By DANIEL HERATY
HEIGHTS – City officials are working on a deficit reduction plan to balance the city’s finances and avoid the possibility of an emergency financial manager.
The proposed plan followed the city’s Dec. 22 submission of an audit report to the state’s Department of the Treasury which revealed a $5 million general fund deficit.
A meeting between councilors and Mayor Daniel Paletko to discuss the plan is scheduled for Jan. 17.
According to published reports, officials from Southfield-based auditing firm Plante & Moran, LLC informed City Councilors during an emergency meeting Dec. 13 of the deficit, from an audit spanning finances from July 1, 2010 through July 31, 2011 and informed the councilors of their findings.
Phone calls to Paletko seeking comment on this story were not returned by press time.
According to published reports, during a November meeting, Paletko revealed a tentative plan that included wage concessions and elimination of overtime from the Police Department and 20th District Court staff reductions. The proposed cuts would eliminate the deficit to create a surplus of about $16,000 in 2017.
City Councilman Kenneth Baron said after much discussion, councilors agreed 4-2 on the plan, with Councilwomen Janet Badalow and Marge Horvath dissenting.
Former Councilwoman Elizabeth Agius, whose term expired Dec. 31, was absent from the Dec. 13 vote.
The plan was sent to the state Department of the Treasury.
Baron was optimistic about eliminating the city’s debt, saying he isn’t expecting the state to reject the plan. If it were rejected, he said, the city could correct it. But first, the city needs to balance its budget.
“We have to move quickly on fine-tuning a plan,” Baron said. “We still need to make adjustments so we have a balanced budget.”
Financial issues affecting other communities and the ability to continuously update and revise the plan are buying the City Council time, Baron said, adding he doesn’t expect a quick response from state officials.
“I’ll be shocked if we hear from them in the next month,” he said. “By then, we’ll have something more fine-tuned.”
The plan still needs to be reviewed by the state’s Treasury Department before it can be implented. If the plan is rejected, the city could face possible takeover by an emergency financial manager. Baron said an EFM is unlikely because of actions to correct the deficit, including sharing information technology services with Dearborn and the Nov. 8 voter approval of a Headlee Amendment override. He expects a deficit reduction plan in place in the next three months.
The money collected from the override, a three-mill tax increase, is projected to trim about $3.4 million from the deficit.
Other service-sharing measures have been discussed, Baron said, but he declined to go into specific details. He said the city also applied for a Staffing for Adequate Fire & Emergency Response Grant created by the U.S. Federal Emergency Management Agency which allows for an increase in Fire Department staffing, which would potentially relieve some of the Fire Department’s overtime cuts.
“In the next five years, we need to make up the deficit,” he said. “We have to start getting down to the nitty-gritty real quick.”
(Daniel Heraty can be reached at [email protected])