2011 Budget starts, Taxable Values Plummet, 911 Center Takes Final Steps, Hertel Catches Fraud, and Fundraiser Reminder

This week, we took the first steps to starting our budget. Every year, the first step in the budget process it to pass a resolution establishing the priorities to guide the development of the 2012 budget and activities of county staff. In the two committees that I serve on - County Services and Finance - there was little controversy. I understand that there was controversy in the Law Enforcement committee, and I assume we will hear more about that next week at the full Board meeting. We scaled back the resolution from previous years and didn't have to make big priority cuts. Our recent past years have seen us having to make big structural changes like closing a jail post, closing a park, eliminating road patrol, and other things. These changes have lead to the deficit this year being lower than it could have been. While a $5.5 million budget deficit is not easy to solve, it could have been much worse.

In conjunction with this, in Finance we received the annual Equalization report. we found out that 8 of the 13 townships and 4 of the 5 cities had negative taxable values compared to the year before. Of those that did not go down, it was because of agricultural property (Williamstown), new development panning out (Aurelius) and an industrial park coming back online for taxes (Mason). Otherwise, property values continue to fall and so do taxable values and tax revenues to communities. Not a good sign. Overall, taxable values in 2011 are a negative 244,061,553 (a 3.22% decline). Next year, in 2012, original estimations are that taxable values will go down another $300 million. This could be reduced to a negative $200 million, though, and our equalization director will keep us updated. These numbers will be used as we look at the status of our 2011 budget and as we start looking at preparing a 2012 budget. Total general fund revenues so far for 2011 are a negative $1,550,084. The estimated general fund revenues are expected to decline $1,905,360. Again, not a good
sign for keeping necessary services being provided. But we have great staff and great leadership, and we will make this work, as we have for the last few years. I am proud to be part of this process as the Finance Chair this year.

In addition to the budget, we took our next (and close to final) steps regarding the new 911 center. We passed a resolution to approve the final design plans and authorizing the Ingham County Building Authority to proceed with bid documents for the Ingham County consolidated 911 Dispatch Center project. This center will soon be built, and we will have finished a major consolidation that will centralize 911 dispatch resources and save dollars for the county moving forward.

I want to give a great bog shout-out and thank-you to Ingham County Register of Deeds Curtis Hertel, Jr. He recently rooted out numerous cases of fraud after seeing a report on 60 minutes about a certain scam. Hertel found over 60 examples of the same exact pattern and the same fraud committed in Ingham County by checking signatures on the mortgage assignment documents. Check out the news story here - http://www.wilx.com/localnews/headlines/Ingham_Co_Investigating_Fraudulent_Foreclosures_120330264.html.

Thanks Curtis! We will hear more from him soon on this blog.

Finally, a reminder - I will be having my first Andy Schor for State Representative fundraiser next week on Wednesday. For more information, you can go to www.andyschor.com. I have received amazing support so far and I expect this to be a great event. Thanks to everyone who has already contributed, and I look forward to a seeing everyone there!

That's it. Have a great week, everyone...and thanks for reading and caring about important issues in Ingham County.

Economic Development Task Force, EITC, Pollution Prevention, Budget 2011, House Race

This week was exciting, as we had a some controversial resolutions at our Board meeting.

First, we considered a resolution that I authored with Commissioner Brian McGrain that would create a Task Force to study the idea of an economic development millage. The idea of the resolution is to look at the positives and negatives of PA 88. The task force will be made up of commissioners, business groups, taxpayer groups, and anyone else who is interested. I hope we can discuss the pro's and con's of having a fund specifically targeted to assisting in small business and entrepreneurial job creation. I look forward to hearing what the businesses of the county have to say, and to hearing what people are willing to pay (if anything). There are no predetermined outcomes of this task force, and we will see what the parties recommend. All Commissioners supported this except Commissioners Schafer, Dragonetti, and Vickers. They indicated that all task forces result in something so they are opposed to discussing it. I, of course, disagree with that and think discussion of issues like this are vital to assist the county in things helping entrepreneurs to create jobs...but we can agree to disagree and still stay civil.

The second controversial resolution was calling on the Legislature to oppose cutting the Earned Income Tax Credit (EITC). Several Commissioners indicated that cutting the EITC would be a tax on low-income workers who can now receive the benefit of this credit. The Republicans indicated that they didn't think it is appropriate for the County to weigh in on state issues. I pointed out that eliminating the EITC could result in low-income residents of Ingham County in needing more services from our Health Department. That, combined with the revenue sharing cuts we are expecting and the declining tax collections, will cause big problems for the County so we have every reason to weigh in. The resolution passed 12-4 on party lines.

Finally, we again considered the Pollution Prevention (P2) resolution. This resolution, as lyoal readers of the Schor Blog found out last week, would require that businesses in possession of certain amounts of dangerous chemicals on site have to create certain plans and provide them to the county. This would, in essence, codify current county policy and would add a fee to it. We don't charge a fee now, and the taxpayers pick up the entire cost of the program. In public testimony, we had several first responderd (police and fire) testify in support of the resolution. They said that they need these plans for if there is a fire and they have to run into a building. They need to know where the chemicals are and what the dangers are of exploding. Other groups, like the Michigan Environmental Council, also weighed in as supportive. The business community opposed the resolution. Demmer Corporation and Granger and the Michigan Manufacturers and others testified that there are problems with the regulation and that they didn't want to pay the fees.

As you may recall, I voted against this in the Finance Committee. Regarding the fee, I have indicated that I believe that the taxpayers should not have to foot the whole bill for this program, especially with a $5.3 million deficit coming to the county for 2011. But, I thought that 75% in the first year was just too much at one time. On the Board floor, Commissioner Victor Celentino proposed and I supported an amendment that would reduce the fees from 75% to 50% to the businesses (and 50% to the taxpayers). When that passed, several of us were more comfortable with the fee and it passed 13-3. We then considered the regulation. Commissioner Todd Tennis, the Human Services Chair, offered several amendments to satisfy the concerns of the business community that were raised in public comment. Commissioner Tennis also indicated that he would review the regulation in a few months. I offered up an amendment to require the affected businesses be notified electronically in advance when that hearing happens. When that passed, I expressed that I would support the regulation. I am not sure it is perfect, but it is a lot better than it was last year and we will have a required review to ensure we can work out any problems that are raised. After having this come up twice and having new issues brought up at the last minute each time, I decided that it is now time to start this program in order to collect the 50% fees for the 2010 budget (which is less than budgeted).

Oh, and as an aside, I was on the radio talking about this regulation yesterday and one of the Republican Commissioners indicated that it is a tax. I am not sure why they are saying that, as it is false. This is clearly a fee, as it is only assessed on those that use the program (those that have the chemicals) and the money collected is not being used for anything other than this program (which only covers 50% of the cost). I understand that the businesses don't want to pay this fee, but I honestly believe that the taxpayers can no longer afford to subsidize this 100%. And I am disappointed that this is resolution is being mis-characterized as a tax when that is clearly not true. The final resolution passed with 12 of the 13 Democrats supporting it (the 13th abstained because her business is affected by the regulation) and one of the three Republicans supporting it. I would like to thank Commissioner Todd Tennis for all the work he did on this with the outstanding Health Department staff this year, and Commissioner Brian McGrain for all the time and hard work he put into this last year. I also would like to thank Commissioner Randy Schafer for going against his political party and staying consistent in his continual support of first responders and voting in support of this regulation.

This week, the County Commissioners also heard from our staff about some of the budget challenges coming for the 2011 budget. This blog is long enough already, though, so I will report on that another week.

And don't forget, my exploratory committee for the State House of Representatives! Please go to facebook and click on “like” for the page at www.facebook.com/andyschor, and go to the website to read my letter and provide information if you want to volunteer. Soon, the webpage will be updated and there will be fundraiser information and information about supporters. The effort is going really well!

911 Dispatch System Costs, Hiring Freeze, 911 Dispatch Center Ready for Construction

The County Board of Commissioners met last night. While there were several significant issues on the agenda, only one turned out to be controversial.

We considered a resolution that would extend the contract with the company that maintains the county emergency 911 dispatch system. As faithful readers of this blog may recall, several years ago the county approved a new emergency dispatch 911 system that was paid for with 911 millage dollars. The system went from an inefficient analog system to what was supposed to be a much better digital system. We looked at various proposals and, in the end, chose M/A Com to install and maintain the system. Over the course of that contract, many problems arose. There were significant problems with 911 dispatch calls dropped in the southwest part of Lansing, resulting in police officers having to use cell phones instead of radios and in increased staffing needed. The company technically met the qualifications of the contract, and the Board of Commissioners was very upset that M/A Com would not fix the problem without a significant purchase from the county. In the end, the county paid but also received discounted maintenance.

Fast forward to last night. The Board considered a resolution that would extend the maintenance contract with Harris (which was formerly M/A Com). The contract originally proposed by Harris called for a 7% increase in the first year and 3% increases in years two through five. The company’s argument was that they had more equipment to maintain because of the problems that we needed to fix in southwest Lansing. County staff told the company that this amount was too high, and Harris agreed to lower this to 5% then 3% for the balance (for a total of about $1.5 million over 5 years). When this came before the Board in Finance last week, the committee still thought that was too high but the company was only willing to discount this another $15,000.

When it came before the Board last night, I strenuously objected to this amount. The County has had $7-8 million dollar deficits and our tax collections have been going down. We have questioned every vendor about why we should be paying 3% or more when inflation is not at that amount and County revenues are not going up at that rate. I reminded commissioners that Harris received increases of 5.5% over the last two years as part of the current contract, and expressed opposition to the resolution before us. Several Commissioners agreed and we had a good discussion and debate about what we could do to reduce this amount.

During debate staff alerted us that the contract ends on Friday, and if we don’t extend it we would have no one to service the contract for 911 dispatch. That made many of us very mad because it seemed as if we were being backed into a corner and would have to approve this contract. I proposed a shorter renewal time so we could work out a new rate with the company, but logistically that was not possible. I then worked with Commissioner Grebner to craft language that creates a 90-day termination clause, and language that instructs staff to get a better rate from the company. If the company refuses to provide a better rate, we have instructed staff to start a bid process to ask other companies for competitive prices to maintain the system. This passed unanimously. So the county agreed to the contact for now, but will look at others who can provide this service and will change systems if Harris doesn’t come down with the rates. Even though the system now seems to be working, I am again very disappointed in this company and expect that we will revisit this again soon.

In other action, the Board took steps to close our budget gap for next year (2011 calendar year) by passing a hiring freeze. The county currently has a hiring freeze for all positions supported by the general fund. The resolution passed last night will extend that through December 2011, and will include all county positions. Department Heads will be able to request waivers to the hiring freeze when necessary from the County Services Committee. The Controller/Administrator will also have authority to exempt positions from the hiring freeze in cases where positions are funded primarily from non-general fund sources. This resolution will minimize the affect of anticipated position reductions in 2011 and years after, and will free up more county positions for employees that could be laid off. It would also provide more vacant positions to be evaluated for additional permanent position reductions.

The Board also last night passed the final resolution needed to get the new 911 dispatch started for construction by authorizing the Building Authority to contract with the Architect/Engineering (A/E) and Construction Management (CM) Firms to begin the design process for the Ingham County Consolidated 911 Dispatch Center. We also approved $500,000 from 911 Funds for preliminary costs associated with this project. As previously reported, the Ingham County Consolidated 911 Dispatch Center site has been approved to be located on County owned land just west of the CMH property on Jolly Road in Lansing. We expect the project to cost about $5.2 million ($4,000,000 for the building and $1.2 Million to equip the facility and establish a contingency fund). We have also worked out all the legacy cost agreements with Lansing and East Lansing, so it seems that we are now ready to finalize constructions costs through our PLA policy and begin construction. Yay!

Tonight the Finance Committee meets and will finalize the budget to be presented to the Board of Commissioners. I will report on in a future blog when the budget is considered by the full Board. I also have two other committees meeting next week. October is shaping up to be a busy month (and that doesn’t include the election coming up!).

Special Guest Blogger: Commissioner Brian McGrain on Human Services

For the next two weeks, I have decided to get the perspective of other commissioners. With the budget now in full swing, and with Human Services (like the Health Department) one of the key areas that we focus on at the county, I thought this week would be an appropriate time to hear from the chair of the county Human Services Committee. So I introduce to you this week's guest blogger - Commissioner Brian McGrain:

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Many thanks to Commissioner Schor for asking me to provide guest commentary on the actions of your Ingham County Commission this week. I am pleased to be serving in my first term on the Commission this year, and am currently seeking re-election. My District (District #3) is comprised of the north-eastern sections of Lansing and Lansing Townships (a reverse L-shaped district running approximately from the Lansing Center in the west along Michigan Avenue to Frandor and then up through Groesbeck to Eastwood Towne Center). I have lived in the Lansing area for 16 years, and have resided in my current east-side residence for over 8 years.

I am especially pleased to be chairing the Human Services Committee of the Commission this year. This Committee provides oversight to Ingham County’s social service activities, and includes activities of the Health Department, Community Mental Health, Human Services, the Mid-South Substance Abuse Commission, MSU Extension, and Veterans Affairs, among others. Annually, the Commission establishes areas of priority emphasis guiding the budget process. Among the long-term objectives supported by the Commission are: preventing and controlling disease; promoting accessible health care; and assisting in meeting basic needs. These objectives are met through support of the various departments reporting to the Human Services Committee.

The overall budget for this service area in 2011 will be over $73 million, of which over $17 million is provided by county general fund dollars. These figures represent about 40% of all county expenditures, and about 25% of the general fund overall. The large amount of financial support provided to care for our County’s residents illustrates that the intent to meet our objectives is of key importance to us. However, it is also important to note that three-quarters of the money spent on these services actually comes from other sources, such as through the state and federal government. Our high level of commitment to this arena allows us to draw down significant matching support for our community.

I must admit, going into our budget cycle for the 2011 calendar year, I was concerned that there were going to be significant cuts to what we could afford. I had heard that we would be facing anywhere from a $4 to $7 million budget shortfall. Our Controller presented us with a proposed budget in August that spelled out a predicted $6.4 million shortfall. Thankfully, our Controller also proposed a number of expenditure changes and budget reductions to help close the gap. Many of our departments were asked to tighten their belts and come up with anywhere from 5-10% in budget reductions. Our Health Department, for instance, decreased their budget by over $1 million. We are hopeful that these budget reductions (some of which also tie hand-in-hand to revenue enhancements) won’t detrimentally affect levels of service to our community. We are also exploring ways to deliver services differently and more affordably, such as by opening up our own group home for teenage boys.

The Human Services Committee on August 30 passed its portion of the 2011 budget with minimal fanfare. Our Finance Committee will meet later this month to take a look at all the budgets that have been passed (including those for Law Enforcement, Judiciary, and County Services) and to consider any changes that might need to be made. A completed budget will be before the entire Commission shortly thereafter for approval, well before January 1, 2011. If only the State were so efficient! (I suppose this is the situation to be had when one has a well-managed county staff and a leadership team made up overwhelmingly of Democrats.)

While we are rapidly closing in on a balanced budget for 2011, many of us on the Commission are already concerned about our 2012 budget. We expect another budget shortfall, but we are already taking steps to begin preparing for the difficult decisions we will face next year. As always, we encourage community residents to contact us with questions about our activities and also proposed solutions to the situations we may be encountering. While we know that we have to tighten our belt, we also pride ourselves at having been a County that has provided innovative programming to support our residents. If I may ever be of service to you, I invite you to contact me at bmcgrain@ingham.org.

Best wishes to all for the remainder of 2010 and beyond,

Brian McGrain

911 Intergovernmental Agreement, 2011 Budget, and Economic Development Through Smartzone

This week, I had three different important county meetings. On Tuesday, the Board of Commissioners met. As I have said before, most of our tough work is done in committee. The Board meeting approved several resolutions, but not much controversial. One important resolution that passed (and not reported on here previously) was an intergovernmental agreement between Ingham, Eaton, Clinton and Livingston counties. This agreement will allow the four counties to combine in purchasing and maintaining new phone technology for the 911 centers in mid-Michigan and to develop virtual backup capabilities. All four counties need to upgrade their 911 phone systems in order to take advantage of internet protocol technology, and all four need to develop emergency backup E-9-1-1 capabilities in the event of primary system failure. Signing this agreement and approving the bylaws allows us to work collaboratively in order to reduce costs and provide for inter-connectivity between counties. It also allows each county to forgo the capital costs of building a physical E-9-1-1 backup center in each county. I had some questions about the makeup of the agreement and bylaws – specifically how decisions are made and how the funding is done – but county staff assured me that the decisions and funding will be done in a fair and equitable way. This agreement will be a good regional tool for savings and efficiency, and I am happy that we passed it unanimously.

The County Services committee held the first of the budget meetings. First it needs to be said that our staff – especially Mary Lannoye (controller) and Teri Morton (budget director) – was able to greatly minimize the impacts of the budget deficit and they need to be greatly commended by the employees and the citizens of Ingham County.

The budget books were handed out on Tuesday, so this there was not much time to read through the extensive budget before committee on Wednesday…but Commissioners and department heads were able to effectively parse and understand the proposals. Every department was happy with their budget allocations in the County Services committee. Not one department head objected to their recommended budget (which is rare). Commissioners did have some questions for some of the department heads, though. I asked our Parks director several questions about the line items in the budget, and he gave good answers. Parks are truly doing a lot more with very little money. I also had issues with our funding of the Tri-County Regional Planning Commission. This is an entity that Eaton, Clinton and Ingham counties all belong to, and it handles land use issues for the region. While I have no problem with their work or staff, I did have a problem with the fact that we are giving them the same $102,000 that we gave them last year. I inquired why we should cut all our departments yet give tri-county the same allocation, and they said that cuts would be matched by other entities and would result in lost matching funds from the federal government. Some money we provide goes to administration, but the bulk of the money goes to services that receive an 80% match, so cutting would lose federal funding. Most Commissioners were satisfied with that answer, but I still believe that we shouldn’t be cutting our own departments yet leaving the regional entities whole. As such, I voted against that one appropriation (I was the only no vote on that part of the budget). The rest of the County Services items passed unanimously. The other committees – Human Services, Judiciary, Law Enforcement, and Finance – will be holding budget hearings over the next three weeks or so.

In addition to serving on official county committees, I also represent Ingham County on the Local Development Financing Authority (also known as the Smartzone). This Authority oversees economic development activities that are a result of dollars that are captured for these purposes. We heard reports from East Lansing staff on the Technology Innovation Center (TIC), which has about 14 entrepreneurial businesses in it (mostly professor or student-run businesses who receive low-cost rent to get their idea off the ground). I am encouraged by the products that we are helping to get to market and the many people who are creating jobs through innovation that we can assist. I was not thrilled, though, that several of the businesses are looking at moving out of town after their lease with the TIC is up. East Lansing staff is trying to assist these entrepreneurs to stay in the East Lansing/Lansing area, but other areas are offering venture capital and appropriate space (i.e. hundreds of square feet of wet lab space) and other incentives that we cannot offer. I hope to bring forth a proposal to rectify that situation…but that is in development and will be reported on in a future County Blog. We also heard from the Lansing Economic Development Corporation staff about the University Research Corridor and the Knapps building project. I am very encouraged by the Knapps project. We did not receive a $2 million grant due to technical problems, but we hope to re-apply for that and get the money. In the meantime, it seems that the developers are still working to get all the appropriate financing and start the reconstruction. Severeal local, state and federal incentives will be used. The goal is to have residential space, incubator space, and retail in the building. It would be a great boon for downtown Lansing, and I am hoping that this can move forward as soon as possible. I have great faith in the Lansing Economic Development Corporation, and I think this will be yet another example of Lansing rebuilding its downtown and drawing young and talented workers and residents back to our city.

That’s it for now. I hope everyone has a great weekend!

2011 Budget Primer: Deficits, Revenues, Expenditures; Final Primary Campaign Update

This week was very quiet for the Board. As such, I would like to devote some time to discussing the budget. County staff will presented it to us at the end of August and early September. As you know (if you are a faithful reader of the Schor County Blog), the county is looking at a deficit of $7-8 million for the 2011 fiscal year, which starts in January. So why is it that we have that deficit? That gets asked often. The easy answer is that we have reduced property values which lead to less tax collections, as well as less interest income. At the same time, we have increasing expenses. That adds up to a deficit. But lets dig into that a bit more.

First let’s look at revenues that the county collects. In 2011, the county is expecting to collect $42.9 million in taxes. We are expecting to receive $9.3 million in intergovernmental transfers (transfers from cities, townships, etc. to the county). County Departments are expected to generate $20.8 million in revenues. We are also planning to use $1 million from our fund balance (rainy day fund). That is a total of about $74 million. All-in-all, these collections are $4.6 million less than the county collected in 2010 ($2.9 million less in taxes, $231,000 less in transfers, $147,000 less in department generated revenue, and $1.3 million less used from the general fund).

For fiscal year 2011, we are expecting county expenditures to be $80.4 million, which is $1.9 million more in expenditures than fiscal year 2010. That is about $6.5 million less in expected revenues than we have in expected expenditures (which includes the already-projected use of $1 million from our rainy day fund).

Why do we have $1.9 million more in expenditures in 2011 than we had in 2010? Here’s why…
1. In 2010 we had 3 furlough days for almost all employees. We have not figured any furlough days into the 2011 budget because we have not yet instructed county staff to negotiate this with the labor unions. That equals an additional $358,000 in expenditures than we had in 2010.
2. There is a 1% pay raise built into county employee contracts for 2011. Most contracts are in the final year of their cycle, so these will all be renegotiated for 2012 and beyond. But for 2011, the agreed-upon pay raise will cost $360,000.
3. We have an increase of $210,000 in employee fringe costs for 2011 (again, as per contracts).
4. The Friend of the Court and Prosecuting Attorney fiscal year change will cost us $185,000.
5. We have not yet implemented any hiring delays or hiring freezes for 2011. We have done that for the last few years, but not implementing those for 2011 would cost $953,000.
6. DHS foster care will cost an increased $253,000. This is due to new state mandates.
7. We always build in $300,000 to our budget for things that were not included in the budget, called strategic planning initiatives.
8. There is a drain tax at large increase from the Drain Commissioner’s office, which will cost $78,000.

We also have some items that will cost less in 2011. They are:
1. State ward cost decreases in the Family Court reduced by $350,000.
2. Community Mental Health reductions of 5%, saving $108,000.
3. Reduced costs for the clerk due to a 2011 being a non-election year for the county, which will reduce clerk costs by $160,000.
4. Debt service reduction savings of $277,000.

Add to this about $80,000 in other random costs, and you have the $1.9 million in expenditures.

So there it is. That is what we are looking at as we start our budget. Now we will see what the recommendations are from county staff to close the gap. I expect recommendations of more hiring freezes and furlough days, and other creative ideas. But we will see. Stay tuned…

Election Update: This is the final election update until the general election kicks into high gear. As you probably already know, I was victorious in my primary election!!! After a vigorous campaign knocking doors, doing mailings, running an absentee voter program, and continued constituent contact, I captured 83% of the total vote in the Democratic primary. Voters were not persuaded by the negative claims made by my opponent and expressed to me, over and over, that they like the job I am doing and want me to continue fighting for the residents of SE Lansing. Thanks to the voters of the 5th County Commission district. I also can’t express enough my deep appreciation for those who helped me on the campaign trail (knocking doors, lit drops, donating, letters to the editor, etc). I take it very seriously that the voters in the Democratic primary have again entrusted me to advocate for them when important county decisions are made. Now I will match up against my Republican opponent. I have met him once, and he seems like a nice and sensible guy. We will compare our records, philosophies, and ideas moving forward, and I am confident that voters will again choose me to represent the district and move Ingham County forward for the next two years.