Ferndale voters to decide operating millage proposals

FERNDALE — Ferndale voters have important choices to make in the Nov. 5 election with two ballot proposals relating to a Headlee override millage.

The proposals presented by Ferndale are aimed to support the city’s police, fire facilities and recreation facilities and operations.

The first proposal on the ballot would reset the city’s general operating millage back to 20 mills. The operating millage for 2025 is set to be 11.4144 mills, and with the 2015 10-year Headlee override millage of 4.2808 mills, the 2025 combined general operating millage is 15.6952 mills. The override is set to expire Dec. 31, 2025.

The ballot language for the Headlee Operating Millage Restoration Proposal reads, “This proposal will restore the authority of the City to levy 20.00 mills for general operating purposes by restoring millage authority that has been reduced by operation of the Headlee Amendment and replacing the 5.4552 mills operating millage previously authorized by electors in 2015, which has been reduced to 4.2808 mills. If approved by electors, the restored millage would continue to be subject to annual reduction by application of the Headlee Amendment.

“Shall the limitation on the amount of taxes which may be imposed on taxable property in the City of Ferndale, County of Oakland, State of Michigan be increased by 8.5856 mills ($8.5856 per thousand dollars of taxable value) indefinitely beginning in 2025, as new additional millage in excess of the limitation imposed by Michigan Compiled Laws section 211.34d, to restore City Charter operating millage authorization previously approved by the electors as reduced by operation of the Headlee amendment, to provide funds for general operating purposes? It is estimated that 8.5856 mills would raise approximately $8,181,810 when first levied in 2025.”

City Manager Joe Gacioch said the city has been trying to be proactive in giving voters all the information they need to make the decision.

“We’ve put out educational videos about the facilities that really help walk the public through how our police and fire experience the facilities, where the deficiencies are, where the inequities are,” he said. “We can show that our female facilities are grossly inadequate and undersized. So we’re really trying to make sure that the public truly understands, one, the state of our facilities, and two, how that relates to the people that work for us. At the end of the day, the Headlee override is principally going to fund people and the facilities that those people reside in.”

The city estimates that a new public safety facility would cost between $35 million and $40 million.

The second ballot question, “Amend Charter Dedicating Portion of Operating Millage to Police Fire Recreation Facilities and Staff,” would earmark 4 of the 20 mills to be spent on public safety and recreation purposes in perpetuity, and the funds would be used for the construction and maintenance of facilities.

The ballot language reads, “It is proposed that Chapter IX, Section 12 of the Charter be amended to provide for the dedicated use of four-tenths (4/10) of one per cent (4 mills) of the assessed value of all real and personal property subject to taxation in the city for the sole purpose of funding improvement, maintenance, and operation of police, fire, and recreation facilities with any excess revenues thereafter to be used for the sole purpose of funding police, fire, and recreation operations and staffing, effective when electors approve restoring the operating millage to 20 mills. Shall the proposed amendment be adopted?”

If the first proposal passes but the second doesn’t, Gacioch said the only difference would be that the funding would not be earmarked for public safety and recreation purposes, though the money would still go toward those purposes.

For more information on the proposals, visit ferndalemi.gov.

 

Is there a better way?
Resident Mike Thompson has been advocating against the passage of the proposals with his Facebook group, Taxes Here Are Terrible.

The group has presented several arguments against the proposals, such as how the operating millage and building projects are two separate issues that they feel shouldn’t have been paired together and that removes a choice from voters. They’re also against how the first proposal has no expiration date.

Thompson stated that he doesn’t feel the city can afford what’s being presented with the millage.

“We live in Ferndale for a reason because we like the community, we like the people there, we think we have kind of the same values, but we knew that if we were struggling to afford this, that there had to be other people that were in the same situation and maybe not as kind of resilient if something were to happen in the economy as far as, you know, income goes.”

Thompson stated that the group “wholeheartedly” supports the Police and Fire departments, but they think there’s a better way to proceed to improve the facilities.

“When they propose something so ambitious and they tie a recreation center to kind of necessary facilities and they don’t put an end date on it, then it really gives people pause,” Thompson said.

“We’re saying let’s put an end date on the funding for new facilities, let’s maybe do one at a time or use a bond, like other cities,” he continued. “We’re not saying no. We’re saying let’s do something a little bit more conservative that allows us to sort of keep tabs on the city, but also gives the employees kind of the confidence that they will be supported.”

Thompson and the group also argued that the proposed 8.6 mills with no expiration date is too much for what the city is seeking.

“This is an 8.6 mill proposal (that) came out of nowhere,” he said. “They essentially were short about $2 million and then they came back with $8.1 million is what they were asking for in revenue.”

 

City manager addresses questions
Gacioch stated that, because the current Headlee millage override expires after 10 years, that puts the city in the situation it’s in right now where it’s concerned about the $4 million that the millage expiring in 2025 is worth.

“If you put a term limit on it again, you’ll be here in the same place whenever,” he said. “So ‘perpetuity’ is a legal term that the state requires, and the state requires that (legal term) when a community simply just asks voters to reset the operating millage to the maximum limit of 20, and that’s what this is. Now in practice, it’s not in perpetuity, because the Headlee rollbacks occur every year. So if voters approve it, it will be restored to 20 and that millage immediately begins to roll back based on the economy. So that’s, I would say, practically how it works.

“Why would the city not put a term limit on it? Why is because, with this funding, they’re looking to build public safety headquarters, and to build that you have to borrow money,” he continued. “And if you borrow money, you’re going to have to have annual debt service. You need to bring in the revenues to pay that debt service. So that’s going to be a 30-year loan, which is pretty typical for building a facility like that. So we’re expecting right now that that facility would be about $35 million to construct. We would borrow the money to construct it and pay it back over 30 years at an annual payment of $2.3 million. So you can’t put a 10-year limit on a Headlee override millage when you’re taking out a 30-year mortgage.”

Ferndale is estimating that, for a home with an assessed value of $250,000, a $125,000 taxable value, the projected breakdown of the tax increase on the 2026 summer tax bill would be $313 for public safety, $68 for a Martin Road Park facility and $156 for union contract adjustments. This would be an increase of $537 annually, or $45 a month, for residents on their summer tax bills.

Gacioch also addressed the concern of why parks were included on the ballot when the main concern has been about police and fire facilities. According to the city manager, following the pandemic, the city looked to leverage federal funds that support building community, recreational and park facilities.

“We’ve been bullish about going for those grants, and we’ve secured $2.1 million to put toward a rec center at Martin Road Park … which is about 21% of the estimated cost to build,” he said. “So 21% of this facility, should it get approved, would be built with other people’s money, and that’s just because this moment in time following the pandemic, as part of the American Rescue Plan Act, you’re seeing a lot of this funding get created for local communities to compete for grants. And we’ve been competitive. So that’s the why and, in the scheme of things, it’s a much smaller facility than the public safety facility. In return for building this right now, the cost of that remainder, that $7 million is what it would cost, that’s the gap funding that’s needed, would cost the average house about $54 per year on their summer tax bill to pay off the debt.”

A flyer promoted by Taxes Here Are Terrible argues that the first proposal removes checks on future spending and that once the projects have been paid for, the city will have a large surplus and it would be a “recipe for wasteful spending.”

Gacioch said if the measures are approved, a resolution would be drafted to issue bonds for any construction. As such, when the public safety facility project is in motion, that money is obligated and can’t be used any other way.

“That charter amendment earmarks the spending increase only for public safety and recreation services. And recreation services is, relatively speaking, a drop in the bucket compared to the public safety facility,” he said. “Outside of the facilities, the spending is earmarked for only those departments. So the police and fire combined to make up 60% of our budget. The recreation department makes up, I believe, less than five.”

There’s also a possibility that Gacioch might not be around to manage these projects. He currently is a finalist for the city manager position in Royal Oak.

Gacioch said that most internal controls are systematized regardless of who is city manager and that if a charter amendment is passed, then the finance director is beholden to reorganize the budget to separate those dollars for police, fire and recreation.

“No matter who is here, that’s going to be controlled already, and that’s subject to an outside auditor every year per state law,” he said.

“The remainder, as I’ve been saying, is really about people. It’s about union contracts,” he continued. “As we’ve shown, Ferndale has not kept up with the exorbitant increases in wages across the public safety facility. You know, we’re about 20% behind our neighbors in terms of base pay for our Police Department right now. So after you get through the facilities, that’s really the remainder and I would expect, if we want to maintain the current service levels, those contracts are going to probably assume the majority of it. So while a 4-mill increase is a lot to an individual household, I understand that and respect that, but in terms of a government budget, the 4 mills goes quick if you’re building a facility, and if you’re looking at, you know, negotiating, we have five union contracts that are up after January and all five of those contracts were negotiated before inflation increases. So all five of those have got to be reconciled with what’s happened over the past three years.”

Police Chief Dennis Emmi declined to state his position on the proposals as a public official, only stating that it is a fact that revenues are declining and costs are rising, and the department’s facilities are outdated and costing them potential candidates at the department.

“Our facilities are outdated in terms of best practice design building for 2024,” he said.

“The latest renovation was fairly cosmetic internally and didn’t really address any of the structural or mechanical issues that the building is facing,” he said.

“It’s important to know that we want to keep pace with some of the other agencies in terms of attracting top talent. You need to put out a competitive wage benefit package, and facilities are really part of the recruiting process in terms of where you’re going to spend most of your time when you’re not with your family.”