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.
Despite the positive financial picture, funding pensions will drag on city coffers for years to come. Police and fire department employee pensions alone are unfunded by over $19 million and there’s another $21 million of unfunded liabilities for the other city workers. This problem cannot be solved overnight but the city took steps with recent employee contracts to address some of the issues.
Garfield Township residents pay 1/3 the property taxes as levied on city residents and yes, there are differences in services, but nowhere near three times the services. In the end, the public and decision makers have options. Do you want tax relief or do you continually want more city staff and more fringe services, both of which will ultimately challenge the financial status of the city and result in additional taxation.
Special-interest groups swarm commission chambers during every budget cycle and will be there again this year. Will anyone speak up for those paying the bills? Do you want a proportionate share of the $3 million refunded to you? Squeaky wheels get the grease.
About the author: Michael Estes is Traverse City mayor
About the forum: The forum is a periodic column of opinion written by Record-Eagle readers in their areas of expertise. Submissions of 500 words or less may be made by e-mailing firstname.lastname@example.org. Please include biographical information and a photo.