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|PRESIDENT’S ADDRESS REGARDING THE ECONOMIC CHALLENGES IN THE VILLAGE OF NEW HAVEN|| || || || |
(As published in January 2012 "Village News" newsletter)
There is little doubt that the national economic recession and the significant state budget crisis have affected many Michigan municipalities. New Haven is no exception. Our local economy is not growing, but rather struggling just to maintain its status quo. Although New Haven’s economy was previously immune to national downturns, this recession is now clearly affecting our local economy. However, despite the economic downturn, we as your elected officials will continue to make every effort to deliver the highest level of services possible to our residents in the most efficient and cost-effective ways possible. Back in 2011, I wrote in the March Newsletter of pending difficult decisions that would have to be made to reduce our budget expenditures. Expenses to run our village are steadily increasing. However, the main resources for revenue are significantly down due to declining property values, outstanding water bills and delinquent taxes.
What is our strategy?
We need to develop a budget that can be implemented incrementally as the facts change. We have four tools available:
1. Reduce expenses
2. Use some, all, or no cash reserves
3. Increase revenues, or
4. Combine any of the above.
We also need to attack our budget issues over multiple years to effectively improve our financial outlook going forward. Our goal must be to use the right tool at the right time. This provides the flexibility needed to match fact to action.
What are our options?
1. Making first level cuts (Phase 1)
2. Making deeper, second level cuts (Phase 2)
Each of these options has its own internal rules of engagement and risk. For example, some cuts mandate staffing reductions and the elimination of certain services, programs or departments. Cash reserves, once applied, cannot be used again in future years. In fact, if cash reserves are used for operating costs and not replaced, a bigger operating deficit will be created.
If there are no cuts made, your taxes and/or water and sewer bills must be increased to cover debt charges to the Village. We are viewing this option as a last resort and it will only be considered if further cuts are unacceptable. We believe this multi-level, multi-year response is the right response given the facts now before us.
Reduction Plans (Implemented / proposed):
First level (Phase 1)
ü Reducing the purchasing of supplies and materials, postage, tools or small equipment purchases across all budgets.
ü Reducing and/or eliminating purchases of office furniture/maintenance equipment.
ü Limiting overtime by personnel and expanding the use of compensatory time or flex time
ü Reducing computer support & replacement
ü Saving time and paper by converting paper forms to an electronic version where the forms can be completed, approved and forwarded electronically
ü Reducing and/or eliminating several special events, including Celebration Day
ü Hiring Freeze: No additional hiring shall be authorized unless there is an essential need
ü Continuing the “demonstrated need” approach to filling all job vacancies.
ü Reducing staff through lay-off (based on adopted personnel and civil service rules).
Second level (Phase 2)
ü Police Department (for all officers) - pay reductions 3% / 20% medical, other union concessions as shown below
ü Fire Department – reduce fire chief salary and/or hours by 50% and remove medical benefit
ü Department of Public Works (DPW) – pay reductions 3% / 20% medical, other union concessions as shown below
ü Administrative Office – equivalent, if not already met through current reduced hours, other union concessions as shown below
ü Union Concessions
o Reducing and/or eliminating elective employee training, travel expenses, special education and local meetings costs not associated with mandatory professional standards, licenses and certifications
o Reducing clothing allowance
o Reducing the tuition reimbursement program
ü Reducing staff by additional layoffs or combining/contracting public services
Along with our plans for reduction as shown above, we are now at the point where the current state of our financial condition mandates that we follow through with making a reduction in the workforce. This is never easy, but it is a necessary and responsible step to ensure that the budget is not only balanced, but protects the limited cash reserves we do have. Attempts were initiated and implemented in April of 2011 for concessions within each department. The Police Chief, Fire Chief, and the DPW Supervisor have all agreed to take a 3% pay cut, and the Police Department secretary is now working reduced hours. The Administrative Office agreed to reduce hours by going to a 4-day, 32-hour work week. The Department of Public Works had made concessions through a hiring freeze since 2007, and has been short-staffed by two (2) full time workers since that time—hiring seasonal workers as needed. However, even with these concessions, there is still a demand for additional concessions.
ADDENDUM (information omitted from newsletter) All professionals have cut their rates by at least 5% as follows: Attorney 8%, Accountants 7.5%, and Engineer 6%.
After assessing the costs to run each department, it makes sense to cut costs in the department that will provide the Village the most significant savings. Currently our Police Department expenses make up almost 70% of our General Fund Budget. Therefore, I made the decision to reduce costs in that department by recommending to the Council to lay off all part-time employees, all part time patrol officers, as well as some full time patrol officers. See the breakdown of costs for all departments later in this publication.
So what does this mean for Village Residents?
The community will see no difference in the deployment of police personnel on the streets. Deployment will remain as it is today, with officers responding to calls for service as efficiently and effectively as before. The Village will continue to provide essential services to the best of its ability.
Eventually, the economy will rebound, and as it does, employees, services and benefits will be restored to previous levels However, until that time, the council and I are committed to making the difficult decisions necessary to ensure that the Village is fiscally sustainable now and in the future, and the impact on vital services are as minimal as possible during this difficult financial period in our economy. Rest assured that we are doing our best to make the decisions that we feel are best on behalf of the community as a whole. If you have any questions or concerns, please feel free to attend any of our council meetings, held every second Tuesday at 7 p.m. You are also welcome to attend any of our upcoming budget meetings.
EXPENSES BY DEPARTMENT
*Figures above are year to date actual figures through 12/24/11
|Wages / Salary||$ 66,339.49||$ 240,249.98||$ 423,443.28||$ 92,832.68|
|Overtime||0||$ 8,599.46||$ 47,631.88||0|
|Other (Holiday payout, Longevity, etc.)||0||0||$ 154,999.77||0|
|Benefits||$ 15,378.13||$ 64,792.27||$ 131,402.89||$ 5,004.00|
|DEPARTMENT TOTALS||$ 81,717.62||$ 313,641.71||$ 757,477.82||$ 97,836.68|