Nov 2009
Seeing Red this Thanksgiving
November/26/2009 10:48
The November 26, 2009 issue of the Grosse Pointe News contains a plethora of factual and informative reading material for Grosse Pointe Shores citizens to digest over this Thanksgiving holiday weekend.
The headline article “Seeing Red” by Brad Lindberg is highly recommended, detailing how the past several years of deficit spending by Shores incumbents have placed the city in its current dire situation. The total general fund balance was $802,000 in March 2008. The unrestricted general fund has a current deficit of $210,000.With this level of deficit spending, no wonder the state of Michigan has the Shores under fiscal watch!
The paper also contains salient letters to the editor from Shores residents John Booth, and John Rickel. Both of these citizens are recognized for their fiscal expertise, and have maintained a longstanding interest in our municipal finances. Mr. Rickel raises concern about our depleted municipal cash reserves, and raises the specter of state receivership. While the letters are not in the online edition of the Grosse Pointe News, you can access them by activating this letter to the editor hyperlink.
All Shores residents should read John Booth’s lucid analysis. He clearly enumerates why our city finds itself in such dire fiscal straights. As importantly, John points out how Mayor Coopers move to appoint the entire Shores council as the finance committee will effectively serve to remove the detailed discussion of fiscal issues from our well-attended city council meetings. Another step violating the incumbent’s promise of more transparency!
Wasn’t it at a meeting just a few months ago that Mayor Cooper bullied Council member Schulte, trying to intimidate him from going to the finance committee meetings by saying this could be an open meeting act violation? And now this is Mayor Cooper’s immediate solution to our fiscal crisis?
Nobody could put things any better than John Booth who closed his letter by stating: “If these guys were fireman, city hall would be in ashes before they even began to discuss whether the building was really on fire.”
Any solution to the Shores fiscal crisis requires that the incumbent council and finance committee members who led us into this fiscal quagmire first recognize, and then admit, that they do not posses the capability to get out of this mess without the proper help.
The council needs to deepen the talent level on the finance committee by adding more Shores citizens with recognized fiscal expertise, people like John Booth and John Rickel. In addition, Council member Brian Hunt, who has chaired the finance committee, should have the decency to resign from that post in order to permit a more capable financial expert to lead the Shores forth.
The citizens elected council newcomer Ted Kedzierski by an unprecedented margin because of his recognized accomplishments both as a CPA, and also as a certified forensic accountant. After reading Ted’s comments in the “Seeing Red” article, it should be apparent to all that he recognizes the bold steps that our city has to take in order survive. As Ted says, the Shores “can’t continue to do business as usual.”
Immediately steps must be taken to control the excessive employee benefits and retiree legacy costs that are at the root of the financial crisis, and Ted proposes concrete and realistic ways to do this. If Mayor Cooper wants to make an attempt to show Shores citizens he is serious about trying to get out of the mess created during his tenure, appointing Ted Kedzierski as chair of the finance committee would be a good first step in the right direction. But watch, chances are that Mayor Cooper will usurp this position for himself, rather than give it to the person most qualified to do the job.
The paper also contains my letter to the editor sent in to respond to last week’s guest editorial entitled “Don’t sign the recall petitions” by Edmund Brady, who represented the incumbents at the hearing in which the Wayne County Elections Commission approved the Shores recall language. In light of the fiscal facts clearly outlined in this week’s paper, I don’t understand how Mr. Brady had the audacity to proclaim in print that the Shores incumbents that he speaks for “balanced the budget.”
Mr. Brady also attempts to create a smoke screen by quoting the personal opinions of one member of the Elections Commission, Judge Milton Mack; implying recall supporters should have to allege malfeasance or misfeasance in the recall language. As a lawyer you know that current state law does not require this, Mr. Brady, and clearly leaves the political reason behind a recall up to the citizens.
The job of the Election Commission is only to determine whether the submitted language is of sufficient clarity for both the affected officials and the voters to identify the course of conduct that is the basis of the recall. The other commission members outvoted Judge Mack, and approved the Shores recall language for use.
If however, Mr. Brady really wants to consider misfeasance, defined by the dictionary as “the wrongful or injurious exercise of lawful authority,” does using public money to obstruct a Freedom of Information Act request for Shores salary information in advance of the election qualify? How about spending tax dollars for the city attorney to review candidate campaign literature? How about failing to make the reality of the Shores finances and deficit spending apparent to the electorate before the charter vote, at the time voters were promised that the 20 mil tax provision was a contingency needed only for drastic and distant future emergencies?
The tragedy of the situation is that if voters had known the actual state of the Shores finances prior to the recent charter and council election, it is very likely that there would have been an entirely different outcome.
Thanks to the incumbents, Shores citizens are now held hostage to a hard to change charter provision that will most certainly be utilized to raise our property taxes again. However, voters can readily recapture their right to cast an educated ballot on the incumbents by signing the recall petitions now being circulated by volunteers throughout the city.
After reading the grim financial facts as objectively presented in this week’s Grosse Pointe News, does anybody truly believe that the Shores can afford two more years of the incumbents?
It is high time for Shores citizens exercise their rights to hold the incumbents accountable! If the facts that have come to light convince you that signing the recall petitions is the right thing to do, use the Contact Form on the last page of the website, and a petition volunteer will contact you shortly.
Have a great Thanksgiving! Thanks to the Grosse Pointe News for giving Shores voters something substantial to digest this weekend beside our turkey dinners!
Do the Math!
November/17/2009 20:05
In the last blog, Shores taxpayers were challenged to use the tax search resource available on the assessor’s page of the Grosse Pointe Shores web site to “do the math” and see how city property taxes on their own home has faired over the past few years under the administration of Mayor Cooper and his incumbent slate.
This link will open a chart showing how the various components of Shores property taxes have risen for my own residence over the past five years, based on the information in this public tax database.
During this time, there has been a 25% increase in my property taxes that go to directly to Grosse Pointe Shores. During this period, the city taxes that go to pay off the Shores debt burden have increased 257%. Taxes going to fund Shores pensions have climbed 164%. Taxes for city operations climbed 126%. Yet the incumbents proclaim, as proud as peacocks, that they have held tax rates steady. The trend evident in the graph makes the fallacy of their argument very clear.
At the same time taxes are escalating, Shores property values have plummeted precipitously. Despite the substantial rise in our municipal property taxes, does any Shores taxpayer think that they are getting more bang for their taxpayer dollar than they were 5 years ago?
Rather doubtful, when you consider where your Shores taxpayer dollars are going. Look at the most recent 2009 Shores financial report. Last year, property tax revenues to the Shores were down to $4,954,000, a number that is sure to decline again this year, as property values plummet. Shores bond debt payments due in 2010 are nearly $600,000. The required pension fund contribution due is almost another $600,000. Add to this the $771,000 annual contribution that the health care fund consultant says we need to plan on based on a realistic 5% rate of investment return.
This adds up to nearly $2,000,000 of your tax dollars needed just to pay off debt and employee retiree benefits! Then consider Shores payroll costs are in the range of reportedly in the range of $2,500,000 dollars. When you add up these figures and subtract them from the city’s property tax revenues, it is clear why so few of your tax dollars are left for road repair and other direct services for Shores residents. Those Shores residents who claim they don’t mind paying high taxes because they are happy with the current level of municipal services need to understand that little of our progressively escalating city tax bills are actually left to provide these services.
Mayor Cooper asked in his recent letter for Shores residents not to sign the recall petitions and to give him and his slate of incumbents another two years.
After you do the math for yourself, do you really think the Shores can afford two more years of deficit spending, unsustainable employee benefits and steeply rising retiree legacy costs? If we don’t demand immediate change, it is possible that rather than being on the State of Michigan fiscal watch list, that the Shores will be in receivership.
To effect change, use the Contact Form on the last page of the website, and a volunteer will contact you shortly to get your signature on the recall petitions.
Sobering Numbers and Broken Promises
November/15/2009 17:12
The latest source document posting is a copy of the Shores 2009 Fiscal report, that was produced by city auditors Plante Moran for the fiscal year ending this past March. The document is highlighted to show the most relevant data, and also annotated with some comments and questions. Review the report, and it will give you a detailed, sobering insight into the state of the Shores finances as of the time of the last annual report. Attend the city council meeting this Tuesday, November 17th at 7PM and learn how first hand things have deteriorated even further over the past few months.
After studying the financial report, then review the incumbents’ campaign statements as published in the February 24, 2009 issue of the Grosse Pointe News, which is available by activating this web link. Does it seem that the officials in charge of the fiscal health of our city are in contact with the actual reality outlined by the auditor’s report? Let their own statements to the citizens of the Shores speak for themselves.
Statement of Brian J. Hunt, Finance Committee Chair:
“As a member of this council I have cut costs and spending, making tax increases unnecessary”.
The Facts:
- Property taxes raised 7% at 3rd Shores Council meeting.
- Total Shores 2008 Program expenses = $7,740,000
- Total Shores 2009 Program expenses = $8,385,000, an 8.3% annual rise.
Statement of Fred Minturn, Finance Committee Member:
“ …we have completely revamped the financial systems of the village… created the right amount of fund equity…Through savings in all areas, overall costs have remained the same despite the rising costs of employee medical and pension benefits, resulting in a slightly lower tax rate and even provided some much needed fund equity.”
The reality:
- Revamped Shores financial system has us on state of Michigan Fiscal Watch List
- See expense facts above on 8.3% rise in costs of Shores programs.
- Net change in total Shores governmental fund balances last year was a negative $353,779. As of now the unrestricted general fund balance of the city is reported to be negative, a situation that had to be reported to the state.
- At the June city council meeting, residents are told a tax increase is required to replenish depleted fund balance. What happened to the fund equity Councilman Minturn was referring to?
- It’s not the tax rate you really care about, it is the tax rate times the taxable value of your home that tells you what is coming out of your checkbook. Use the links at the Shores tax assessor’s web site to perform a tax information search and review the data on your own home for the past few years. Do the math and see how much more in total you have been paying in city taxes each year during the tenure of Mayor Cooper and his incumbent slate .
Statement of James M. Cooper, Mayor:
“The work to share benefit expense and reduce legacy costs began a number of years ago and will persist as contacts are reviewed. At the close of the last fiscal year the pension fund was 98% funded.”
The grim reality is that the employee contracts inked last November, just a few months before Mayor Cooper’s statement, provide Shores employees the following:
- Premium level Blue Cross Policy for only $250 cost per year employee, and at no cost for retirees. Shores pays the yearly $1000 deductible. The contract guarantees retirees same level of health care benefits, even if they are cancelled for active employees.
- A defined benefit pension plan that lets employees retire at 75 to 80% of their pay on the backs of Shores taxpayers. You can see Mayor Cooper is blowing smoke about any real serious efforts to control legacy costs when you look at the graph of Shores annual pension costs, which have escalated rapidly during his tenure. Why haven’t we moved to a defined contribution pension plan like many other governmental bodies?
- Year end figures show the Shores pension fund had accrued liability of $18.9 million, when the market asset value of the holdings was only $12.3 million . This is a deficit of $6.6 million dollars. Is this a plan that is 98% funded?
- The Shores own consultant advised them in the 2009 Health Care report that employer contribution for unfunded health care liability may be as high as $771,000 a year! The current Shores budget does not fully account for this major expense, which will be passed on to taxpayers to balance the budget.
The tragedy of this situation is that the failure of the incumbent officials to present the true state of the Shores fiscal health to the voters prior to the February charter election, now holds taxpayers accountable for a much higher level of property taxes in the future.
Who would have ever voted for the new city charter with its 20 mil property tax limit had they known the real facts?
Political Recall Election
November/07/2009 13:52
I am grateful to the Grosse Pointe News for publishing the following piece I wrote as the Guest Editorial in the November 5th, 2009 issue of the paper. Shores residents should appreciate the what a fine job our local papers do in keeping residents informed of the issues.
The following is my original submission, which was only modified slightly by the paper’s editor:
In a July 16th 2009 editorial published in the Grosse Pointe News, State Representative Tim Bledsoe offered some thought provoking insights in a guest editorial entitled: “Setting The Bar For Political Recalls”
In that article Representative Bledsoe indicated that three questions need to be affirmatively answered in order for a recall initiative to qualify as a worthwhile effort.
The first question Representative Bledsoe raises is: “Did the elected officials violate the public trust?” Prior to the charter vote, Shores officials advised residents that the new city structure would bring increased efficiency, yielding a savings in the range of $225,000. Mayor Cooper was even quoted as saying that “becoming a city may permit a tax reduction.”
When residents expressed concern that the new charter would allow taxes to be raised to the maximum 20 mil limit without a public vote, officials promised they had no interest in raising taxes and that this contingency was there for future emergencies. These promises are documented in several articles published by this very newspaper (posted at www.shoresrecall.com.) Despite these promises, elected officials passed a $330,000 tax increase just two months after being sworn into office! The public trust was clearly violated by these openly broken promises.
The second question raised is easier to answer: Did the elected officials make decisions that cannot be undone? Representative Bledsoe poses this question, because if the action taken were truly irreversible, then a recall effort would have little effect on changing direction. (Although this hopefully doesn’t mean we should reward poor performance, even when irreversible damage is done.)
In this case, the actions taken to raises Shores taxes can definitely be reversed. With fiscally responsible officials on the council, there is no reason our municipal expenses can’t be controlled and taxes brought down. The real issue for Shores voters to consider is why the incumbents let our finances deteriorate to the point where the State of Michigan had to place our city on their fiscal watch list? Do we want to “stay the course” and risk being placed under receivership?
The third question is: Did the officials act on the basis of sinister motives? Using taxpayer dollars to fight a Freedom of Information Act request in order to prevent important PUBLIC INFORMATION on Shores employee compensation and benefits from coming out during an election certainly appears sinister. The public has a right to know where their tax money is going. By delaying release of this key financial information until after the February 2009 election, Shores officials intentionally withheld important information, preventing residents from casting a truly informed vote. Surely they knew that both the charter vote and the council election might have come out differently if citizens had known the facts.
Add to this the Michigan Department of State investigation into why Shores officials paid our city attorney to review candidate campaign materials, and Shores residents have many solid reasons to be concerned about their tax dollars being consumed by sinister motives and a self-serving agenda.
Shores voters should seriously consider the answers to these key questions raised by Representative Bledsoe when considering whether to sign the recall petitions for Mayor Cooper and the four incumbent council members. Rather than succumb to emotion, or take stock in hearsay and gossip, I hope all Shores residents will look deeper into the facts behind these critical issues. The data posted at www.shoresrecall.com is all verifiably accurate. All documents cited on the website are also available at Grosse Pointe Shores city hall and we encourage residents to request this information directly from the city offices.
Residents also need to understand that the purpose of a recall is simply to schedule a democratic election wherein the voters can decide, by popular vote, if they wish to remove one or more specific individuals from office. Contrary to what some have been led to believe, a recall election is not “costly” and adds virtually no expense when held during a regularly scheduled election.
The following is my original submission, which was only modified slightly by the paper’s editor:
In a July 16th 2009 editorial published in the Grosse Pointe News, State Representative Tim Bledsoe offered some thought provoking insights in a guest editorial entitled: “Setting The Bar For Political Recalls”
In that article Representative Bledsoe indicated that three questions need to be affirmatively answered in order for a recall initiative to qualify as a worthwhile effort.
The first question Representative Bledsoe raises is: “Did the elected officials violate the public trust?” Prior to the charter vote, Shores officials advised residents that the new city structure would bring increased efficiency, yielding a savings in the range of $225,000. Mayor Cooper was even quoted as saying that “becoming a city may permit a tax reduction.”
When residents expressed concern that the new charter would allow taxes to be raised to the maximum 20 mil limit without a public vote, officials promised they had no interest in raising taxes and that this contingency was there for future emergencies. These promises are documented in several articles published by this very newspaper (posted at www.shoresrecall.com.) Despite these promises, elected officials passed a $330,000 tax increase just two months after being sworn into office! The public trust was clearly violated by these openly broken promises.
The second question raised is easier to answer: Did the elected officials make decisions that cannot be undone? Representative Bledsoe poses this question, because if the action taken were truly irreversible, then a recall effort would have little effect on changing direction. (Although this hopefully doesn’t mean we should reward poor performance, even when irreversible damage is done.)
In this case, the actions taken to raises Shores taxes can definitely be reversed. With fiscally responsible officials on the council, there is no reason our municipal expenses can’t be controlled and taxes brought down. The real issue for Shores voters to consider is why the incumbents let our finances deteriorate to the point where the State of Michigan had to place our city on their fiscal watch list? Do we want to “stay the course” and risk being placed under receivership?
The third question is: Did the officials act on the basis of sinister motives? Using taxpayer dollars to fight a Freedom of Information Act request in order to prevent important PUBLIC INFORMATION on Shores employee compensation and benefits from coming out during an election certainly appears sinister. The public has a right to know where their tax money is going. By delaying release of this key financial information until after the February 2009 election, Shores officials intentionally withheld important information, preventing residents from casting a truly informed vote. Surely they knew that both the charter vote and the council election might have come out differently if citizens had known the facts.
Add to this the Michigan Department of State investigation into why Shores officials paid our city attorney to review candidate campaign materials, and Shores residents have many solid reasons to be concerned about their tax dollars being consumed by sinister motives and a self-serving agenda.
Shores voters should seriously consider the answers to these key questions raised by Representative Bledsoe when considering whether to sign the recall petitions for Mayor Cooper and the four incumbent council members. Rather than succumb to emotion, or take stock in hearsay and gossip, I hope all Shores residents will look deeper into the facts behind these critical issues. The data posted at www.shoresrecall.com is all verifiably accurate. All documents cited on the website are also available at Grosse Pointe Shores city hall and we encourage residents to request this information directly from the city offices.
Residents also need to understand that the purpose of a recall is simply to schedule a democratic election wherein the voters can decide, by popular vote, if they wish to remove one or more specific individuals from office. Contrary to what some have been led to believe, a recall election is not “costly” and adds virtually no expense when held during a regularly scheduled election.
Mayor Cooper's Letter
November/03/2009 22:21
The recent letter Mayor Cooper sent to Shores citizens asks them not to sign the recall petitions. In the letter Mayor Cooper did little to address the serious financial issues facing the Shores, intimating that union contracts don’t give the city the flexibility to deal with the changing financial times.
Shores residents are encouraged to review the newest source document just posted on the website, the contract settlement agreements between Grosse Pointe Shores and the unions. Note that these agreements were signed only last November, when Shores officials knew full well of the fiscal crisis due to declining home values and property tax revenues. What did the incumbents do in this era of declining revenue: give employees a 3% per annum raise for each of the 3 years of the contract.
Besides the pay raises, take a good look at the premium health care benefits provided to employees for only $250 a year. The city even pays the $1000 deductable expense for those covered. In an era where private businesses have had to scale back retiree health care plans in order to survive, what did the Shores do? Put in a clause that guarantees that if health care benefits are cut for active employees, that retirees will continue to enjoy their same generous benefits.
Apparently nobody was looking ahead at what these retiree health benefits were going to costing taxpayers, but as you can see in the latest Retiree Health Care Report from March 2009, the unfunded liability for the incumbent's munificence is estimated to be 10 million dollars.
As you can see from the source document, the Shores provides retirees a defined benefit pension plan. Regardless of the vagaries of the stock market, and how much the worker has kicked in, long term municipal employees can retire at 75% to 80% of their final average compensation. As the latest Pension Report shows, this fund had a deficit of about 6.5 million dollars. The question here is why hasn’t the Shores moved to a defined contribution plan, like many other governmental bodies have done in order to maintain financial stability?
Added together, the substantial debt from these retiree benefits is in the range of $16.5 million dollars, or about $15,000 per Shores household. Who do the taxpayers have to thank for this situation besides Mayor Cooper? Note the finance committee, which included Council members Brian Hunt and Fred Minturn, recommended the latest employee agreements.
If Mayor Cooper feels constrained by the lack of flexibility of these recent union agreements, then why did the he and the incumbent council members make them in the first place?
Given the direction our city finances are headed, and the fact the Shores is already under fiscal watch by the State of Michigan, don’t succumb to Mayor Coopers plea to give the incumbents another two years. When given the opportunity to sign recall petitions, Shores voters need to act and hold the officials responsible for our current fiscal situation accountable.