Grosse Pointe Woods Talks Budget, Tax Hike

Budget talks continued Monday with city officials going nearly line by line through the 2012-2013 spending plan, looking for any final cuts and savings before going to voters for .

With a $1.1 million shortfall in the proposed $29.7 million budget and delayed spending on roads and equipment, voters will be asked if they'll approve a tax assessment of an additional 3.65 mills, Mayor Robert Novitke said after Monday's Committee of the Whole meeting.

The committee is a subcommittee of the council and is for preparation for formal council meetings. The next council meeting is Monday, April 2. There, City Controller Dee Ann Irby will formally present the budget to the council, though it is not likely to be discussed. That will likely begin in April, Novitke said, after the millage election information is finalized.

To increase the tax rate, voters must decide whether to approve an override of the Headlee Amendment, which in part requires tax rates be rolled back if state equalized property values are greater than the rate of inflation.

Due to the rollback, the Woods millage assessment on property owners has dropped to 14 mills from the maximum of 20 mills. A mill is equal to 1/1,000th of a dollar. For every $1,000 of taxable value--about half of market value--a property owner pays $1 in property tax. 

If voters approve the additional 3.65 mills they will be paying less in taxes in 2012-2013 than they were in 2007.

Grosse Pointe Woods, while in an enviable position of having a $4 million reserve fund, is in the same predicament as every community. That is having to cover increasing costs with decreasing revenue due to falling property values. To illustrate the decline: 1 mill in 2007 brought in $1.8 million. In 2012, 1 mill brings in $601,750.

"It's amazing we're delivering the same services," Novitke said during the budget discussion Monday. "If we don't have the Headlee it's pretty apparent the only place you're going to get the dollars is to go into reserves or implement more fees or lose more people," meaning city employees. 

Mayor Pro Tem Vicki Granger said she hopes the city won't be faced with decisions such as whether to charge for services--a last resort in some municipalities that have found charging is the only way to maintain services.

"It's important for people to understand that one of the mills you're paying out of that 14 is for that ambulance to be in your driveway in a minute and a half," Granger said.

Besides enacting freezes on hiring and wages, the council has also delayed major expenses such as road repairs and city vehicle updates for at least three years. The coming year, the city is cutting some parks and recreation programs and will save money through .

There are wild cards in play for the budget, each of them with potential to bring in extra income to the city or cost the city more.

One is the on the Children's Home of Detroit property, which will generate significant tax revenue for the city. There are also plans to reevaluate all taxable property to determine values that are under-assessed. The city also has yet to learn  how much it will earn from new fees such as false alarm calls.

The budget is expected to be approved by May 21.