By BOB OLIVER
Almost three months after being re-elected and halfway through the fiscal year, the mayors of Dearborn and Dearborn Heights have both expressed a positive financial outlook for their respective cities moving forward.
At the Dearborn Area Chamber of Commerce’s “Tale of Two Cities” Business Builder event Jan. 14, Dearborn Mayor John O’Reilly Jr. said the city has had financial struggles like others in the state and country since the recession began in 2009 but has been able to work through them by being fiscally responsible and creating five-year plans to keep them on track.
“You have to know where you want to be in order to develop policy to get there,” O’Reilly said. “We need to look at the big picture.”
The budget for the city’s general fund for the 2013-14 fiscal year is just under $100.7 million for revenues and other financial sources and $100.4 million for expenditures, with the city having an amount of over $363,000 to contribute to its fund balance reserve.
For all funds, the city is planning of having revenues of $251.4 million with expenditures of over $254.6 million, leaving them with a fund balance of approximately $3.1 million.
The city was praised by auditors from Plante Moran, who met with the city council and presented their report on the 2012-13 fiscal year in December, for using only approximately $600,000 in funds from their fund balance after budgeting for $6.4 million going into the year.
Also part of the city budget were the proposed millage changes for the fiscal year, with reductions made in the garbage/rubbish millage and the debt millage for the combined sewer overflow, which dropped 0.03 and 0.28 mills, respectively.
The millage for the Civic Center expired at the end of the last fiscal year, so the 0.65 mills will not have an affect this year. Overall, the city has 25.9 mills, which is a drop of 0.96 mills.
At the time of the budget’s adoption, Dearborn Financial Director Jim O’Connor told the council that the only items not covered in the budget were the Dearborn Administrative Center bonding and supplemental capital budget, the Severstal contribution and the Melvindale fire service consolidation because the items were incomplete and still under review.
The DAC is the future location of city hall and the administration for the city. It is at 16901 Michigan Ave., just west of the Henry Ford Centennial Library, and was purchased by the city in 2012 for $3.2 million.
In July, the city sold parts of the city hall complex to Artspace, a Minneapolis-based nonprofit real estate developer which agreed to purchase the complex for $1.65 million and plans to renovate it to create 46 work and living spaces for artists as well as spaces for art studios, art organizations and creative businesses.
The Severstal money is an $8.5 million donation offer by Severstal North America to be used for the redevelopment of the DAC and for naming rights in the Artspace project.
The Melvindale fire service consolidation was, at the time, the proposed absorbing of the Melvindale Fire Department by the Dearborn Fire Department. The departments officially merged in late August.
O’Reilly’s annual State of the City address is scheduled for 7 p.m. Feb. 26 in the council chambers inside city hall.
In Dearborn Heights, the city council passed a budget for 2013-14 that assumed $39.1 million in expenditures and $40.7 million in revenues, creating a projected $1.5 million surplus for the city.
That surplus, coupled with the $2 million surplus from the 2012-13 fiscal year, is expected to allow the city to drop its deficit to just over $2 million by June 30, the end of this fiscal year.
Mayor Dan Paletko has said that the city’s deficit should be reduced to less than $1 million by June 30, 2015.
The city’s deficit was nearly $5.5 million in 2012, with most of that taken up by the city’s sanitation levy, which was $2.1 million this year.
The city received a clean audit report for the 2012-13 fiscal year from Plante Moran in November.
At the time of the budget vote in May, Councilman Thomas Berry said the budget wasn’t perfect but that the council had been looking everywhere for ways to trim it a little more.
“I don’t think that any of us are completely happy with this budget,” Berry said. “We’ve been reviewing this for two or three months to find all the spots where we could amend and make cuts. Unfortunately, there are uncontrollable expenses that we have no real control over.”
At the DACC’s Tale of Two Cities event, Paletko said the city is making its way of out its deficit and will continue to look for ways to tighten up its finances without sacrificing services to residents.
“We are financially becoming stronger,” Paletko said.
He highlighted a combination of factors that led to the city’s deficit, including the recent recession, declining property values and less revenue from the state.
“Just a couple years prior to me becoming mayor in 2004, we were getting almost $7.4 million from the state annually for revenue sharing,” Paletko said. “That number has dropped to $4.9 million. When you have that kind of decline and your property values are declining you get a huge build up of financial pressure for municipalities.”
Paletko does not have a State of the City address scheduled.
(Bob Oliver can be reached at [email protected].)