Plante Moran audit reminds council of the economic challenge city will face

By SUE SUCHYTA
Sunday Times Newspapers

TRENTON – Plante Moran’s Nov. 16 city council audit presentation provided a reminder of its anticipated decrease in tax revenue, the likely end of state subsidies and the need to budget accordingly.

Property taxes are the city’s largest source of revenue, and the report indicated that the $1 million Trenton received from the State Local Community Stabilization Authority, for lost personal property taxes, was unlikely to continue in the future.

In the past year, the city’s general fund decreased by $426,000, more than originally planned, due to a reduction in revenue sources.

The general fund, which pays for city services, sees 45 percent of its expenses incurred by public safety, with retiree expenses representing 21 percent of the general fund expenditures. Property taxes provide revenue for the general fund.

At the end of the fiscal year, June 30, the city had $8.6 million in outstanding debt, of which $7.9 million was for the sewer improvements completed several years ago, which was supported by a millage.

In addition, the city has $39 million in pension liabilities, and $50 million in other post-employment benefit liabilities, which are unfunded, and represent the cost of health care and pensions for current retirees and future retirees.

While the city’s residential property values have increased by 0.3 percent, and commercial properties have increased by 2.3 percent, industrial real property values have decreased by 19.3 percent.

Plante Moran noted that the total taxable value of properties within the city are increasing at a rate below that of inflation.

The city’s largest taxpayer, DTE Energy, will close the Trenton Channel Power Plant in the second quarter of 2022, and Eastman has announced the closure of Solutia in the first quarter of 2021. It was noted that city officials need to plan for the revenue loss and to plan for the future development of both sites.