Traverse City Record-Eagle


February 16, 2014

Forum: Traverse City has a dilemma

By Michael Estes

Traverse City has a dilemma. Recent city commissions and administrations have been so financially prudent that a surplus of your tax dollars have collected in our savings accounts.

This is occurring at the same time that Grand Traverse County is exploring additional borrowing or layoffs to balance their books and many major cities in the state face bankruptcy. We’ve all heard of Detroit’s woes, but a host of other towns face similar financial trouble.

Detroit and others have finally realized that taxpayers can no longer fund excessive staff and excessive compensation for those staffs and that government cannot and should not provide everything for everybody. Most of the financially troubled towns have long hidden their problems by borrowing excessively and using deferred pensions as one tool to push costs to the next generation.

The positive financial condition of Traverse City has been accomplished during the same period that expenditures for roads, sidewalks and trails have increased from $100,000 to over $1 million, the administrative fee (a tax to collect your taxes) has been eliminated and a small reduction has occurred in the general fund levy.

City commissions and administrations have made a host of difficult decisions that led to these positive results. Those decisions involved the understanding that government’s role in serving the public has limitations, that managing assets and staffing require prudent approaches, not emotional decisions, and that good intentions must be supported by good public policy

Currently there is $5.8 million in the city bank account sitting as a safety net towards meeting a $14 million budget. A 20 percent budget surplus is generally considered adequate for government entities, meaning the City has discretionary or surplus funds of approximately $3 million. By comparison, Grand Traverse County generally maintains a 15 percent to 18 percent surplus. The ultimate decision on what to do with the excessively collected tax dollars should be an issue of concern to all taxpayers. Remember, it’s your money.

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