben said, the go!pass program has panned out nicely for the AATA.

Outcome: The board unanimously approved the change in price structure for the go!pass.

Amendment to Capital Plan

Before the board for its consideration was approval of a revision to AATA’s capital and categorical grant program to accommodate three projects: the Blake Transit Center (BTC) reconstruction in downtown Ann Arbor, the bus storage facility expansion, and the bus maintenance facility upgrade.

The scope of the BTC project has expanded, with a total estimated cost of $5.5 million. The estimate is based on a schematic design that is not yet complete. Already secured is $4.195 million in grant funds, which leaves a balance of $1.044 million.

At the Aug. 24 meeting, CEO Michael Ford said that AATA is looking to finalize design of a newly reconstructed Blake Transit Center in the next month. The AATA is still working with the city to obtain the use of a six-foot strip of land on the southwest edge of the AATA parcel, between Fourth and Fifth avenues. The AATA is planning to issue construction bids in October or November 2011 with the hope that construction work can start in the spring of 2012.

The bus storage expansion was AATA’s final project approved for federal stimulus funds – $1.01 million in stimulus funds were allocated to the project. With a current cost estimate of $2.404 million, there is a balance of $1.394 million.

The bus maintenance facility upgrade includes the addition of a urea filling station. Already approved in grants for that work is $0.598 million. The total cost will be $1.244 million, leaving a balance of $0.647 million.

The board’s action on Aug. 24 revised the AATA’s capital and categorical grant program to provide a total of $2,676,678 for the three projects from the AATA’s federal formula funds.

Outcome: The board unanimously approved the adjustment of its capital plan.

A-Ride Deal

The board was asked to consider an increase in AATA’s contract with Select Ride, to provide service for the AATA’s A-Ride – an on-demand program offered to those with disabilities preventing them from riding the regularly scheduled AATA fixed-route service. The increase in the contract authorized by the board is 2.9% – from $2,793,481 to $2,873,481.

The increase reflects the recent increases in taxicab rates, authorized by the Ann Arbor city council at its May 16, 2011 meeting. The increase authorized by the council was from $2.25/mile to $2.50/mile, which had been requested by several taxicab companies in light of rising fuel prices.

The contract with Select Ride is structured so that the company is paid based upon the distance that passengers are transported, together with the fare structure for the taxicab rides. The contract increase reflects a compromise under which the AATA is shouldering only part of the increased cost due to the taxicab fare increase.

Outcome: The board unanimously approved the change in the A-Ride deal.

MDOT Master Agreement

A resolution on the agenda called for authorizing standard terms and conditions for a five-year master agreement with the Michigan Dept. of Transportation. The master agreement will facilitate future contracts with MDOT for state funding, as well as to pass through federal funding to the AATA. The standard terms and conditions are established as part of a master agreement so that they don’t have to be spelled out in every future contract individually.

The current five-year master agreement expires on Sept. 30, 2011. The board’s action authorized a new agreement that reflected only minor changes from the current one: third-party contracting procedures are updated, and reference to a regional program was eliminated because it no longer exists.

Outcome: The board unanimously approved the five-year master agreement.

Commuter Rail Communications: WALLY

During his communications to the board, CEO Michael Ford noted that the last planning and development committee meeting had included discussion of the Washtenaw and Livingston Line (WALLY) project. AATA continues to look at the project and evaluate it, Ford said. He’d come back to the board in September on the issue, Ford told the board, but there would be additional discussion by the planning and development committee to focus on the status of the project, the money that’s been spent so far, investments in the WALLY corridor, and a description of the project’s major issues.

Ford said an “analysis paper” would be created to describe the WALLY project’s status and an action plan going forward, which would clarify the role of the state (via MDOT). Work would include talking to Livingston County and other community partners, as well at to Ann Arbor Railroad.

In reporting out from the planning and development committee, Rich Robben, chair of that committee, characterized the committee’s conversation about WALLY as “quite a discussion.”

In relevant part, the minutes of the planning and development committee meeting read as follows:

David Nacht stated that he was opposed to any further spending of funds at this time on architectural services for WALLY noting that these funds have been provided by AATA’s WALLY partners, and suggesting that at this point it is very unlikely that the project will go forward. He suggested that an offer be extended to the WALLY partners to return the funds, or ask for permission to spend the funds on other projects that will benefit transit. Michael Benham explained that the completion of station design would aid with qualifying for additional federal grant funds and added that the WALLY project was rated the top project by the State of Michigan to receive funding to improve signals and ongoing development of the project.

Committee members and staff engaged in a lengthy discussion regarding WALLY. It was suggested that absent the political will in Washtenaw and Livingston County, it is unlikely that trains will run. In contrast, it was noted that even if WALLY does not go forward, the tracks (which have already been improved) can still be used by freight cars.

Michael Ford was requested to contact the Governor’s office and the head of the Michigan Department ofTransportation (MDOT) to ascertain whether the project is a priority of the current administration, and if so, will that support lead to the needed capital and operating support for WALLY. Michael Ford indicated that he recently met with Kirk Steudle (the Director of MDOT). They discussed the idea of identifying more incentives to develop and urge collaboration between communities.

Rich Robben suggested tabling the WALLY discussion with a caveat that the funding not be spent without specific authorization from the board. Mr. Robben requested the opportunity for more discussion on operating funds. Michael Ford requested confirmation (which he received) that the funds for WALLY will remain in the draft budget, but will not be spent without specific action from the Board.

Communications, Committees, CEO, Commentary

At its Aug. 24, 2011 meeting, the board entertained other various communications, including its usual reports from the performance monitoring and external relations committee, the planning and development committee, as well as from CEO Michael Ford. The board also heard commentary from the public. Here are some highlights.

Comm/Comm: Shorter-Term Service Improvements

In addition to the work on the transit master plan (TMP) and the governing body that would be the countywide authority, CEO Michael Ford mentioned shorter-term initiatives that the AATA is working on to enhance service: Ypsi-to-Ann Arbor service, van pool service, extension of A-Ride (paratransit) service to the East Ann Arbor Health Center, and airport service.

Ford reported that because the AATA had received more than one response to the request for proposals (RFP) it had issued for the airport service contract, the project would be delayed by six to eight weeks, but the AATA was still moving forward with that, he said. AATA is collaborating on funding issues with private and public partners, which includes talks with the University of Michigan and the Ann Arbor Convention and Visitors Bureau. He reported that AATA would be meeting with the Wayne County Airport Authority, as well as with Wayne County EDGE to discuss how the AATA might operate out of the airport.

The A-Ride service was extended on July 1 to the East Ann Arbor Health Center. Ford reported that training was held for employees on the details of the new service.

An RFP was issued for van pool service in late June, Ford reported, and a recommendation could be ready for the planning and development committee to review at its meeting in September.

In the area of improving the Ann Arbor-to-Ypsilanti workforce transportation service, Ford said that Night Ride would be expanded to Ypsilanti in the fall. AATA is also looking at doubling the number of weekday trips on Route #4, which would begin in January 2012. That’s already included in the 2012 budget, Ford said.

The AATA continues to work with community partners to support service, Ford said

Comm/Comm: Landscaping

Ford reported on the in-progress landscaping project at the AATA headquarters facility.

Landscaping work underway at the AATA headquarters facility on South Industrial Highway.

He noted that the ivy, dead trees and rocks were gone and they’d be replaced with low-maintenance plants. Accessible concrete ramps are also being installed.

Comm/Comm: CTN Viewership

Reporting out from the performance monitoring and external relations committee, Charles Griffith told his board colleagues that board meeting online viewership on Community Television Nework was included in the board information packet. Counts reflect the number of views, not necessarily the number of unique IP addresses, and do not include views of the regular cable broadcast, which CTN does not track.

Sep. 16, 2010: 27
Oct. 21, 2010: 44
Nov. 18, 2010:  2
Dec. 16, 2010: 50
Jan. 20, 2011:  9
Mar. 17, 2011: 23
Apr. 21, 2011: 21
May  19, 2011: 12
Jun. 16, 2011:  9

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Comm/Comm: Performance Update

Charles Griffith, chair of the board’s performance monitoring and external relations committee, characterized the financial operating data as “in good shape.” He allowed that expenses have started to go up on a per-service-hour basis, but are still under the target amount. The AATA continues to see an uptick in ridership.

Ridership numbers on fixed-route service through July 2011. (Links to higher resolution image.)

It’s now possible to compare on an apples-to-apples basis, he said, because it’s been over a year since the last fare increase was implemented. Ridership in July 2011 was up 6.2%, he said, adding that they can only speculate why.

Griffith said it might be possible for the October 2011 on-board survey to help shed some light on that. He noted that ridership for the demand response component of the AATA’s service is down 3.5%, which is a continuation of the downward trend since the fare increase.

Comm/Comm: Information on Intermediate Stops

During public commentary at the conclusion of the meeting, Vivienne Armentrout told the board that she had a suggestion for a service improvement: The stops that are intermediate to those listed in the schedule are not listed anywhere that she could find.

That had caused her some confusion at times, Armentrout said, though overall she was delighted with her Route #13 service. The drivers are considerate and courteous, she reported. But sometimes she thinks there’s going to be a stop and then there’s not. She ventured that one reason it might not be possible to put those intermediate stops into the schedule is that it would take away some flexibility. But she wished for a list or some way that information could be accessed.

Comm/Comm: Wake Up, Washtenaw!

Larry Krieg spoke during both times available for public commentary. He called the board’s attention to several recent developments indicating the role of transit in growing the economies in the regions it serves. He noted that the American Society of Civil Engineers had released a study recently concluding that by 2021, the average American household will lose $7,000 in spending power, unless additional funds are spent on roads, bridges and transit.

He noted that the Michigan State Police had released a report stating that the direct cost of car crashes in 2009 was $4.9 billion, with indirect costs in pain and suffering of $4.0 billion. And Orlando, Florida has begun work on SunRail, a 39-mile commuter line, using existing rail right of way, despite initial objections from Florida Gov. Rick Scott. There’s no doubt that operation costs for SunRail will be fully covered by public and private sources in addition to farebox revenue, he said.

Larry Krieg of Wake Up, Washtenaw! addressed the board.

Transit has an important role to play in the economic development of the community, Krieg said. Now is no time to hang back. In the time allotted for public commentary at the end of the meeting, Krieg returned to the podium to describe some steps that his group – Wake Up, Washtenaw! – is taking to promote economic development through transit.

Krieg said he felt that opposition to investment in transit is generally based on a lack of information. There needs to be a strong voice for each transit project. So Wake Up, Washtenaw! proposes to continue support for Partners for Transit, a citizen group promoting the transit master plan. The group will also engage civic and business leaders in Washtenaw County and surrounding counties. He also suggested convening a roundtable discussion of transportation funding alternatives, that would involve business leaders, transit officials and the University of Michigan’s Transportation Research Institute (UMTRI). He suggested that the discussion should include alternative legal and financial structures that could bring public transit closer to being self-sustaining. Krieg concluded by inviting people to email him at wakeupwashtenaw at gmail dot com.

Comm/Comm: Paratransit, Human Rights

Thomas Partridge complained about the time for public commentary at AATA board meetings, which is limited to two minutes (at the start and the end of the meeting), calling it undemocratic censorship. He called on the board to give priority to monitoring the AATA’s paratransit service performance. He contended that he’d be victimized, even though he’d taken a limited number of taxi rides through the service. He contended that some of the taxicabs have more than 250,000 miles on them and don’t ride well or drive well and have non-functioning air conditioning. Partridge contended that the AATA board members are not performing their functions well, because they don’t take ride themselves and inspect buses themselves. They don’t know what’s going on in the streets, he said.

Partridge also spoke at the conclusion of the meeting during public commentary. He lamented the fact that public meetings have become “routine” for participants and for board members and employees. What the public needs to understand, he said, is that public transit is a primary human rights and civil rights issue. Support for transit should be garnered on this basis, he said. Partridge contended that transportation services are being rationed out on a discriminatory basis. Drivers and other personnel are stressed, and service is strained too far, he contended. Vehicles are assigned to drivers in a racist and discriminatory manner, he claimed.

Present: Charles Griffith, David Nacht, Jesse Bernstein,  Rich Robben, Roger Kerson, Anya Dale

Absent: David Nacht, Sue McCormick

Next regular meeting: Thursday, Sept. 15, 2011 at 6:30 p.m. at the Ann Arbor District Library, 343 S. Fifth Ave., Ann Arbor [confirm date]

Many Michigan residents will be paying higher taxes this year, thanks to tax hikes championed by Gov. Rick Snyder.

According to Daily Beast correspondent Howard Kurtz – a venerable Washington insider who is supposed to know such things – the greatest fear among certain Republicans in Congress is not that they might stumble during the current game of fiscal chicken and send the nation into default.

They are more worried, writes Kurtz, of being “targeted for defeat by anti-tax crusader Grover Norquist.” Which is what they dread will happen if they agree to anything that would provide the federal government with a single penny of additional revenue.

This leads me to wonder: Has anyone inside the Beltway taken a look at the tax increases Norquist signed off on here in Michigan?

Norquist, who has famously declared that his long-term goal is to shrink government “down to the size where we can drown it in the bathtub,” runs an outfit called Americans for Tax Reform. Never at a loss for a sound bite, he has gained outsized media attention with a demand that candidates for state and federal office sign an anti-tax pledge. The state version calls on candidates (and incumbents) “to oppose and vote against any and all efforts to increase taxes.”

The wrath of Grover, apparently, was not sufficient to intimidate Michigan Governor Rick Snyder or GOP majorities in the state House (63-47) and state Senate (26-12). They passed a budget this spring, ahead of schedule, and they balanced it the old-fashioned way: They raised our taxes.

State tax hikes will cost me and my family, I figure, about $1,500 a year. As a whole, individual Michigan taxpayers will pay $1.42 billion in new taxes, including a substantial bump in the Michigan income tax rate – which was supposed to fall to 3.9% over the next few years – to a higher, permanent level of 4.25%. There’s also a tax on a whole new category of income – pensions – which used to be exempt from state taxation.

Increased tax rates and new categories of taxation usually get ol’ Grover pretty red in the face, so I gave his office a call to see if he was planning to stage a recall campaign against Snyder, or to run primary candidates against offending legislators. Or maybe have some people shot at sunrise, which is the sort of thing he likes to say. (No wonder he gets on TV all the time.)

Apparently, Norquist was too busy torpedoing federal budget talks to spend any time with me. I was handed off to a press aide named John Kartch, who declined to return my calls or emails.

To be fair, if I were Kartch, flakking for a red-meat right-wing lobbying shop, I wouldn’t call me back either, given the type of people I usually hang around with.

To be even more fair, I didn’t need an interview with Kartch or Norquist to find out if they felt my pain last month, when the first installment on my higher state tax bill was due. (I’m self-employed, so I have the joy of writing checks to Uncle Sam and Uncle Rick four times a year, instead of just once.) Americans for Tax Reform issued a press release in April, when the Michigan House passed an early version of the tax hikes (different in degree, but not in kind, from the final measure.) Norquist didn’t attack the idea – he endorsed it.

Snyder, a former hi-tech executive who lives in Ann Arbor and ran for office as “one tough nerd,” is much more inclined to get tough on wage-earning Joes and Janes than with his former – and future – peers in the business community. While you and I are shouldering an additional $1.42 billion in tax hikes, Michigan businesses will get $1.64 billion in tax cuts. Some 95,000 businesses in Michigan will not have to pay any taxes at all.

Since the total tax increases you and I will pay are outweighed by lower taxes for businesses, state government winds up with less money – about $224 million a year less by 2013. That’s four tenths of one percent of the total state budget, which weighs in this year at $47 billion. I’m not sure this qualifies as drowning government “in the bathtub”; it sounds more to me like “throwing a little water up government’s nose.” But it was good enough for Grover. In his April 28 press statement, he ordained the Michigan tax package as a “net tax cut, it is consistent with the pledge.”

Even better, it will “help to end Michigan’s lost decade of high unemployment … lower the barrier for employers to start-up, expand and invest, inevitably creating more jobs across Michigan.”

We should check back in a few years to see how the “inevitably” thing is working out. I liked Republicans better back when, like Richard Nixon, they were all Keynesians. So I have a hard time figuring out how any jobs will be created when millions of families lose disposable income through higher taxes, just to provide tax breaks to a much smaller number of businesses. (If we were investing the added revenue in public infrastructure to enable private profits, like roads, schools and bridges, it would be a different story.) To whom are Michigan businesses going to sell their goods and services, when me and everybody else in the state has to fork over all our extra cash to Rick Snyder?

The pretzel logic asserting that my tax increase isn’t really an increase because somebody else is getting a bigger tax cut is easily exposed: If I tell the Michigan Department of Treasury I don’t intend to pay the $1,500 the new law says I owe because “Grover Norquist told me I was getting a net tax cut,” I’m pretty sure things won’t turn out very well for me.

Things won’t turn out very well for any of us if the entire country continues to be held hostage by a single Beltway operative with a big Rolodex and an oversized obsession about the size of his tax bill. Even right-wingers used to understand this, as the left-wingers over at TalkingPointsMemo.com have demonstrated, with graphs showing that both Ronald Reagan and Maggie Thatcher addressed budget deficits by raising taxes while in office.

But you don’t have to go back to the 1970s or 1980s to find a conservative icon who supported a tax increase. You just have to go a little bit west, and pay us a visit here in flyover country. Rick Snyder raised taxes and not only lived to tell about it – he even got a pat on the back from America’s angriest anti-tax ayatollah.

Me? I couldn’t even get a return phone call. Thanks a lot, Grover.

Roger Kerson, creative director at RK Communications, is a media strategist for labor unions, environmental organizations, and green businesses.

Also at Wednesday’s meeting, commissioners authorized the issuance of up to $405,000 in bonds for a porous pavement project on Sylvan Avenue in Ann Arbor – the Ann Arbor city council had approved a construction contract for the project at their April 19 meeting. The city is working with the county’s water resources commissioner on this effort. If successful, it could pave the way for more porous resurfacing of local roads.

In the category of the local agricultural economy, the board honored the Horning family of Manchester for their work as progressive dairy farmers – Earl Horning in turn invited the public to a June 26 “Breakfast on the Farm” event. “We’d like our city friends to come and visit us,” Horning told commissioners.

Equalization Report

At the board’s April 14 administrative briefing, when commissioners got a first look at the April 21 meeting agenda, county administrator Bob Guenzel gave them some good news: The much-anticipated equalization report would show a decrease in the equalized (assessed) value of property in the county, but the decrease would be less than forecast. That is, their budget forecast was on target – they wouldn’t have to make additional cuts in 2010 due to less-than-expected tax revenues.

Last Wednesday, Raman Patel – director of the county’s equalization department – delivered the news officially. A 7.2% drop in equalized value was not as bad as the 7.5% decrease that county officials had budgeted. The approved 2010 general fund budget projected revenues of $62.9 million – in fact, revenues will be closer to $64.67 million, Patel told commissioners. They’ll have about $1.7 million “extra to play with,” he said.

How the Equalization Process Works

The state-mandated equalization process runs throughout the year, as both the county and local assessors within each municipality examine the value of land and other property, such as buildings. Local assessors turn their findings over to the county, which then conducts independent assessments based on sales studies and physical appraisals. Next, the county’s equalization staff looks at how their findings compare with the local assessors’ findings. (The county has authority to request that local assessment rates be altered, if it considers them to be too high or too low.)

Chart showing Washtenaw County equalized and taxable values. (Links to larger image)

After this “equalization” occurs, the local municipalities send out notices to each property owner in their jurisdiction, stating each property’s assessed value as well as its taxable value. If property owners disagree, they can appeal that assessment. After appeals are ruled on, the county uses that data for its equalization report.

Taxable value is a state-mandated formula, and is the lower of two figures: (1) a parcel’s equalized (assessed) value, or (2) a capped value calculated by taking last year’s taxable value minus any losses (such as a building being torn down), multiplied by 5% or the rate of inflation (whichever is lower – this year inflation is 0.997%), plus the value of any additions or new construction.

If the property changes hands, taxable value is reset at its equalized value.

Taxable value is used when calculating taxes for the county, as well as its various municipalities and other entities that rely on taxpayer dollars, including schools, libraries and the Ann Arbor Transportation Authority, among others.

Details of the 2010 Equalization Report

On Wednesday, Patel noted that this is the county’s 52nd equalization report – he has assisted with 39 of them. [.pdf of equalization report]

This year, Patel and his staff are recommending that the county’s equalized value be set at $16.253 billion – a drop of $1.2 billion, or -7.22% from 2009. The taxable value is calculated at $14.496 billion, a drop of $815.522 million or -5.33%.

Other highlights from this year’s report:

• The assessed value of residential property – which accounts for 64.4% of all property in the county – dropped by 5.69%, while commercial property values fell 4.09%. The most staggering decline came in the industrial classification, which dropped 37.29%.
• All jurisdictions are seeing declines in taxable value. The city of Ypsilanti and Ypsilanti Township took the hardest hit, with taxable value falling 10.93% and 12.26%, respectively. The smallest drops were in Ann Arbor Township (-0.85%) and York Township (-0.08%).
• The value of taxable new construction has fallen sharply over the past five years – from $613.8 million in 2006 to $328.6 million this year.

Patel also noted that the gap between equalized and taxable values is narrowing. This is important because when equalized value and taxable value are the same for a property – and if that property’s assessed value continues to fall – then its taxable value falls in tandem with that assessed value. And that means lower revenues for local municipalities.

Equalization: Commissioner Comments

Leah Gunn said that “even though it’s bad news, it’s good news.” She recommended setting aside the additional funds, rather than spending them. Barbara Bergman agreed, saying “let’s put it in the bank.”

Mark Ouimet said the report is pretty much what he expected, and that they’ll likely see negative numbers for years to come. Responding to a question from Ouimet, Patel said the decrease in commercial property value will likely continue for several years. Ouimet described a scenario in which property owners refinance: If the appraisal for their refinancing comes in lower, then neighboring property owners will use that as a comparable to challenge their own property’s assessed value, hoping to lower their taxes, too.

Patel reported that there are currently appeals pending from last year at the Michigan Tax Tribunal on $900 million in property values – the assessed value is being challenged by the owners. Every year, he said, appeals will no doubt continue.

Ouimet speculated that residential values have likely bottomed out, but commercial properties will probably continue to decline in value. Patel agreed, but said that Washtenaw County was in better shape than others, thanks to the universities and hospitals. Ypsilanti and Ypsilanti Township were hurting because of the GM plant closure – the eastern side of the county is also influenced by what’s happening in Wayne County, he said.

Kristin Judge asked about new classification guidelines, which shifted 259 parcels in the county from the industrial to the commercial classification. The value of properties in the industrial classification plummeted 37.29%, with losses from the closing of the Pfizer site, the GM plant in Ypsilanti Township and other businesses. Judge asked whether the loss to commercial value was actually greater. Yes, Patel said – if those 259 properties had remained classified as industrial, the drop in commercial value would have been a lot worse.

Conan Smith said the lower-than-expected decline was great news, showing they had been appropriately conservative on the revenue side. But it’s only half the picture, he cautioned – they still have to accrue all of the savings they forecast on the expense side of the 2010 budget. Already they’ve learned from the county treasurer that interest income is significantly down, he said. Departments within county government were asked to forecast their expenses, “but that’s a prediction,” Smith said, and could turn out to be too optimistic.

Smith cited ongoing negotiations with townships and the sheriff’s department over the police services contract, and the shortfall they still have to deal with related to added staffing for the jail expansion, which opens this summer. There’s also the looming loss of state revenue sharing, he noted, which could wipe the extra revenue off the map, he said. He urged the board to approach this “slight windfall” with caution.

Porous Pavement for Sylvan Avenue

Commissioners voted on a resolution authorizing the issuance of up to $405,000 in bonds, backed by the county’s “full faith and credit,” for a project to install porous asphalt pavement on Sylvan Avenue in Ann Arbor. It’s part of the Allen Creek drain project, and water resources commissioner Janis Bobrin was on hand to take questions from the board.

This project was previously discussed at the Oct. 5, 2009 meeting of the Ann Arbor city council. From Chronicle coverage:

Pulled out of the consent agenda for individual consideration by the council was an expenditure for $54,271 to pay for engineering services (from Fishbeck, Thompson, Carr & Huber, Inc.) connected to the Sylvan Avenue permeable pavement project. Permeable pavement allows storm water to filter straight through the surface. The surface parking lot where the old YMCA building stood at Fifth Avenue and William is paved with permeable pavement.

Sylvan is a short one-block-long street running east-west, nestled into the upside down ”V” formed by State and Packard streets, near Yost Ice Arena. Nick Hutchinson, who’s a civil engineer with the city, fielded questions from Margie Teall (Ward 4) in whose ward Sylvan Avenue is located.

The reason Sylvan was chosen, he said, was that it had suitable soil underneath, it was flat, and there were existing drainage problems. He was asked first by Teall about maintenance, a question that was followed up with a specific question from Mayor John Hieftje about the possible need to vacuum the pavement to maintain its permeable properties. Hutchinson explained that it was more a matter of running a street sweeper an extra time per year over the street as opposed to vacuuming it. He also noted that during the winter, no sand – just salt – should be spread on the street.

The extra cost of permeable pavement, he explained, came mostly from the extra cost of the asphalt itself, not from the street reconstruction activity. So the extra cost for this project, he said, was not significant, given the 800-foot length and narrowness of the street.

The project should be finished, Hutchinson said, in spring 2010.

More recently, at its April 19 meeting, the Ann Arbor city council also approved a construction contract with ABC Paving Co. for $343,875. The project’s budget is $481,245, funded by the city’s street reconstruction millage ($159,983) and the stormwater maintenance fund ($321,442). The stormwater funding portion of the project will be repaid from the bonds secured by the office of the county’s water resources commissioner.

At Wednesday’s meeting of the county board, Jeff Irwin characterized it as a great project, and asked how these kinds of things get initiated. There’s a lot of talk around Ann Arbor about porous pavement, he said, and he wondered how this particular project got picked. He got a laugh by saying how he often sees the implementing of porous pavement by neglect – referring to potholes.

Bobrin said the Sylvan Avenue project was part the broader Allen Creek stormwater initiative, which includes work underway at West Park and Pioneer High School property. [See Chronicle coverage: "West Park Renovations Get Fast-Tracked" and "Drilling for the Drains"] The idea was to take a comprehensive approach to managing an “ultra-urban” creek, Bobrin said.

Working with the city of Ann Arbor road engineers, they chose Sylvan in part because it’s a short street, Bobrin said. The technology is new, and engineers wanted to see how well it would work. She said if it goes well – in terms of longevity and maintenance – they’d likely see more porous pavement used.

Though this project was government-initiated, Bobrin pointed to a project on Easy Street that was prompted by residents there. That road was repaved with paving cobbles, and was more expensive than porous asphalt.

Leah Gunn noted that the porous pavement on the Fifth & William parking lot was a project of the Downtown Development Authority. [Gunn is a DDA board member.] There’s a sign on the lot that explains the benefits of the material, she said, “so stop by and take a read!” Bobrin said it was amazing to see it on a rainy day, as the water drains through the pavement. It also makes the lot less icy in the winter, because there’s no standing water.

Wes Prater wondered about the soil under the pavement – if it’s not designed well, in the winter the water might get trapped and frozen just beneath the pavement, he said. Bobrin agreed that the design is crucial. They’ll have a sand under-drainage base so the water won’t get trapped, and additional water quality treatment beneath that. [According to a cover memo accompanying the resolution, the base will include an underlying sand filter and swirl concentrator to remove oils, sediment and phosphorus from runoff in the road.]

Prater also said he’d heard that this technique reduces road noise – was that true? Bobrin thought so, but said she wasn’t sure, since that’s not an aspect of the project that she’s examined. [Reduction in road noise was a benefit of porous pavement touted by a resident during public commentary at the Ann Arbor city council's April 19, 2010 meeting.]

Outcome: Approval of the bonding authority passed unanimously.

Drug Discount Program

Commissioner Jessica Ping proposed a resolution authorizing the county to enter into a contract with CVS/Caremark for their drug discount program, which would be made available to residents. This program has been discussed for several months and has been a contentious issue for some commissioners.

From Chronicle coverage of the board’s Sept. 2, 2009 meeting:

In July, three commissioners – Kristin Judge, Jessica Ping and Wes Prater – attended a conference of the National Association of Counties (NACo) in Nashville. While there, they learned of a drug discount program offered by CVS/Caremark, and they asked a representative of that business to make a presentation about the program to the full board.

At Wednesday’s meeting, Steve Rohm from CVS/Caremark told commissioners that 1,250 counties nationwide participate in the drug discount program. If Washtenaw County participates, cards would be offered to any resident not covered by insurance – there’s no enrollment, fee or registration required, no age limitations or limits on usage. Residents would take the card to participating pharmacies to get some type of discount on their prescription drugs. The discounts would be set by each pharmacy – Rohm said that consumers typically get around a 22% savings. Pet prescriptions are also covered, he said.

Responding to a query from commissioner Jeff Irwin, Rohm said that for each prescription filled using the discount card, CVS/Caremark receives a small transaction fee that’s been pre-negotiated with the pharmacies. He said he did not know the amount of that fee.

Kristin Judge said that she had checked with Ellen Rabinowitz, executive director of the Washtenaw Health Plan, to see if the discount drug card would in any way negatively impact the county’s current plan, and found that it would simply give residents another option. She said that at the NACo conference, she asked commissioners from other counties that were already participating in the plan whether there was a downside to the program – they all told her it was a great benefit. There’s a new kind of person who needs help, Judge said – people who have worked all their lives and never relied on government aid, but who now find themselves out of a job. They’re still reluctant to ask for help, so this discount card, which doesn’t require registration, would be perfect for them, she said.

Commissioner Jessica Ping said that the city of Saline is already participating in the program, through its membership in the National League of Cities. She said her sister, Alicia Ping, who’s a member of the Saline city council, would be willing to answer any questions they might have about the program.

Judge said she’d be supporting the county’s participation in the drug discount program. She also indicated that NACo would be offering similar programs for dental and vision coverage in the future.

On Wednesday, Ping said the program would be a great asset to the community, and urged commissioners to support it.

Leah Gunn began the discussion by reading a statement that outlined her objections to the plan. [.pdf file of Gunn's statement] She cited concerns over reports of deceptive business practices and violations of HIPPA (the Health Insurance Portability and Accountability Act). Gunn said she hasn’t seen a copy of the contract, and based on news reports that she’s read, she doesn’t want the name of Washtenaw County associated with the program in any way.

Barbara Bergman, who’s been a vocal critic of the plan, also read a prepared statement, laying out many of the same concerns. [.pdf file of Bergman's statement] She asked for an update from Curtis Hedger, the county’s corporation counsel, on questions she’d asked him to pursue with NACo and Oakland County, which already offers the drug discount program.

Hedger said he’d spoken with Oakland County’s legal counsel, who’d told him they thought CVS/Caremark was a good company and they’d made no changes to the contract used by NACo. Hedger was unable to reach anyone at NACo, but said his research showed the organization had started it as a pilot program in 2004. At that time, NACo had issued a request for proposals (RFP), and ultimately awarded the bid to Caremark. The program was offered initially to 17 counties, then offered to all NACo members in 2005. Caremark was acquired by CVS in 2007.

Wes Prater said he’d heard a lot of rhetoric, but hadn’t seen one iota of information from other commissioners that had anything to do directly with the drug discount program. The savings for residents were considerable, he noted, and many counties nationwide already offer it. The county wasn’t going to incur any cost, he added, saying “Come on, folks – let’s be reasonable.” It was important to offer help to low-income residents without health insurance, he said.

Rolland Sizemore Jr. asked a series of questions, eliciting the fact that there was no limit on the number of residents who could use the card, that most large drugstores and many independents accept it, and that the county would be able to terminate the contract. Hedger said that they can terminate it by giving 60 days notice before the end of the contract’s term, at the end of May. An initial one-year contract would be automatically renewed for one-year increments, unless the board took action to terminate.

Hedger also explained that the county wouldn’t be charged for a “basic” marketing plan provided by CVS/Caremark, but there would be a cost if the county chose to customize its marketing. It wasn’t clear exactly what kind of customization was offered, or what the cost would be.

Ping said nothing that had been presented was sufficient to prevent the board from moving forward to offer this plan. It won’t cost the county, she said, and if they don’t like it, they can pull it. One of the reasons that the county is a member of NACo is because of programs like this, she said, and they should take advantage of it.

Kristin Judge said for her, it was about the residents: “I’m going to do anything I can to help the residents of Washtenaw County.” Commissioners she’d talked with in other counties that already offered the program described it as a “no brainer” and wondered why Washtenaw County hadn’t done it sooner. If the board approves it, Judge said she’d personally deliver cards to schools, libraries, doctors’ offices, homeowner associations and other venues to make sure residents had access to the program. She said she appreciated the concerns of other commissioners, but that she had spent considerable time researching the program and felt it was worth offering.

Jeff Irwin had some lingering questions. He wondered whether CVS/Caremark could collect personal information from a customer’s prescription, when they used the discount card to fill it. Hedger said he’d talked with the CVS/Caremark attorney, who told him that information was collected in aggregate – that is, none of the individual prescription information is given to CVS/Caremark. Reports from pharmacists indicate how many prescriptions of a certain type are filled, for example, but not the names of customers.

Irwin said he wasn’t sure he was comfortable signing off on a program that collected even aggregate information, given the company’s track record of mishandling personal information. He wasn’t sure the discounts outweighed that concern. He also didn’t like the fact that CVS/Caremark required exclusivity, aside from grandfathering in the county’s existing health plan. He said he wasn’t thrilled with the termination clause either, but the exclusivity arrangement was more onerous. What if another program came along that offered an even better deal?

Irwin offered an amendment that would allow the county to offer other plans in the future, if they wanted.

Hedger clarified that the exclusivity applied only to programs that the county might offer, not to other discount programs like those offered by the Ann Arbor Area Chamber of Commerce.

Prater said Irwin’s amendment seemed designed just to draw out the process. According to the county’s health department, he said, an estimated 11% of the local population doesn’t have health insurance. That equates to about 33,000 people who need relief, and he urged his colleagues to support the program.

He moved to call the question on the motion to amend – a parliamentary move that requires eight votes. The motion to call the question failed, gaining support only from Prater, Judge, Ping, Ouimet and Sizemore.

Irwin returned to the question of exclusivity, saying he thought it was “weird” that the CVS/Caremark representative, Steve Rohm, had told the board that the company would require exclusivity, but wouldn’t enforce it. He felt it indicated a willingness on the part of CVS/Caremark to soften its demands. It’s not in the county’s interest to agree to exclusivity – it’s only in the interest of CVS/Caremark, Irwin said. If they can get a better deal out of the company, they should try.

Citing the bad economy, Sizemore said he wanted to get the program started.

Judge said she’s spent many hours researching the program, and couldn’t imagine that within another year – the term of the contract – a better program will come along. “It’s only one year for a contract that cost the county zero dollars,” she said. The energy spent on opposing the CVS/Caremark program could have been spent finding a better one, Judge added, but that didn’t happen.

Judge also pointed out that the county surely has other exclusive arrangements with businesses – like Verizon, for the county’s cell phones. Bergman responded, saying she assumed that contracts with companies like Verizon went through an RFP process, with competitive bids. That was not the case with CVS/Caremark, she said.

Bergman also thanked Judge for the time she put into researching this program, but noted that it was Judge’s choice to do so. Bergman took offense at the suggestion that other commissioners didn’t work as hard, saying that was disingenuous.

Outcome: The amendment to change the contract language failed, supported only by Barbara Bergman, Leah Gunn, Jeff Irwin, Ronnie Peterson and Conan Smith.

Speaking to the main motion – authorizing the contract with CVS/Caremark – Smith said he’d vote against it. He was uncomfortable with the company’s business practices, and didn’t want to support something that had caused such consternation among commissioners. He was concerned that the business didn’t disclose its profit model, that a disproportionate amount of funds go toward CEO compensation, and that some of the county’s professional staff have expressed discomfort with the deal. He didn’t like the exclusivity requirement, and he didn’t like ceding the county’s authority to NACo in selecting the company.

More importantly, Smith said, was that there are times when the benefit to the individual is outweighed by the harm to the community – WalMart is an example of that, he said. And with the federal health care reform that’s recently passed, there may be relief on the way. All of these factors “suggest to me that we should let this one go.”

Prater said he took issue with the fact that so many county residents are being ignored – some are going without their next meal, and commissioners really should have more compassion for them.

Bergman allowed that perhaps the county should be more aggressive in marketing its own drug discount plan. She said a better strategy would be for CVS/Caremark to simply slash its prices across the board. The drug discount program is a way to get people into their store, where they’ll buy other things, she said.

Outcome: The resolution authorizing approval of the CVS/Caremark contract for a Washtenaw County drug discount program passed, with dissent from Barbara Bergman, Leah Gunn, and Conan Smith. Commissioners will take a final vote on the resolution at the May 5 board meeting.

Drug Discounts: Public Commentary

Eric Sturgis told commissioners that he previously lived in Oakland County and had taken advantage of the CVS/Caremark program, which had saved him about 20% off prescriptions. He understood the concerns that had been raised, but felt that those concerns should be weighed against what’s best for the individual. If a better program comes up, they should pursue it. As Democrats, he said, anytime they can help people, they should do it. He said he was glad to see that the Republicans were on board this one time. [Commissioners Ping and Ouimet are the only Republican commissioners.] He said he knew all commissioners worked hard.

Audrey Tisdale, who works for the county, said that Washtenaw United Way offered a drug discount program – called FamilyWize – that doesn’t require signing a contract. She urged the county to look into that as an alternative.

Drug Discounts: Commissioners Followup

Judge said she never stated that other commissioners didn’t work hard – she knew that they did.

Irwin responded to the comment about pursuing a better program if it came along. There already is a better program, he said – the county’s own prescription plan, which offers deeper discounts. The only difference is that you have to sign up for it, and it doesn’t cover pet medications. Other than that, it all comes down to marketing, he said. If the county eventually decides to put money into marketing a drug discount plan, he hoped the county would spend it on the plan that saves more money.

Bergman noted that there was someone who typically spoke during public commentary time who had not been there for several weeks. She said she wished him well, for whatever reason he was absent, adding, “I frankly look forward to seeing him again.” [She was referring to Thomas Partridge, who is a regular speaker during the public commentary time at meetings of the county board, Ann Arbor city council, AATA and other public entities.]

Smith jokingly told Sturgis that the Republican caucus was planning to hold a puppy killing later that night to make up for their support of the drug discount program.

Road Commission Expansion

Conan Smith moved a resolution setting a public hearing on May 19 on expanding the Washtenaw County Road Commission from three members to five. He told his colleagues that it wasn’t a decision on whether to expand – setting the public hearing was just a way to start the conversation. [The county board is responsible for appointing the road commissioners to six-year terms. Currently serving are David Rutledge, Douglas Fuller and Fred Veigel.]

Commissioners Leah Gunn, Barbara Bergman and Jeff Irwin all supported the resolution, saying they were also in favor of expanding the road commission.

Wes Prater, who has previously served as a road commissioner, said he opposed the resolution. It would add to the cost of the commission, he said, with no increase in revenues. In fact, roads are deteriorating because the commission is operating at revenue levels that are as low as they were in 2001, he said. State legislators need to find a way to adequately provide funding for roads – he noted that five local communities are now paying for road repair on their own, either by levying new taxes or taking money from the general fund.

The road commission still had issues, he said, but relationships between management and the unions have improved, and things are on the right track. He noted that the road commission expects to be certified soon to ISO 9000 and ISO 9001 standards – the first road commission in the state to do that. Overall, the commission is doing good work, Prater said.

Kristin Judge weighed in, saying she thought the road commission should eventually be expanded to five members, including representation from the western part of the county and Pittsfield Township. However, she was concerned about the timing. She wanted more discussion about how they’d handle the cost of additional salaries, for example. Judge described herself as being a strong critic of the road commission before she was elected, but since then she’d seen the entity be more responsive to her constituents’ concerns, and she appreciated that.

Jessica Ping echoed Judge’s comments, and said she didn’t think the timing was right. She also praised the road commission’s responsiveness to issues raised in her district.

Saying he wasn’t opposed to expansion in principle, Ken Schwartz said he thought that setting a public hearing was putting the cart before the horse. He moved to table the motion until the board’s May 19 meeting.

Outcome: The motion to set a May 19 public hearing on possible expansion of the road commission was tabled, with dissent from Bergman, Irwin, Ouimet and Smith.

Road Commission: Public Commentary, Commissioner Response

Eric Sturgis spoke briefly, thanking Smith for proposing the public hearing and saying he didn’t see anything wrong with that.

Responding to his comment, Judge said they should have the public hearing after they get more information on the proposed change.

Smith noted that state law requires that they hold a public hearing first – the intent is to get information and gauge interest from the public before setting policy. It’s a lengthy process from hearing to appointment, he said.

At this point, Prater charged that Smith was speaking out of order. Smith said he was responding to a citizen who spoke on the issue during public commentary, which is allowed. He continued by saying that if they want to engage in this process and not defer to the next board, they needed to start the process. [There will be at least some turnover on the board this year – commissioners Mark Ouimet and Jeff Irwin are not running for re-election, and are vying instead for seats in the state House of Representatives.]

Misc. Reports, Presentations, Public Hearing

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Dairy Farmers of the Year

The Horning family of Manchester were honored for their work as “progressive dairy producers.” They were recently named Michigan State University Dairy Farmer of the Year. Their six-generation family dairy business, which started in 1877, now has 360 milk cows, 410 head of young stock and 700 acres of cropland.

Earl and Diane Horning were on hand to accept the board’s resolution of appreciation – it was read by Jessica Ping, who represents District 3, which includes Manchester in southwest Washtenaw County. Earl Horning said it was a humbling experience to work with the state’s dairy farmers. He noted that they had been featured in a Kroger commercial, and that the grocery chain was a very friendly company. The Hornings also invited commissioners to attend a June 26 Breakfast on the Farm event they’ll be hosting, which shows people how the farm operates. “We’d like our city friends to come and visit us,” Horning said. The farm is located at 11855 E. Pleasant Lake Rd. in Manchester.

Following the presentation, Conan Smith remarked that he had grown up next to a farm, and that his first jobs were baling hay and milking cows. He suggested that all commissioners should be made to do farm work.

Area Agency on Aging

Barbara Bergman passed out brochures from the Area Agency on Aging 1-B, with information about support services that would help people live on their own, rather than in a nursing home.

Head Start Imagination Library

Kristin Judge invited commissioners and the public to the April 30 kick-off of the county’s Head Start Imagination Library, from 10:30 a.m. until noon. Kids up to five years old who are enrolled in the program receive a free book in the mail each month. Initially, the program will serve children in the Ypsilanti area (within the 48197 and 48198 zip codes). They need to raise another $493,000 to serve the rest of the county, Judge said. She also noted that during the festivities, she’ll be reading aloud from the book, “The Little Engine That Could.” The event will be held at the Washtenaw County Head Start building, located at 1661 Leforge in Ypsilanti.

Aerotropolis

Bob Guenzel reported that the Detroit Region Aerotropolis is up and running – the entity aims to develop the area surrounding Detroit Metro and Willow Run airports in Washtenaw and Wayne counties. Nine governments – including Washtenaw County, Ypsilanti and Ypsilanti Township – have joined, Guenzel said, and they’ve received inquiries from several other communities who might be interested in joining, which he said is positive. He noted that he currently serves as the county’s representative on the entity’s board, and that commissioners will have to appoint a replacement, hopefully at their May 5 meeting. [Guenzel is retiring in mid-May as county administrator.]

Tony VanDerworp serves as staff support for the county’s aerotropolis work, and gave a quick update. The group is working on revisions to its master development plan to include the element of transit, he said. They’ve also issued a request for proposals (RFP) for marketing. They’re hoping that the state legislature passes the Next Michigan Development Act, which would allow the aerotropolis and similar entities to offer tax abatements and set up tax increment financing (TIF) districts. Another committee is working specifically on marketing of the Willow Run Airport.

Rolland Sizemore Jr., the board’s chair, said that he and Verna McDaniel – who’ll be replacing Guenzel – will bring a resolution on a new appointment for the next board meeting.

Ronnie Peterson asked whether the aerotropolis bylaws prevented Guenzel from remaining as the county’s representative – he was told they don’t. In that case, Peterson said, he’d be urging Guenzel to stay on that board. Guenzel knows the history of that effort and has a lot of respect from the other partners involved, he added.

Treasurer Reports

Wes Prater said he’s like to receive monthly reports from the county treasurer, Catherine McClary. The board hadn’t seen a report from the treasurer in quite some time, he said.

Public Hearing on Urban County Annual Plan

The board held a public hearing on the Washtenaw Urban County‘s annual plan for 2010-11, which must be submitted to the U.S. Dept. of Housing and Urban Development (HUD). [See Chronicle coverage: "Urban County Allocates Housing Funds"]

No one spoke at the hearing. [.pdf of Urban County 2010-11 annual plan]

Present: Barbara Levin Bergman, Leah Gunn, Jeff Irwin, Kristin Judge, Mark Ouimet, Ronnie Peterson, Jessica Ping, Wes Prater, Ken Schwartz, Rolland Sizemore Jr., Conan Smith

Next board meeting: The next regular meeting is Wednesday, May 5, 2010 at 6:30 p.m. at the County Administration Building, 220 N. Main St. The Ways & Means Committee meets first, followed immediately by the regular board meeting. [confirm date] (Though the agenda states that the regular board meeting begins at 6:45 p.m., it usually starts much later – times vary depending on what’s on the agenda.) Public comment sessions are held at the beginning and end of each meeting.

John U. Bacon

With tax day just past, it’s a good time to ask where our money should go – and where it shouldn’t. I don’t have all the answers, of course – but I’m convinced one expenditure should end immediately: stadium subsidies.

Two years ago, the New York Yankees signed third baseman Alex Rodriguez to a contract that will pay him $275 million dollars in exchange for 10 years of catching, throwing and hitting a baseball. That puts him ahead of his teammate, Derek Jeter, who has to get by on a mere $189 million for his decade of duty. Sucker.

Whenever teams sign contracts like that, the player’s agent always justifies it by saying, “Well, that’s what the market will bear.”

If that were true, it would still be insane, but at least there would be a logic to it. After all, if any team is dumb enough to pay someone that kind of money, and if a family of four wants to pay $200 to see that guy play – well, then, so be it. That’s how free markets work.

But the free market doesn’t come close to paying these guys’ salaries. Who picks up the gap? You do – every time you pay your taxes.

When teams spend money like that, they suddenly realize they need a fancy new stadium with luxury skyboxes to generate the kind of revenue necessary to pay those ridiculous salaries. So, they demand state and local governments build them one – and most of the time, that’s exactly what those states and cities do.

The United States is home to 99 major league baseball, football, basketball and hockey arenas and stadiums. According to Judith Grant Long’s research at Rutgers University, the teams that play in those places have received subsidies totaling $21.3 billion. That’s billion, with a ‘b.’

To pay for the Silverdome, the Palace and Comerica Park, Michigan taxpayers have coughed up $616 million – which is about average.

Rodriguez’s team, the New York Yankees, just built a shiny new stadium for $2.3 billion – and had the nerve to ask the taxpayers to pony up half of that, over a billion dollars. But the Yankees get to keep all the team’s profits, which is how they pay guys like Rodriguez hundreds of millions of dollars to do something your kid does in the backyard for free.

What do the taxpayers get? The bill, that’s what – while New York City’s school system is facing a $4 billion deficit, and a massive layoff of 15,000 teachers.

It doesn’t have to be this way. And, just across the border, it isn’t. Canada is home to eight major league teams. But Canadian taxpayers don’t pay for their stadiums. Their teams do – just like they should – and the taxpayers spend their money on their schools. It’s a novel concept.

Somehow, Canada ranks second worldwide in student literacy, and the U.S. ranks 15th. Fine. But we lead the world in sports salaries. U-S-A! U-S-A!

More good news: Rodriguez is doing just fine, thank you – except for the steroid scandal, that is. He’s already hit two home runs this season, and since he gets paid about $800,000 per homer, he’s already made more than 30 New York City school teachers will this year – combined. Provided, of course, they don’t get laid off.

Taking candy from a baby may be immoral – but taking money from students, and giving it to sports stars, should be illegal.

About the author: John U. Bacon lives in Ann Arbor and has written for Time, the New York Times, and ESPN Magazine, among others. His most recent book is “Bo’s Lasting Lessons,” a New York Times and Wall Street Journal business bestseller. Bacon teaches at Miami University in Oxford, Ohio; 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.

Stephen Rapundalo (Ward 2) sets up his presentation on the Local Development Finance Authority (LDFA) before the start of the April 12 council budget meeting. Rapundalo sits on the LDFA board as the Ann Arbor city council’s representative, and currently chairs the board.

At the April 12 budget meeting, the council heard presentations on two related entities: the Local Development Finance Authority (LDFA) and Ann Arbor SPARK. The LDFA contracts with Ann Arbor SPARK for various business development services.

The two key themes that emerged from the LDFA presentation were consistent with the overall topic of the city’s budget: (i) Where does the LDFA get its money? and (ii) What does the LDFA spend its money on?

Part of the LDFA’s revenue goes towards economic development activities – a business accelerator – for which it contracts with Ann Arbor SPARK. The presentation to the council from SPARK’s CEO, Michael Finney, was followed by testimonials of companies who said they had benefited from SPARK’s efforts.

Development activities are just one kind of investment that the LDFA could make under its TIF (tax-increment financing) plan. It could also make investments in physical infrastructure. During question time, Sandi Smith (Ward 1) drew out from Stephen Rapundalo (Ward 2) the possibility that the LDFA could contemplate an investment in a fiber-optic network. Rapundalo, who serves on the LDFA board, indicated that such an LDFA investment might be possible, even if Google does not select Ann Arbor as a test community for its current fiber-optic initiative.

The council also heard from the economic development community about how the name “Ann Arbor” is perceived in the rest of the world.

The part of the council’s meeting dedicated to deliberations on its own budget was comparatively brief. Councilmembers were keen to portray in a positive light a couple of different issues, among them a potential increase in the city’s debt load resulting from a failure to complete a $3 million sale of property at First & Washington, as well as proposed increases in water rates.

Local Development Finance Authority (LDFA)

The presentation to councilmembers on the LDFA was made by their colleague, Stephen Rapundalo (Ward 2), who sits on the LDFA board in the slot designated for a city councilmember, and currently chairs the body.

A point of emphasis for Rapundalo – to counter what he characterized as “misinformation” – was to make clear that there are some taxes not captured by the LDFA.

The two kinds of taxes identified by Rapundalo and displayed on the slide in his presentation as not captured by the LDFA are Ann Arbor Public Schools debt service and the enhancement millage. Ann Arbor’s public schools “remain whole,” Rapundalo said, due to the way property taxes are redistributed by the state.

LDFA: Where the Money Comes From – Capture

By way of more detailed background, it’s worth considering what’s meant by “capturing taxes.”

The LDFA is funded through tax-increment financing (TIF) in a manner similar to the way the Ann Arbor Downtown Development Authority is supported. A TIF district allows authorities like the LDFA and the DDA to “capture” some of the property taxes that are levied by other municipal entities in the district.

There’s a contrast, then, between property taxes that are “levied” by a municipal entity that has the right to collect (i.e., levy) them, and taxes that are “captured” by an authority like the LDFA or the DDA.

The notion of “capture” conveys at least two ideas. First, a TIF authority does not itself levy taxes – the legal right for the collection of taxes stems from some other municipal entity, like the city of Ann Arbor, or Washtenaw County or the Ann Arbor Public Schools (AAPS). This is sometimes one of their selling points: Creation of a TIF district does not contemplate creation of new taxes or raising taxes.

Second, if a particular TIF authority did not exist, the taxes it captures would be collected anyway, and those monies would have some other “destiny.” In most cases, that destiny would be direct use by the municipal entity that levied the tax. By way of a concrete example, one of the kinds of taxes captured by the DDA is the city of Ann Arbor’s general operating millage. If the DDA did not exist, then the portion of city of Ann Arbor taxes currently captured by the DDA would go to the city’s general fund.

In the case of the LDFA, the story of an alternative destiny for some of its captured taxes has an extra wrinkle. That’s a wrinkle involving capture on the increment for the AAPS general operating millage. If the LDFA did not exist, then the taxes collected on behalf of the AAPS for its general operating millage would not be used directly by AAPS, but rather would go to the state’s School Aid Fund, for redistribution among school districts statewide based on a per-pupil formula as determined on a specified “count day.” This is what underlies Rapundalo’s explanation that local schools would “remain whole.” [Previous Chronicle coverage with a primer on how public schools are funding in Michigan: "Does It Take a Millage?"]

The TIF plan for the LDFA discusses the potential impact to local school funding as follows:

Based on current state law, this Plan shall have no direct impact upon the local school districts, as it has no direct impact upon the per pupil reimbursement from the State to the public schools. The impact to the State School Aid Fund will be approximately $24,000,000 over the 15 years of the LDFA plan. This translates to approximately $1,600,000 annually, or $0.79/student statewide.

The state of Michigan’s School Aid Fund is administered in a way such that some districts get back more from the state than their millages contribute to the fund, while others get back less. Those that get back less – like AAPS – are known as “donor districts.”

The Ann Arbor school district’s status as a donor to the School Aid Fund is sometimes heard in defense of any possible negative impact on statewide school funding potentially caused by the LDFA’s tax capture. That is, the LDFA can be seen as a mechanism by which the Ann Arbor area recoups millage dollars that are lost to other areas of the state due to its “donor” status in the School Aid Fund. This recouping, of course, does not recover millage dollars for the direct benefit of the public schools.

The specific taxes that are captured by a TIF authority are spelled out as part of the set of formative documents for such an authority. For the Ann Arbor DDA, the relevant taxes that are captured are spelled out as follows [emphasis added]:

Per Public Act 197 (1975), as amended, the Ann Arbor Downtown Development Authority collects the tax revenues levied by the City of Ann Arbor, Washtenaw County, the Ann Arbor Transportation Authority (AATA), Washtenaw Community College, and the Ann Arbor District Library on the initial taxable value of all new real and personal property within the DDA District.

Prior to 1994, the DDA also captured Ann Arbor Public Schools taxes and the Washtenaw Intermediate School District taxes.

For the LDFA, the taxes to be captured are spelled out as follows [emphasis added]:

Under this Plan, tax increment revenues subject to capture by the LDFA shall include, to the maximum extent permitted by Act 281 of 1986, as amended, the following: Ann Arbor portion of the district – 50% of operating millage of local school districts and 50% of the State Education Tax levied upon the Captured Property. Ypsilanti: no revenue shall be captured at the present time. The LDFA shall not capture tax revenues attributable to the levies of any other taxing jurisdiction.

The specific geography of the LDFA district mentioned here – the union of the geographic areas specified in the respective DDAs of Ann Arbor and Ypsilanti – is one of two ways that the amount of taxes to be captured by a TIF authority is limited: geography and increment.

LDFA: How Much Gets Captured – Putting the “I” in TIF

If a TIF authority captured all of the property taxes levied by a municipal entity everywhere those taxes are collected, then there would be no tax revenue to the municipal entity. That is not how TIF authorities are set up. The first limitation is geographical – the specific area in which the Ann Arbor DDA can capture taxes, for example, corresponds to an area generally described as downtown Ann Arbor.

The area in which the DDA can capture any portion of property taxes levied by a municipal authority is defined to be property inside the red line. (Image links to a .kmz file in the city of Ann Arbor’s Data Catalog, which can be opened in Google Earth.)

The second limitation is how much of the tax levy is captured in a defined TIF district. The “increment” in “tax increment financing” is the difference between some baseline of taxable value for properties in the district, compared to increases in the taxable value.

In the case of the DDA, the increment is defined to be the difference between the value of new construction and the previous value of the property. Any subsequent increases in the taxable value of the property as a result of market forces is not included in the increment on which the DDA captures taxes. This is sometimes called a “one-time increment.”

For the LDFA, the increment is defined as follows:

Beginning in 2003, the LDFA will capture ad valorem and specific tax levies on all new and incremental growth from the initial assessed value of Captured Property determined on the basis of assessments as of December 31, 2001. The initial taxable value of the LDFA District is $261,776,313. The LDFA will capture tax dollars for fifteen (15) years, commencing with levies imposed in 2003 through the levies imposed in 2018.

As reflected in the section of the LDFA TIF plan previously cited, it is not the entire amount of the increment that is used to define tax capture for the LDFA, but only 50% of it.

LDFA: How Much Is That in Dollars?

In his presentation, Rapundalo presented the actual dollars captured to date by the Ann Arbor LDFA:

2004  $   68,578
2005     199,699
2006     333,524
2007     526,624
2008     727,999
2009   1,101,408
2010   1,234,626

-

Based on projections presented by Rapundalo, the captured taxes will steadily increase to around $1.8 million in 2018, when the life of the LDFA currently ends. Summing over the entire 15-year life of the district from Rapundalo’s slide, current projections suggest that the district would capture about $16 million total. That is less than what was originally forecast – before the economic downturn of 2008 – in the formative documents for the district, which estimated that $24 million would be captured over the course of 15 years.

The total amount of taxes captured over the life of the district plays a role if the amount proves to be higher than what was originally estimated. From the LDFA TIF plan [emphasis added]:

Tax Increment Revenues in excess of the estimates set forth in this Plan, or in excess of the actual costs of this Amended Plan to be paid from Tax Increment Revenues will be considered surplus under Act 281. Unless retained to further implementation of the Development Plan set forth in Section III pursuant to a resolution of the Authority, surplus tax increment revenues must revert proportionately to the respective taxing jurisdictions from which collected.

LDFA: How the Money Is Spent: Activities, Infrastructure

The kinds of activities supported under the LDFA’s contract with Ann Arbor SPARK, Rapundalo explained, are centered around the business acceleration, incubator services, entrepreneurial education, and networking among businesses and entrepreneurs.

A business accelerator provides resources to help nascent start-up companies clear the hurdles to becoming a mature company with a saleable product, which in turn could lead to the creation of jobs and increased employment in the area.

The business acceleration services are conceived in terms of phases: Phase I, Phase II, Phase III.  In Phase I, initial contact is made with people who have a business/technology proposition and the idea is screened for programmatic fit, reviewed by advisers and consultants, and vetted for advancement to Phase II. That’s a step that entails an in-depth evaluation of a prospective client to determine capability of business for consulting help in Phase III.

That final phase reflects substantial involvement on the part of SPARK to get a company past start-up phase to a point where the company can attract venture capital investment. In Phase III, strategic issues are addressed, including the development of a business plan, schedule and budget.

Among the questions posed by councilmembers was one from Margie Teall (Ward 4), which focused on the notion of “virtual tenants” for SPARK’s incubator facility. Rapundalo deferred the question to Skip Simms, who is SPARK’s managing director for entrepreneurial business development. Simms explained that virtual tenants had access to internet service, a physical address where they could take a mail drop, and use of conference rooms.

Teall asked if a company needed an Ann Arbor address to become a virtual tenant of the incubator. Simms clarified that a company’s status as virtual tenant was a mechanism by which a company could claim an Ann Arbor address – that of the incubator on East Liberty Street. The question of a company’s address is important, because an Ann Arbor address is required for eligibility for LDFA services.

LDFA: Measurement of Success – Activities vs. Outcomes

In Rapundalo’s presentation, he noted the challenge inherent in evaluating success of the LDFA’s activities. During question time, Sandi Smith (Ward 1) asked Rapundalo about effectiveness. He noted that one kind of comparative metric they looked to was other LDFAs created under Michigan’s SmartZone legislation – what are best practices among other similar such districts? One of the priorities that came out of the board’s 2009 retreat, said Rapundalo, was a focus on an analysis of effectiveness. [Chronicle coverage of that retreat: "Expanded LDFA Board Reflects on Purpose"]

One of the statistics that’s tracked is activity related to the various business acceleration services, measured by the number of companies that used various services: Phase I services (218);  Phase II services (91); Phase III services (61); entrepreneurial boot camp (28); and incubator (34). Those activities were, in aggregate, associated with 106 new jobs, according to Rapundalo’s slide. Balanced against that were five companies that left the LDFA service area, resulting in 11 jobs lost.

One of the difficulties, Rapundalo acknowledged, was that they were dealing with very young companies and that there was a certain volatility associated with that.

Sabra Briere (Ward 1), looking at the 106 new jobs, noted that some would say it’s not enough, but some would say it’s really good. “What is the measure of success?” Briere wanted to know. Rapundalo allowed that this was exactly the crux of the matter.

The LDFA TIF plan does make an estimate of the number of jobs that could be created through the LDFA investment over the 15-year life of the district: 700. From the TIF plan:

The estimation of jobs in the high technology sector and under the program outlined by this Plan is a speculative venture contingent upon many factors outside the control of the LDFA. However, the writers of this plan estimate that 700 jobs may be created as a direct and indirect result of these activities. This estimate is based upon the following assumptions: A survey conducted in 1998 by the Washtenaw Development Council and the Ann Arbor Software Council determined that the average technology company in the area employed 57 individuals after approximately 10 years of operation. Based on the establishment and/or location of two new businesses each year within either the Ann Arbor or Ypsilanti portions of the SmartZone, this would result in the creation of just over 700 jobs during the 15-year life of the LDFA.

Following Rapundalo’s remarks, the city’s CEO, Tom Crawford – who sits on the LDFA board as an ex officio member – added that “we’re creating the environment that nurtures the growth.” The idea, said Crawford, is that one of these companies will “take off.” Pressed by Briere for any examples of a company that has “taken off,” the example of Xoran Technologies was offered.

Rapundalo echoed Crawford’s sentiments, saying that the business acceleration was about “hand holding” and helping companies learn how to walk. There’s high risk of failure, he allowed, but this was balanced against the potential for high return.

The LDFA, said Rapundalo, as an oversight body, needed to make sure that tax dollars were translated into “something meaningful.”

LDFA: Infrastructure Investments – Fiber Optics

In the course of his remarks, Rapundalo mentioned that the LDFA had offered $250,000 in support of Ann Arbor’s response to the Google Fiber initiative: The firm’s request for information (RFI) from communities interested in having Google install a fiber-to-the-home network. Sandi Smith (Ward 1) asked Rapundalo if the LDFA would consider making an investment in a fiber-optic network, even if Google did not choose Ann Arbor as a test community. Rapundalo did not rule out such a possibility, saying that the LDFA had talked a bit about the topic in a broader sense.

Smith was in some sense echoing sentiments the city council had heard before on the need for a fiber-optic network, even if Google did not fund one for Ann Arbor. During the public hearing on the city’s Google Fiber initiative, held on March 15, 2010, Wes Vivian urged the city council to think about how they would achieve a fiber-optic network, if Google did not choose Ann Arbor. [From Chronicle coverage: "Mixed Bag: Phones, Fiber, Fire"]:

Wes Vivian introduced himself as a decades-long telecommunications consultant, and told the council that for the last 15-20 years it’s been clear that either the telephone companies will migrate to fiber-optic networks or face domination by cable television companies. That process has begun, he said – AT&T has installed fiber in many communities.

If Google “coughs up the money” that’s great, Vivian said, but we need to find a way to implement this anyway – even if Google decides not select Ann Arbor as a test site. Fiber, he said, was part of the necessary infrastructure of a city – like a street. It wasn’t necessary to provide a system, he said, but just a hole in the ground or a hole in the air.

The idea of using LDFA funds as infrastructure investments – specifically the kind of high-speed telecommunications infrastructure represented by fiber-optic networks – is made explicit in the LDFA’s formative documents. From the TIF plan [emphasis added]:

The LDFA District is fully developed with roads, sidewalks, lighting and subsurface utilities. The infrastructure is publicly financed and maintained. The Development Plan does not anticipate large-scale improvements to or expansions of this infrastructure. In the event sufficient revenues become available through this plan, investment may be made to facilitate the expansion of high-speed telecommunications infrastructure throughout the District. Alternatively, the LDFA may become a grant recipient for financing designed to encourage this investment.

At the March 2010 meeting of the Ann Arbor Downtown Development Authority board – on which Smith also sits, in addition to serving on the city council – Smith had drawn out the fact that when underground work on streets is undertaken by the DDA, conduit is installed to accept potential installation of various telecommunications.

Ann Arbor SPARK

Ann Arbor SPARK CEO Michael Finney gave a presentation that addressed some of the same issues that Stephen Rapundalo had touched on.

SPARK: Metrics for Success, Job Retention, ProQuest

Among the issues covered by Finney was the challenge in evaluating success – not only in choosing appropriate metrics, but in taking the measurements in a reasonable way. He noted that in calculating the number of “jobs retained,” the idea was to count only those jobs that were actually at risk of leaving. In the city of Ann Arbor for 2009, for example, Finney indicated that 450 jobs had been retained through the activities of SPARK.

SPARK’s activities related to job retention include talent recruitment for companies that are looking to expand. Finney gave ForeSee Results as an example of a company that recently indicated they were looking to hire 10 additional staff. If a company that is looking to grow cannot recruit the staff in the Ann Arbor area that it needs for that growth, there’s a risk that the company could try to achieve that growth in a different region of the county.

Finney had invited representatives of a few companies to speak on behalf of the positive effect of SPARK’s efforts. Among them was Elliott Forsyth, senior vice president of human resources and business services for ProQuest. He explained that in 2006 ProQuest had been financially stressed and that Cambridge Information Group had acquired the company, expressing some interest in moving operations elsewhere.

Forsyth credited SPARK’s efforts at coordinating support from the Michigan Economic Development Corp. and the city of Ann Arbor to encourage ProQuest to stay. The support from the city of Ann Arbor to which Forsyth alluded came in the form of a tax abatement approved at the city council’s March 3, 2008 meeting:

Resolution to Approve Industrial Facilities Exemption Certificate Between the City of Ann Arbor and Proquest LLC. A motion was made by Councilmember Rapundalo, seconded by Councilmember Greden, that the Resolution be approved. On a voice vote, the Mayor declared the motion carried unanimously. Enactment No: R-08-094

In a Dec. 18, 2007 Ann Arbor News article on the $10 million Michigan Economic Growth Authority tax credits awarded to ProQuest, the value of the tax abatement granted by the city of Ann Arbor was put at around $1.2 million.

A search of online Ann Arbor News archives [registration required but free, available through the Ann Arbor District Library] shows that through the early to mid-2000s, a possible tax abatement for ProQuest had been discussed, but rejected until the 2008 approval.

One issue raised by Tony Derezinski (Ward 2) was the question of whether arrangements made to retain companies could be enforced. Finney indicated that agreements are typically contingent on jobs.

In the case of ProQuest’s tax abatement, the deal comes with the following conditions:

6. By December, 31  2009, ProQuest will add not less than Fifty (50) jobs at the facility named on the Application as compared to its number of employees as of the effective date of the Certificate. If ProQuest adds less than Fifty (50) additional Jobs by December 31, 2009, ProQuest shall have materially breached the terms of this Agreement and the City shall have the right to recommend revocation of the Certificate subject to provision 11 of this agreement to the State Tax Commission or taking other appropriate legal action in connection with the default.

7. ProQuest shall comply with all of the requirements of the City’s Living Wage Ordinance.

8. This abatement is being granted by the City in part to allow ProQuest to qualify for application of incentive tax credits by the State of Michigan. This agreement is contingent upon ProQuest receiving approval of State tax incentives within 120 days from the date the Michigan State Tax Commission issues the herein referenced abatement certificates. Failure to obtain approval of State tax incentives during this time will automatically revoke this agreement and the City shall have no further obligations to ProQuest under this Agreement.

9. ProQuest shall maintain operations within the City of Ann Arbor during the period of time for which the State tax incentives are in effect. If ProQuest relocates, whether within or outside of the State of Michigan, ProQuest shall pay to the affected taxing units an amount equal to those taxes it would have paid during the abatement term had the abatement not been in effect.

SPARK: What’s Your Elevator Speech for Ann Arbor?

Michael Finney indicated during his presentation that the name “Michigan” or “Detroit” did not generate a positive response from people he met from other regions of the country. The name “Ann Arbor,” however, had a positive association.

Sandi Smith (Ward 1) asked Finney what his “elevator speech” was for Ann Arbor. [An elevator speech is the short, condensed pitch given to someone in the time it would take to ride an elevator with that person before going separate ways.] Smith said that she’d spoken to Ken Nisbet, director the University of Michigan’s technology transfer office, and that Nisbet had given Ann Arbor’s “quality of life” as his response to the elevator speech question.

Finney’s response focused on the idea of Ann Arbor’s robust entrepreneurial ecosystem. He noted that SPARK itself is a start-up organization. Having the right ecosystem, Finney said, is the key to success. Referring to the possibility of a Google fiber network, Finney said, “we’re drooling about something like that happening.”

However, Tony Derezinski (Ward 2) focused on the idea that it’s not the city boundaries, but rather its regions that are important for the Midwest. He cited a book by Richard Longworth, “Caught in the Middle: America’s Heartland in the Age of Globalism,” as articulating that idea. Finney concurred with Derezinski that southeast Michigan is a relevant region in that sense, and that Ann Arbor could be the focus of that region, expanding outward from Washtenaw County.

City Budget

City administrator Roger Fraser kicked of the short discussion of the budget by noting that the budget would be presented formally at the council’s April 19 meeting, although the budget book has been available for a couple of weeks.

Councilmembers had a few clarificational questions on various aspects of the budget.

City Budget: Debt

Sandi Smith (Ward 1) was puzzled by a line in the budget summary that reads “Loan payment for First and Washington – $150,000,” noting that she did not think the city owed any money on the property.

Fraser allowed that Smith was correct – the city does not owe money on the property. However, the city is expecting $3 million from the sale of the property in connection with Village Green’s City Apartments project, which has site plan approval from the city, but has not moved forward yet due to lack of financing.

Fraser described the $150,000 as a contingency of sorts, borrowing some money to “tide us over” if the $3 million from the sale of that First & Washington property does not come through sometime soon. The site approval option to purchase agreement has been extended once by city council through December 2009, with a provision that the city administrator can authorize two 3-month extensions, which he has done. When the second extension runs out at the end of June 2010, the council will need to act if there is to be an additional extension.

At the council’s Monday budget meeting, the city’s CFO, Tom Crawford, indicated that he’d had recent conversations with Village Green and that they were feeling positive.

Mayor John Hieftje asked Crawford to confirm that the city was within its legal limit for debt load – the city cannot have debt in excess of 10% of the total state equalized value of property. Crawford indicated that the city was at 2.6%, and he thus felt comfortable with the city’s debt level. Crawford also cited other cities’ debt load – Grand Rapids, Lansing and Kalamazoo – as comparable. Ann Arbor’s bond rating, said Crawford, was in the top 20 in the state.

City Budget: Rates and Fees

Sabra Briere (Ward 1) requested that for the various fee changes that were included, a two-year frame of reference be provided – she was concerned that fee increases proposed this year might be coming on top of fee increases already made last year.

Mayor John Hieftje asked Sue McCormick, the city’s public services area administrator, to confirm that the city’s water rates are low compared to other communities in the state. She provided that confirmation, saying that the city’s water and sewer rates were second-lowest in the state. She allowed that the city had a separate stormwater system, whereas some municipalities had their stormwater system integrated with their sanitary sewer, which would cause Ann Arbor’s rates to appear artificially lower.

However, after factoring in stormwater charges, McCormick said, Ann Arbor’s rates were still fifth-lowest in the state – roughly $1.40 for every 1,000 gallons of water. Tecumseh, she said, was an example of a muncipality that had lower rates – $1.25.

The board also got an update on the 2009 budget, made appointments to more than a dozen commissions and committees, and approved emergency funding to help provide shelter for the homeless during the winter months. Details on these and other agenda items after the break.

2009 Budget Update

County administrator Bob Guenzel had prepared a PowerPoint presentation to give commissioners an update on the 2009 budget. But when he asked whether they wanted the short or long version of the report, several called out, “Short!” – as a result, his remarks were brief and did not include the formal presentation.

First, some background: In early 2009, Guenzel had projected a $3.3 million deficit for this year’s $103.7 million general fund budget, in addition to a significantly larger deficit for 2010 and 2011. In June, he made recommendations to the board for a first phase of cuts and other strategies to address the deficit through 2011. [See June 3, 2009 Chronicle coverage: "Opening Up the County Budget"]

At Wednesday’s board meeting, Guenzel credited the early implementation of those first-phase cuts for eliminating the deficit in 2009. He also cited cost-cutting efforts by the sheriff and the county courts. Sheriff Jerry Clayton, for example, reduced his department’s budget by about $500,000 this year. In addition, the county’s Community Support and Treatment Services (CSTS) department, working with the Washtenaw Community Health Organization, was able to eliminate $1.5 million from its budget this year, through early implementation of  2010/2011 cuts.

Additionally, among the budgeted 2009 expenditures that weren’t made during the year were $100,000 for north/south commuter rail  (WALLY) and $600,000 that had been set aside for the jail expansion.

Guenzel said that by the second quarter of 2009, he had anticipated a general fund surplus of $250,000 for the year. However, as of Sept. 30 – the end of the third quarter – the county’s 2009 surplus is projected to be $300,284. He’ll report on the final outcome of the 2009 budget in early 2010.

2010-2011 Budget

County administrator Bob Guenzel had requested that commissioners pass the budget on Nov. 18 both at their  Ways & Means Committee meeting and at the regular board meeting that same night. However, the board voted on it only in Ways & Means, a committee on which all commissioners serve. They are expected to take a final vote at their Dec. 2 board meeting. Given that there were several amendments made on the same day as their meeting, some commissioners said didn’t feel comfortable making a final vote until they had time to thoroughly review the finished version of the document. [.PDF file of proposed 2010/2011 budget, with revisions noted]

2010/2011 Proposed Budget

Commissioners asked several clarification questions, but otherwise spent most of the time in their budget discussion thanking the county staff for its hard work, and praising county employees – both unions and non-union employees – for making sacrifices to deal with what had been a projected $30 million deficit over two years. Jennifer Watson, the county’s budget manager, was given special recognition by several commissioners for her patience in responding to their requests for information.

Several commissioners noted that the deficit had been eliminated without massive layoffs – the budget calls for a net loss of fewer than 20 jobs. But they also expressed concern for the next budget cycle, saying that the worst wasn’t likely over. Property tax revenues are expected to continue to fall – the general fund budget of $103.7 million is anticipated to drop to $99 million in 2010 and $98.5 million in 2011.

In addition to the general fund budget, the board voted on two other budget-related resolutions: Changes to compensation for non-union employees, and authorization to negotiate a new agreement with the county courts.

Changes to Compensation and Benefits for Non-Union Employees

This summer, county administrator Bob Guenzel proposed pay cuts and changes in medical benefits for non-union employees in 2010 and 2011, including a 3% salary cut in 2010 and a 2% cut in 2011. The cuts were estimated to save about $2.3 million over the two-year period and affect nearly 300 of the county’s 1,350 employees. [See previous Chronicle coverage: "Opening Up the County Budget" and "Pizza, Payroll and Budget Pain"]

Later in the year, the county negotiated concessions with 11 of the 17 bargaining units for labor unions representing the majority of county workers. Members of five AFSCME units – the largest union of county employees, representing about 650 workers – ratified an agreement in early October. Additional details from The Chronicle’s coverage in October:

Workers represented by AFSCME will forgo a planned 3% pay raise in 2010 and agreed to no raise in 2011. In addition, they agreed to eight “banked” days in 2010 and another eight in 2011. These are unpaid days that each year are a combination of four predetermined dates selected by the administration, and four “floating” days, arranged between the employee and supervisor. They differ from furlough days primarily in the way that the county distributes the pay cuts associated with the unpaid time off, spreading the cuts over 26 pay periods. Each employee’s bi-weekly paycheck will be reduced by about three hours of pay for full-time workers throughout the year.

At Wednesday’s meeting, the board approved a change in the compensation for non-union workers, with an intent to more closely align them with the compensation of unionized employees. Instead of pay cuts, non-union employees will have a wage freeze. Non-union workers now will also have eight furlough days per year – similar to the banked days for union workers – and will forego merit pay. [AFSCME workers continue to receive so-called step increases as well as increases based on longevity on the job.]

According to a cover memo accompanying the board resolution, the proposed changes in non-union compensation – which commissioners ultimately approved – represent 91% of the originally projected savings. The remaining 9% – about $324,000 over two years – will be achieved through attrition of non-union jobs.

Terminating the Memo of Understanding between Washtenaw County and Its Courts

With no discussion, the board also approved authorizing Guenzel to send a notice to the 22nd Circuit Court, 14a District Court and Washtenaw County Probate Court, ending a Memorandum of Understanding that governs the relationship between the courts and the county related to the budget, personnel and other issues. The current memorandum went into effect in January 2004. [.PDF of 2004 Memorandum of Understanding]

The county is responsible for funding these three courts, which are otherwise autonomous. From a cover memo accompanying the Nov. 18 resolution that commissioners passed:

At the most recent meeting of County Administration and the Courts to discuss budget issues, the County Administrator notified the Courts that he would ask the Board of Commissioners to terminate the Agreement by giving the one year’s written notice required under the Memorandum of Understanding. It is important to note that the Courts did not object to the County’s termination of the Memorandum of Understanding, and, in fact, stated that they looked forward to renegotiating a new Agreement with the County during the one-year termination notice period. … This will give the County and the Courts a full year to renegotiate a new Agreement which is more germane to the current economic climate.

The general fund budget that is expected to be given final approval by commissioners on Dec. 2 specifies a combined budget for the courts of $13,003,383 in 2010 and $13,191,513 in 2011.

Funds for the Homeless

At Wednesday’s meeting, commissioners were asked to appropriate $250,000 from funding already earmarked in the 2009 budget for supportive housing services. Of that, $175,000 will be used for an emergency response to increasing demand for service for the homeless during the winter months.

Commissioner Ken Schwartz asked Mary Jo Callan, head of the county-city community development department, to explain how that funding would be used. In response, Callan gave some data on some indicators of the economy. The September 2009 unemployment rate is 9.3%, and more people are living in poverty. At least 1,200 residents were evicted in Washtenaw County last year – and that’s probably a low estimate, she said. Food Gatherers has reported a 35% increase in demand for food since last October, and the Humane Society of Huron Valley has seen a 50% increase in the number of people surrendering their pets because they can’t afford to pay for food and care.

In general, there is a huge demand for services, Callan said, including need from people who’ve exhausted all of their other options. The $175,000 in emergency funding won’t solve these problems, Callan said, but it will provide supportive housing to 10 homeless families – “starting tomorrow, if this is approved.”

For 12 months, each of the 10 vouchers will cover a $900 subsidy for rent and utilities, in partnership with Avalon Housing and other agencies. Families will be asked to contribute 30% of their income as well. The remaining money will pay for supportive services to the families, which might include access to job training and mental health services, depending on the needs of each family.

Callan said that while $17,500 per family sounded like a lot, it was an investment in preventing a downward spiral that could lead to demand for other government-funded services, like incarceration or emergency hospitalization.

Schwartz said that $175,000 could provide housing for a lot of people who’ll be on the street this winter, rather than support just a few families for a year. It was unsustainable, he said, to expect the county to take care of families at that cost.

Callan replied saying that this was just one part of a broader initiative, partnering with the city and the Downtown Development Authority. [Earlier this month, the DDA approved $20,000 in funding for the Shelter Association of Washtenaw County and Interfaith Hospitality Network. The city approved $159,500. The funds will help pay for beds and case management plus staff support for 25 additional beds at the Delonis Center, 25 additional beds in the rotating shelter program, and housing vouchers for eight families. See Chronicle coverage: "Support for the Homeless Shelter" and "DDA Buys Shelter Beds"]

Callan pointed out that the situation was especially dire for families that are homeless. There’s not a facility that can be temporarily expanded to house families, she said. To create a shelter to house families during the winter months would cost the same as using housing vouchers and providing supportive services for an entire year, she said. The latter alternative maximizes stability and dignity, she said.

Several commissioners voiced support for the funding – and in fact, it later passed unanimously as part of the board’s consent agenda. [.PDF file of resolution and cover memo] But some expressed caution as well. Wes Prater said the county needs to do more planning to handle a situation that’s only going to get worse. “Before this winter’s over, we’re going to see something that we’ve never seen in our lifetime,” he said, noting that the weather in November had been mild, thankfully, but that won’t last. “We’re going to have a really really bad time.”

Ronnie Peterson said that this wouldn’t be a short-term crisis – he believes it will be another three or four years before things bottom out in the economy. He wanted to make sure the county tracked the effectiveness of the programs that are intended to help lift people out of homelessness.

Callan said that the staff is requiring people who receive help from these funds to report what happens in their lives, following this assistance. She said the current effort is a humanitarian response to a crisis situation, and that it’s part of a broader initiative to deal with the underlying causes of homelessness. [See .PDF file of county report: "Blueprint to End Homelessness"]

Appointments

Every year at about this time, the board chair nominates people to fill openings on more than a dozen county committees, boards and commissions. Typically, the board of commissioners holds a caucus at a separate meeting prior to the vote, to discuss the nominations. This year, that caucus was scheduled for Nov. 11, but was canceled.

During Wednesday’s meeting, board chair Rolland Sizemore Jr. read aloud the names of his nominations. Not citing a reason, Conan Smith asked that the vote on the Accommodations Ordinance Commission be postponed. In addition, Sizemore did not make nominations for the Community Action Board or the Workforce Development Board, deferring those until the Dec. 2 board meeting.

Sizemore made the following nominations, which the board approved unanimously without discussion:

• 800 Mhz Project Oversight Committee: Paul Bunten, Alan D’Agostino, Jerry Zapolnik
• Agricultural Lands Preservation Advisory Committee: Julie Frost
• Area Agency on Aging Executive Board: Thomas Miree
• Brownfield Redevelopment Authority: James Harless, Suzanne Heiney
• Building Authority: Edward Goldman
• Citizen’s Advisory Council for the Juvenile Drug Court: John Palladino
• Criminal Justice Community Collaborative: Steven Copeland
• Economic Development Corp.: Michael Simon
• Emergency Medical Service Commission: Shoshana DeMaria, Robert Domeier, Ed Dreslinski, Thomas Ensign, Rick Erickson, Richard Fleece, Peter Forster, Ron Mann, Frederick Model, Corey Nygaard, Roger Simpson, John Steinke, Jerry Zapolnik
• Environmental Health Code Appeals Board/Public Health Advisory Committee: Kathleen Fojtik Stroud
• Local Emergency Planning Committee: Rebecca Benedict, Pat Ivey and Sandra Lopez
• Natural Areas Technical Advisory Committee: John Russell
• Parks & Recreation Commission: Janice Anschuetz, Jimmie Maggardrt and Robert Marans
• Public Works Board: James Dries and Eugene Glysson

Apportionment Report

In April, Raman Patel, the county’s equalization director, gave an annual report to the board describing the county’s total equalized (assessed) value of property. That report is crucial because it gives an indication of how much revenue the county will receive from property taxes. [See Chronicle coverage: "Washtenaw County: Equalize This"]

This chart, included in the county's apportionment report, shows how property taxes are administered in Michigan. (Image links to larger file.)

On Wednesday, the equalization and property description department was back, this time with its apportionment report, which gives details of the 2009 taxable valuations for property in the county, by municipality. The report also includes the amount of millages levied and the dollar amounts collected in taxes. [.PDF file of 2009 apportionment report]

Patel couldn’t make the meeting and Dick Steffens, a management analyst in the department, was on hand for questions. Aside from a clarification question from Wes Prater, the only other commissioner to query Steffens was Kristin Judge, who wanted to know what property values might look like for the next tax cycle. She said she was assuming values would be lower.

Steffens paused, indicating he was hesitant to prognosticate. “If I make a comment,” he quipped, “my boss will kill me.”

Accomodation Tax

As part of its consent agenda, the board approved a new five-year agreement with the Ann Arbor Convention & Visitors Bureau and the Ypsilanti Convention & Visitors Bureau, from 2010 through 2014. The agreement will increase the county’s share of the accommodation tax revenues from 5% to 10%. The county collects a 5% room tax from local hotels.

The additional revenue coming to the county will be used by the county treasurer to help administer and enforce the accommodations tax ordinance. [See Chronicle coverage in the report of the Nov. 11 administrative briefing.]

Curtis Hedger, the county’s corporation counsel, said that the contracts provided to commissioners as part of the Nov. 18 agenda were not the final versions. He plans to provide those by the next board meeting. There will be only minor changes, he said. For example, the contracts currently call for a six-month termination clause, and the bureaus are requesting a year.

Though the leaders from both bureaus – Mary Kerr of the Ann Arbor CVB and Debbie Locke-Daniel of the Ypsilanti CVB – attended Wednesday’s meeting, they did not make a presentation to the board.

Items Pulled from the Agenda

Two items originally on the agenda for Wednesday’s meeting were pulled: a vote on eliminating the county’s contribution to the Money Purchase Pension Plan (MPPP) for commissioners, and a presentation by Sheriff Jerry Clayton.

Money Purchase Pension Plan

Background: Over the years last year, retirement benefits for most county employees have been shifted from the MPPP, a defined contribution plan, to the Washtenaw County Employees’ Retirement System, known as WCERS, which is a defined benefit plan. In defined benefit plans, retirees receive a set amount per month during their retirement. In defined contribution plans, employers pay a set amount into the retirement plan while a person is employed. The most common of these defined benefit contribution plans is the 401(k).

The county hopes to eliminate the MPPP completely. Commissioners are the only current county participants, contributing 7.5% of their salary on a pre-tax basis and receiving a 100% employer match. The county also contributes to a voluntary employee beneficiary association (VEBA) on behalf of each commissioner.

At Wednesday’s meeting, commissioner Wes Prater asked that the MPPP resolution be removed from the consent agenda – he then asked that it be postponed to the second board meeting in January. He noted that since the change wouldn’t take effect until Jan. 1, 2011, there wasn’t any rush. [By law, commissioners can't change their salary and benefits during the middle of their terms. Elections will be held in November 2010, with new terms beginning in January 2011.]

The motion to postpone the item passed, with dissent from commissioners Barbara Levin Bergman, Leah Gunn and Jeff Irwin.

Recommendation of Policy for Adding Deputies

Sheriff Jerry Clayton had been expected to make a presentation related to adding contract deputies that would be paid for by Scio Township. [See Chronicle coverage: "Sheriff Suggests Way to Add Deputies in Scio"] However, that item was pulled from Wednesday’s agenda, and Clayton did not attend the meeting.

Misc. Commissioner Communications

During the section of the meeting set aside for items of current and future discussion, commissioner Kristin Judge said she’d like to have a working session on Thursday, Dec. 3 related to budget issues. Though they’ll be finalizing the 2010/2011 budget soon, next year would be a working year, she said, and she’d like the board to be more proactive in giving the administration more guidance about the board’s priorities. Judge mentioned a retreat that the board held in April, but noted that they didn’t emerge from that half-day meeting with any specifics. [See Chronicle coverage: "Budget retreat focuses on broad goals, not specific cuts"]

Commissioner Ken Schwartz said that he generally agreed with the need to be proactive, and said he’d also like to focus on maximizing revenues from federal programs, so that the county can deliver housing and other services using federal funds.

Commissioner Jessica Ping, who chairs the board’s working sessions, said she’d look at the schedule and see what dates were available to put that topic on the agenda. Conan Smith reminded Rolland Sizemore Jr. that Sizemore had talked about holding another board retreat. Sizemore joked that they should move it to Florida.

Public Commentary

Rick Monier: Identifying himself as a resident of Dexter Township, Monier said he objected to the county’s 800 megahertz tower being constructed on the former Chelsea landfill in Lyndon Township. Many people had spoken out against building the tower on that site, he said, but it was moving ahead anyway. It made more sense to put the equipment on an existing tower, rather than build a new one, he said.

During the time set aside for commissioners to respond to public comment, Mark Ouimet, who represents that area on the county’s west side, said he’d been to several meetings regarding the new tower, and had hoped to reach an agreement to address residents’ concerns. He said he was disappointed that hadn’t happened. “It’s a shame that it’s gotten to this point, because it has been very frustrating to the folks who live around that tower,” Ouimet said.

The 800 megahertz project, funded by a millage that passed in 2006, is building a countywide communications network that will allow police, fire, and EMS agencies – as well as organizations like the Washtenaw County Road Commission and the Ann Arbor Transportation Authority – to communicate via one system.

Thomas Partridge: Partridge, a resident of Scio Township, spoke during all four available times for public comment. He said the board needed to take steps to make the boardroom more accessible for people using walkers or wheelchairs who might want to speak during public commentary. He also asked the board to postpone the vote on the budget until at least the third week in December, saying that they needed to give it greater thought. The proposed cutbacks, he said, would imperil local residents. Partridge also noted that on this same evening, the board of the Ann Arbor Transportation Authority was discussing plans to expand public transit service countywide [See Chronicle coverage: "AATA Adopts Vision: Countywide Service"]. He said that residents would get better service if public transportation were handled by a department of the county government, not a separate agency.

Janelle Baranowski: Speaking after the second public commentary by Thomas Partridge, at the end of the Ways & Means Committee meeting, Baranowski began by saying that she wanted every commissioner to look at her while she spoke. She criticized them for treating Partridge with disrespect, noting that some of the commissioners were talking with each other during his public commentary. Commissioners are elected by the citizens, she concluded, and those citizens deserve their respect. [Baranowski has applied for the Community Action Board and the Workforce Development Board. As reported earlier in this article, when board chair Rolland Sizemore Jr. announced his appointments during the board meeting, he postponed action on those two boards, saying that he'll announced those appointments at the Dec. 2 meeting.]

Present: Barbara Levin Bergman, Leah Gunn, Jeff Irwin, Kristin Judge, Mark Ouimet, Ronnie Peterson, Jessica Ping, Wes Prater, Ken Schwartz, Rolland Sizemore Jr., Conan Smith

Next board meeting: Wednesday, Dec. 2 at 6:30 p.m. at the County Administration Building, 220 N. Main St. The Ways & Means Committee meets first, followed immediately by the regular board meeting. [confirm date] (Though the agenda states that the regular board meeting begins at 6:45 p.m., it usually starts much later – times vary depending on what’s on the agenda.) Public comment sessions are held at the beginning and end of each meeting.

A handwritten sign at the entrance to the Firefly Club apologizes for the closing. (Photo by the writer.)

The Firefly Club, a jazz and blues nightclub at 637 S. Main, was closed down by the state last night and its assets seized for unpaid sales taxes. Owner Susan Chastain told The Chronicle that her bank account and other assets have been frozen as well, because she was unable to make full payments to the state over the past two months on a debt of $120,000 – an amount in arrears for assessed sales tax dating back several years.

“We’ve always struggled,” Chastain said. It’s historically been difficult for blues and jazz clubs, she added, but the economic downturn has made it even more difficult to keep up.

Chastain opened the Firefly nine years ago at 209 S. Ashley, where the Bird of Paradise, a now defunct jazz club, had been located. Recordkeeping problems – dating back to the club’s opening – caused the state to assess the Firefly’s sales tax, plus penalites and interest, at about $160,000 several years ago. Chastain said that about three years ago her current accountant negotiated a payment plan, and she started sending the state $2,000 each month to put toward the unpaid sales tax.

The move to their current location in 2007 was a big setback for the business, Chastain said, and last winter was especially difficult. She tried to get monthly payments lowered to $1,000 but was only able to negotiate it down to $1,500 per month through May, when the amount bumped back up to $2,000.

Chastain said she hasn’t been able to pay the full amount for June and July, but that she sent in $1,500 each of those months. She was hoping that a big event planned for Saturday – a 50th birthday party for sax player Tim Ries – would bring in enough money to help pay that bill.

But last night, just before the club was to open, she got a call telling her that the field agent for the state treasury, Barb Weatherbee, and two Ann Arbor police officers had arrived at the club and were closing it down. “It was totally mortifying,” she said. She has 10 days in which to come up with the full amount owed. If she doesn’t, the state will auction off her assets – including a grand piano and several posters signed by musicians who’ve played there.

Calls left for Weatherbee and a spokesman at the treasury department haven’t yet been returned. [Update: Reached late Friday afternoon, state Treasury spokesman Caleb Buhs said he couldn't comment on this specific case, but said that seizures of this kind take place only "after many, many months of working with the taxpayer." He said he couldn't disclose the state's audit procedures or what guidelines determine when property is seized – that information could allow taxpayers to work around the system, he said. 

After property is seized, the taxpayer no longer has the option of a payment plan. The entire amount must be paid before the auction date in order to retrieve the property. The auction will occur after a minimum of 10 days from the date of seizure, but it could be longer, Buhs said – the taxpayer has until the date of the auction to make payment. The auction will happen on site at the Firefly Club – when the date is scheduled, it will be posted on the building and in the local newspaper. Buhs said now that the Ann Arbor News is no longer publishing, he's not sure where they'll be noticing the auction – possibly in the Detroit Free Press.] 

According to the city of Ann Arbor treasurer’s office, the club also owes almost $2,600 in business personal property taxes from 2007, 2008 and 2009.

Chastain said she’s trying to seek support from whatever corner she can, such as contacting state Rep. Rebekah Warren of Ann Arbor, to see if there’s anything she can do. But the state is desperate for money, Chastain said, so she isn’t optimistic that they’ll cut her a break.

In addition to its stable of regular performers – including the Paul Keller Orchestra, which features Chastain as the lead vocalist – the club has also been a spot for celebrations. In the recent Democratic primary for Ann Arbor city council, for example, councilmember Mike Anglin held his post-election party at the Firefly.

The Ann Arbor School for the Performing Arts, located in the same building, has benefited from its neighbor, according to Stephanie Weaver, the school’s executive director. Students are allowed to sit in and play with many of the professional musicians who perform at the club. “There’s no comparison to that kind of education,” Weaver said.

“This is probably the last really great presenter of this dying art form around this area,” she said. “Performances are so high quality there.”

Chastain said she’s fought hard for almost 10 years to keep the club open. Even if she declares bankruptcy, she said she’ll still face the tax debt: “Taxes never go away.”

A notice posted on the entrance to the Firefly Club.

An overflow crowd in the lobby of the county administration building arrived too late for a seat in the boardroom, and watched Wednesday's Washtenaw County Board of Commissioners meeting on TV. (Photo by the writer.)

Washtenaw County Board of Commissioners meeting (Aug. 5, 2009): As Washtenaw County grapples with a staggering budget deficit, 4-H supporters – including local farmers, teens and club leaders – packed Wednesday’s county Board of Commissioners meeting, urging commissioners not to cut funding for that program. They were joined by many others who use master gardening, financial counseling and other services of the county’s MSU Extension program, which could see dramatic funding cuts as the county tries to balance its budget.

As The Chronicle previously reported, the county faces a $30 million deficit over the next two years. Last week, county administrator Bob Guenzel released a list of options for cutting another $12 million out of the budget, and eliminating up to 181 jobs. Those options – which he stressed are not his recommendations at this point – target non-mandated services, ranging from Head Start to a variety of mental health programs. On Wednesday, Guenzel gave a formal presentation about the options to commissioners, who will be the final arbiters of any budget decisions. The discussion following Guenzel’s presentation could aptly be summarized by this statement from commissioner Conan Smith: “It sucks.”

2010-2011 Budget: What to Cut?

On Wednesday, Guenzel reminded commissioners that at the beginning of 2009 they knew that dealing with the budget crisis would be a full year’s project. The good news, he said, is that they’re on target for the timeline they’d laid out: He’ll present his recommendations for the 2010 and 2011 budget at the board’s Sept. 16 meeting, and they’ll have roughly 2.5 months to deliberate and make modifications before passing the final budget. The bad news, he added, is that the economy isn’t getting any better.

That’s one reason why the projected deficit has grown from $26 million to $30 million – property taxes and other revenue sources are down, while health care and pension costs are up. Even if the board enacted all of the options presented on Wednesday, coupled with $13.69 million in cuts approved at their July meeting, they still need to find an additional $4 million to cover the deficit.

And if the administration can’t squeeze concessions from the 17 bargaining units that represent about 1,000 of the county’s 1,350 workers, then even more jobs and cuts to services will be on the line. Some union leaders, but not all, have agreed to at least talk, even though contracts for union workers run through 2010 or longer, and unions aren’t obliged to revisit those deals. Guenzel updated the board on labor talks during a closed executive session at the end of the meeting. Overall, he noted, “There is no silver bullet to solve this budget issue.”

We refer readers to previous Chronicle coverage of the options outlined in Guenzel’s talk, with details about each of the areas under consideration for cuts. Wednesday’s presentation focused on non-mandatory services. “That doesn’t mean they’re not of value,” Guenzel said. “We’re running out of options is the issue.”

He also said that they’ll need to look at the level of service provided for mandated services. [A report on mandated and discretionary services funded by the county was prepared earlier this year by county staff.] For services mandated by the state, the county in some cases is providing more than the minimum service level required.

Following Guenzel’s presentation, commissioners took turns giving feedback and commentary, and asking questions – no decisions were made about these cost-cutting options at Wednesday’s meeting. It became clear quite quickly that several commissioners did not support certain options on Guenzel’s list.

J-PORT

One of the options calls for eliminating funding for the Justice Project Outreach Team, known as J-PORT, as well as the Homeless Project Outreach Team (H-PORT). The combined programs receive $702,334 in general fund dollars, and employ nearly nine full-time workers.

J-PORT in particular was cited by several commissioners as a valuable program and an effective way to divert people from jail. During the public commentary section of the meeting, Chris Easthope – a 15th District Court judge – said he represented the views of other judges in support of J-PORT. The intent is to help people who are mentally ill and end up in the criminal justice system. Rather than putting them in jail, J-PORT provides support services until they stabilize. Easthope said the program helps prevent jail overcrowding, and saves on jail costs by keeping people out – look at the program as a budget enhancement, he suggested. Easthope also invited commissioners to his courtroom to see the program in action, and offered to sit down with officials from the county and city of Ann Arbor, where he previously served on city council, to explore ways of getting other funding sources for the program.

Commissioner Jeff Irwin said the investment in J-PORT is saving the county money, because it’s extremely expensive to house people in the jail. (Easthope had stated it cost $85 per night.) Commissioner Ken Schwartz said he shared those concerns. The less they spend on J-PORT, he said, the more they’ll spend on corrections. Commissioner Leah Gunn said that not only was J-PORT cost effective, but it also reflected her value system – that people don’t go to jail who don’t belong in jail.

Head Start

Several commissioners also spoke in support of Head Start, a federal program managed locally by the county. Eliminating county support for it entirely would affect 35 county employees for a maximum savings of $765,880.

Commissioner Leah Gunn said the goal of Head Start is to break the chain of poverty, describing it as “a program that works.” Commissioner Kristin Judge said she wanted to take funding cuts for Head Start off the table, saying she’d like to do the same for the option of closing the county’s juvenile detention center.

Commissioner Jessica Ping wanted to get more details about what it would take for the county to pull out of Head Start. She noted that Washtenaw was one of the few counties that supported Head Start to such an extent. Commissioner Mark Ouimet asked whether the county had talked with the Washtenaw Intermediate School District (WISD) about whether that entity might take over management of Head Start, instead of the county. Guenzel said they’d talked to WISD, but hadn’t made serious moves in that direction.

4-H and other MSU Extension programs

The evening’s public comment sessions were dominated by more than two dozen people supporting the Michigan State University Extension in Washtenaw County, primarily speaking about its 4-H program. Commissioners also heard from master gardeners, a woman who benefited from the extension’s financial counseling, and those who stressed the importance of the extension’s role in fostering economic development through the county’s agricultural sector. Several of the speakers were accompanied by others who stood behind them in a show of silent support.

Speaking first was Doug Lewis, a Milan resident, director of the University of Michigan’s Student Legal Services and a trustee of the Michigan 4-H Foundation. He cited the Al Jarreau song “Tomorrow Today” and said “I spend a lot of my time thinking about tomorrow.” He runs a horse club for kids but he owns all the horses, and he acknowledged that the economy makes that difficult. This past year has been tough, he said. But thinking about how he’s helping sustain the future by working with kids is worth it. He urged the commission to continue its funding for the extension, saying he didn’t want Washtenaw to be the first county in Michigan to lose its 4-H program.

Several teens spoke to the commission, stressing that 4-H was far more than just farm kids and animals. Heather Cook said she’s been a member of 4-H for 12 years, and it gave her the confidence she needed to speak in front of the board that evening. She said that the program has helped her develop leadership skills, and noted that she serves as a youth representative on the 4-H Advisory Council with commissioner Mark Ouimet. Without the MSU extension, she said, there will be no 4-H. (Later in the meeting, commissioner Conan Smith joked, “The most disturbing thing I’ve heard this evening is that the youth of Washtenaw County are being mentored by commissioner Mark Ouimet.” He was teasing.)

Earl Horning said he was a sixth-generation dairy farmer in Freedom Township, where his family has farmed for over 100 years. His entire family has been involved in 4-H, he said. It’s a positive way to spend money, helping the community thrive.

Jennifer Fike, executive director of the Food System Economic Partnership, noted that the MSU extension – and in particular Mike Score, an agricultural innovation counselor with the extension – had been instrumental in launching FSEP and in making a difference in the local farming community. FSEP works with five counties, including Washtenaw, where it’s based, to promote and support farmers and the local food economy.

Mike Bossory, who owns the Alber Orchard and Cider Mill in Freedom Township, said he used to work for manufacturing companies in Saline and Chelsea, which are no longer in business. The MSU extension made it possible for him to make the transition from manufacturing to the agricultural sector, providing help with business planning and other services. He said he has added jobs to the local economy, and anything that can help make that happen is a vital resource.

Dan Sparks-Jackson, nursery manager for Fraleighs Landscape Nursery in Dexter, said that the extension provides support and brings in customers to the business. If you eliminate the extension, he asked, what other organizations can offer the services that it does?

Several people who had participated in the extension’s master gardener program spoke about the importance of that service. Kathie Mahn, president of the Master Gardener Alumni Association of Washtenaw County, cited several programs that serve the community, including a gardening hotline staffed by volunteers, and training provided to residents interested in growing their own food – something that’s been increasingly important in today’s economy, she said. Excess food from many gardens is given to the homeless – another community benefit.

In follow up to public commentary, commissioners Jessica Ping and Mark Ouimet, whose districts cover the western, largely rural half of the county, both said they strongly supported the extension programs. Ouimet said he’d heard others comment about the narrow focus of the extension, but that the public commentary had shown the breadth of services that it provides. Commissioner Ken Schwartz said it was great to see future leaders of the community attend the meeting, and he was especially heartened to see so many young women in leadership.

Mental health services

One of the largest areas being considered for cuts relates to mental health services. That category includes the H-PORT and J-PORT programs mentioned above, but the largest portion of funding goes to the county’s Community Support and Treatment Services department (CSTS). CSTS has a contract with the Washtenaw Community Health Organization – a partnership of the county and UM – to provide a wide range of services for the mentally ill, as well as adults and children with developmental disabilities. Cutting general fund support for CSTS completely would save $1.6 million and eliminate about 82 jobs.

Several county CSTS workers spoke during public commentary. Mary Parker, a job coach with the program, said she’d worked for Washtenaw County for 16 years and has watched the staff work with developmentally disabled residents – they are caring, committed people, she said. She urged commissioners to listen to the staff, saying the work they do is important, and helps parents of developmentally disabled children as well as the community. Audrey Tisdale read a letter from one of those parents, who described the help that CSTS staff had given to her daughter with Down syndrome. Robert Hartman said he’s only worked for CSTS for a year and a half, but that it has been rewarding work. “We’re there because we love those people,” he said. “We want to help. I wouldn’t want to work in any other place.”

Donna Sabourin, CSTS director, told commissioners that the WCHO contracts with CSTS to provide services to county residents and is the primary funder for these services. The county’s general fund pays for 12% of the salaries for CSTS workers. Those salaries are set by union contracts, so they can’t make across-the-board pay cuts. Another factor is that WCHO itself is facing budget cuts from the state, which could affect its budget for CSTS. If county funding for CSTS is eliminated, it’s doubtful that WCHO would be able to increase its funding to sustain the program.

Commissioner Jeff Irwin cited the CSTS care management program – in which workers help residents apply for aid from state and federal agencies – as an example of a program that costs money but has long-term gains. If residents didn’t receive state and federal aid, the county would have more strain on its own programs to provide support for these people. Cutting something like care management is an example of being penny-wise and pound-foolish, he said.

Commissioner Barbara Bergman, who serves on the WCHO board, noted that the entity has a new director, Patrick Barrie, who should be part of these discussions. She said he’s looking at ways to restructure the WCHO budget, which might include more funding for H-PORT and J-PORT. If that’s possible, it could free up general fund dollars in the county for other purposes, possibly CSTS. She said she’d be willing to facilitate discussions with WCHO to address the issue.

Strategic planning

The county’s office of strategic planning is being considered for downsizing or complete elimination, affecting up to seven jobs (including two that are already vacant) and saving as much as $1.1 million.

During public commentary, Michael Bodary, an Ypsilanti city councilmember, said that eliminating strategic planning would have an adverse affect on that city and the eastern part of the county. In particular, he cited brownfield redevelopment services, economic development efforts through Ann Arbor SPARK and neighborhood stabilization services as key to turning around the Ypsilanti community. The office of strategic planning is involved in all of those efforts.

Ed Koryzno, Ypsilanti’s city manager, said he understood the issues facing the board – Ypsilanti has been dealing with budget reductions for several years. He said as the city’s own planning staff has shrunk because of those reductions, they’ve come to rely more on the county’s staff, especially in the area of brownfield redevelopment. He said the county office helped Ypsilanti secure $600,000 in cleanup grants for the Water Street project, for example. The strategic planning staff also is crucial in supporting initiatives like the Eastern Leaders Group, SPARK East and other efforts, Koryzno said.

In addition to the strategic planning office, both Bodary and Koryzno said the MSU extension programs were helpful to the city.

During discussion of the budget options, commissioner Jeff Irwin noted that the fees collected from developers for brownfield redevelopment were designed to cover costs of the program, but that isn’t happening because of the economic slowdown. Commissioner Ken Schwartz clarified that the county acts as the agent for brownfield issues for most of the municipalities in Washtenaw. The question is how townships and villages would handle that, if the county program were eliminated.

Act 88: Economic Development Tax

The one revenue recommendation in Guenzel’s presentation is a potential new tax. Under legislation referred to as Act 88, the county could levy .017 mills – $1.70 for every $100,000 in a property’s taxable value – and raise $256,000 for economic development purposes. The county has committed $200,000 in general fund dollars to support Ann Arbor SPARK, the region’s economic development entity, plus another $50,000 for its Ypsilanti business incubator, SPARK East. If the board approves the new tax, those funds could be used instead of general fund money for SPARK, thus freeing up general fund dollars for other uses.

At Wednesday’s meeting, the county held a public hearing on the possible millage. Jennifer Fike, executive director of the Food System Economic Partnership, urged commissioners to consider agricultural economic development as a possible recipient of the Act 88 dollars. She cited the services that FSEP provides, including a Farm to School program that has helped connect local farmers with buyers like the Ann Arbor Public Schools. One farmer has seen revenues increase by 25% after he gained the University of Michigan as a customer, with the help of FSEP. While other sectors like life sciences and technology are important, farming is also a vibrant contributor to the local economy, she said.

Fike made a specific recommendation for the Act 88 funding. FSEP currently gets $15,000 from the county’s general fund – that amount could instead come from Act 88 dollars, she said. Another $15,000 could be used for the 4-H annual fair, and $26,000 could support the MSU extension’s agricultural innovation work, led by Mike Score. That would still leave $200,000 for SPARK, she said.

Two representatives from SPARK – CEO Mike Finney and Bill Milliken, who helped launch the entity and serves on its board – spoke during the public hearing. They both emphasized the importance of economic development in general, and the accomplishments of SPARK in particular.

Several commissioners were supportive of the new tax. Commissioner Kristin Judge said she’d gotten positive feedback from her constituents about it, but wanted the board to be cautious about adding too many small taxes. [Last year, the board levied a tax of 1/40th of a mill to raise roughly $393,000 annually for veteran services. On a home valued at $100,000, the tax is about $2.50.]

Commissioner Jeff Irwin asked Curtis Hedger, the county’s corporation counsel, whether agricultural services would be eligible for funding under Act 88 legislation. Hedger said he thought FSEP would qualify, but he wasn’t sure whether Mike Score’s program through the extension would be eligible – the funds have to go to a nonprofit, if not used directly by the county. Irwin said using Act 88 funds was an excellent opportunity to support agricultural economic development.

Commissioner Ronnie Peterson said he wanted to make sure they had a clear understanding of how Act 88 funds would be allocated. It was too easy to shift money between buckets, he said, and if the funds were going into a bucket, he wanted to know which bucket would be getting the money.

Outside agency funding

One of the options presented by Guenzel included full elimination of county support to human services nonprofits, except for what’s mandated. That move would save $1.69 million and not affect any county employees. Another option is to take a 20% reduction in funding for those agencies, in addition to a previously approved 20% cut. Cutting another 20% would save $338,542 in the general fund budget.

In addition, the board agenda included a resolution by commissioner Leah Gunn, who proposed pooling all the dollars for nonprofits into a competitive bid program administered by the joint county/city of Ann Arbor Office of Community Development. The current funding structure requires that nonprofits in the areas of human services and children’s well-being go through the bid process. However, the county had earmarked amounts for certain other nonprofits, including Project Grow, the Neutral Zone and the Blueprint for Aging, among others. Gunn’s resolution would require that those agencies go through a competitive bid process as well, rather than being automatically funded.

Commissioner Wes Prater made a motion to table the resolution until September. He said they should get a better handle on the rest of the budget before moving forward. Gunn countered by saying that her intent wasn’t to lock down the specific dollar amounts in funding, but rather to eliminate the automatic funding.

During the vote to table the resolution, Jeff Irwin passed on his initial turn. Only commissioners Gunn, Conan Smith and Barbara Bergman voted against the motion to table. When the vote came back around to Irwin, he counted the yes votes around the table – then voted yes. This parliamentary move gave him the option of making a motion to reconsider the previous vote, which he did. He stated that they hadn’t had adequate time to debate the postponement, and that he thought tabling Gunn’s resolution was “a really bad idea.” The Office of Community Development needs time to put out its requests for proposals, then work with nonprofits and make evaluations before making funding recommendations to the board, which has final approval. All of this needs to be in place before the first of the year, he said, and pushing it back another month will make it difficult to meet that timeline.

Gunn asked Prater if it would be acceptable to strip out the reference to specific dollar amounts, so that the resolution would focus simply on eliminating the automatic funding. Prater agreed. The motion to reconsider passed, and Gunn amended her resolution, deleting references to the dollar amounts involved.

Kristin Judge pointed out that the dollar amounts won’t be set until the final budget is approved at the end of the year, so there’s no guarantee that nonprofits will receive any county support. Mark Ouimet echoed that sentiment, saying that nonprofits need to know “there may not be any money available.”

Rolland Sizemore Jr., the board’s chair, objected to the idea of adding another layer between the board and the agencies being funded – namely, the Office of Community Development. He said he would not support the amendment. On the amendment, only he and Irwin voted no.  Gunn’s resolution to pool nonprofits in to a competitive bid process passed as amended to eliminate specific dollar amounts.

General questions and comments

Rolland Sizemore Jr. expressed frustration that he hadn’t received answers from the administration on questions that he has asked repeatedly. He said it was his last time to ask, and that next time he “won’t be so nice.” His requests are to 1) get an executive summary of budget-related materials – the proposal presented by Guenzel on Wednesday was an 85-page document; 2) get information on how other communities are handling similar budget reductions, and 3) be presented with a “dummied down” version of the budget so that commissioners can digest it. He also said they needed to be presented with options for both mandated and non-mandated programs, so that they can see the whole budget picture.

Jeff Irwin, too, was frustrated by the “TBD” related to mandated levels of service. He said they haven’t dug deep enough into the issue, and without that, he can’t make decisions about non-mandated services, which often have the biggest bang for the buck.

But Kristin Judge said that mandated programs were already working with extremely limited resources. She didn’t see how there more substantive cuts could be made there. She also said that she wanted the level of detail that she was getting from the administration, not just an executive summary. She asked if the administration could provide a spreadsheet showing how much funding was being leveraged by county dollars. For example, for every general fund dollar that Head Start receives, it’s able to secure an additional $7 from other sources. Having that analysis would give commissioners a clearer picture of which county programs – mandated and non-mandated – are bringing in additional revenue.

Leah Gunn reminded her colleagues that the largest non-mandated service in the county was for police services.

Several commissioners asked residents to help by giving ideas and feedback on how to deal with the budget crisis. Sizemore said they heard a lot about what programs not to cut, but very few people were stepping up to suggest ways of saving these programs. He said he wanted to hear from people in “TV land,” referring to those watching on Community Television Network.

Conan Smith stated that the nearly $12 million in cuts presented by Guenzel wouldn’t solve the crisis, even if they were to enact them all. And since they were talking about saving programs like Head Start and 4-H, they’d need to find ways to cut costs elsewhere.

Union negotiations

Guenzel did not comment on the status of talks with the unions representing county workers, but several commissioners urged union leaders to bring their own ideas to the table and work as a team with administration. “We all need to share in the sacrifices,” Kristin Judge said. Rolland Sizemore Jr. said the unions should bring their own ideas for cost-cutting, and not make the administration and board look like the bad guys for proposing cuts.

Conan Smith, noting that the board had no right to demand contractual changes, pled with the unions to help. He said that he and his wife [Rebekah Warren, who serves in the state legislature as a representative from District 53] are trimming 5% from their household budget, “and it’s not pleasant.” He said the unions would have his eternal gratitude if they helped the county address this budget crisis.

Residents and county staff pack the boardroom during Wednesday's meeting of the Washtenaw County Board of Commissioners. At the podium, board chair Rolland Sizemore Jr., right, presents a commendation to Lloyd Powell, the county's public defender. (Photo by the writer.)

Present: Barbara Levin Bergman, Leah Gunn, Jeff Irwin, Kristin Judge, Mark Ouimet, Ronnie Peterson, Jessica Ping, Wes Prater, Ken Schwartz, Rolland Sizemore Jr., Conan Smith

Next board meeting: The board is working on a summer schedule, with regular meetings held only once a month. They resume their regular schedule in September with their next meeting on Wednesday, Sept. 2 at 6:30 p.m. at the County Administration Building, 220 N. Main St. The Ways & Means Committee meets first, followed immediately by the regular board meeting. [confirm date] (Though the agenda states that the regular board meeting begins at 6:45 p.m., it usually starts much later – times vary depending on what’s on the agenda.) Public comment sessions are held at the beginning and end of each meeting.

“Not so,” Mr. Lee tells CNN on tax day. The assessment seemingly was set high enough in hopes of encouraging Mr. Lee to file his past-due returns and pay the correct tax with interest and penalties. “Won’t happen,” further retorts Mr. Lee. “I feel badly about the whole thing but I just can’t bring myself to figure out the complexities of the California income tax forms. I hope they will call me and we can agree on some number and I’ll just pay it.”

If Mr. Lee, a businessman with a few rental properties, is confused by the California returns, he is most fortunate not to be doing business in Michigan. The governor’s new Michigan Business Tax, with its mind-numbing complexities and inequities, sets the gold standard for costly tax attorneys and CPAs. Likely the governor’s  State Treasurer has already realized – or soon will – the significant free give-a-ways, tax credits, and subsidies that will be needed to get any prospective new business to buy into the MBT mess, a tax adopted at 2 in the morning by a sleep-deprived (brain dead?) legislature surrounded by dozens of well-paid and wide awake lobbyists.

April 15^th has come and gone for another year and with it the prolific number of blogs and editorial demands for tax change. Mr. Timothy F. Geithner, the new U.S. Secretary of Treasury, will likely offer up some changes (crafted by dozens of lobbyists imbedded in the Beltway) to a tax system already teetering on the brink of collapse from complexities and complications. The system can’t take too many more patches, particular from The Secretary, who recently nicked the Treasury for about $17,000 in unpaid Social Security taxes on his own personal return.  More changes, more complexities, more unfairness is putting the tax system itself at risk. A small patch here or there now seems to be causing a leak somewhere else.

I have been in the tax compliance business, as a some-time teacher and full-time practitioner, since 1967. It is time for our industry, with all of its attorneys, CPAs, estate and tax planners, auditors, etc. to just go away. Shoo…go home. Our tax system doesn’t need a tweak, it needs a hatchet job.

The  hatchet job would eliminate the income tax and adopt a national sales tax on consumption and financial transactions. All of the illegal drug and gambling money that is laundered through our banking system daily would be taxed upon deposit. If Bennie the Bookie decided to get out of the market entirely and go to cash on deposit in the back yard, at some point he will likely spend it. Those front row tickets at the Lakers games must be had. There would be no sales tax on necessities. The national sales tax on other items would be graduated, with luxury items being taxed at a higher rate at the time of purchase. 

The system is already in place to accurately assess and collect the tax. If you are one of the 700 people at Merrill Lynch who had a bad year in 2008 (each only making more than $5 million), you would pay a financial sales tax when you stored your money in your CMOs, REMICS, and all of those other financial products that no one but you can understand. And, at this point we’re not so sure about your depth of understanding, either.

We, as a people, don’t like  to focus on the income side, keep records, disclose salary and perks, keep track of what the person in the next cubical is making, paying or avoiding in taxes. But everyone likes to buy and consume or even invest. There would be no record keeping for Mr. Lee or any other consumer/investor. Bill and Winston, could become close friends, join the local coastal touring society and each drive out of the Mercedes dealership with a new roadster – but each would also be a little lighter in the pocketbook. This way, everyone participates by giving back for our national well-being at a time they are the happiest…at the moment of consumption.

The U.S. Treasury estimates that the amount of unpaid taxes is in the billions, enough to fund the Pentagon’s budget for six months. The department also anticipates that it will get worse this year as more people have to go into a self-employed/cash survival mode. It’s so unfair. 

Consider the following: A middle-aged, self-employed single woman making $50,000 a year pays over $15,000 in taxes while barely able to make the monthly rent payment in a 700-square-foot studio in Brooklyn. Sam Slick, a real estate developer across the river in Manhattan, wants to sell his Park Avenue property for $100 million. Unfortunately, his tax attorney computes that the taxes on sale would approach $35 million, leaving only $65 million for Sam, hardly enough for a down payment on a new estate in the Hamptons. So Sam mortgages the property for $100 million at Bear Stearns, pockets all the money, pays no tax on the loan proceeds and upgrades to a beachside villa in St. Barth’s. Sam croaks the following spring, and before he can even push up some daisies, Sammy Jr. inherits the Park Avenue property. The income tax unpaid on the $100 million is forgiven in the estate tax process. The Treasury Department calls it an estate “step-up” adjustment.  Further, Sammy Jr. falls in love with his father’s young widow (“Wiffels”), defaults on the $100 million non-recourse mortgage at Bear Stearns, takes the rest of the residual estate and hikes off to enjoy the beach with Wiff and the rest of the glitterati.

Sammy Jr. and Wiff may live happily ever after on St. Barth’s, free of U.S. income taxes because of the income exclusion rules for U.S. citizens residing in a foreign country. No, they don’t pay French income taxes either, because France does not tax the residents of St. Barth’s.  However, the sales tax is very steep on a bottle of expensive wine. After a great day at the beach, it’s a tolerable expenditure for the common good.

Oh, by the way, your tax dollars paid off Sammy’s defaulted mortgage (now called a “toxic asset” by Mr. Geithner) which Bear Stearns sold to Goldman Sachs shortly before going out of business.

Say it ain’t so…but it is.

About the writer: Del Dunbar, a CPA and partner with Dunbar & Martel, has lived in Ann Arbor since the 1960s.