Proposal 1 August 5, Primary

Wayne County Taxpayers Association Position Paper

Proposal 1

APPROVAL OR DISAPPROVAL OF AMENDATORY ACT TO REDUCE STATE USE TAX AND REPLACE WITH A LOCAL COMMUNITY STABILIZATION SHARE TO MODERNIZE THE TAX SYSTEM TO HELP SMALL BUSINESSES GROW AND CREATE JOBS

The amendatory act adopted by the Legislature would:

1. Reduce the state use tax and replace with a local community stabilization share of the tax for the purpose of modernizing the tax system to help small businesses grow and create jobs in Michigan.

2. Require Local Community Stabilization Authority to provide revenue to local governments dedicated for  local purposes, including police safety, fire protection, and ambulance emergency services.

3. Increase portion of state use tax dedicated for aid to local school districts.

4. Prohibit Authority from increasing taxes.

5. Prohibit total use tax rate from exceeding existing constitutional 6% limitation. Should this law be approved?

************(*

I want to state that the Personal Property Tax is a horrible tax and a burden to business and employment. If I were to say to the average taxpayer that their stove, refrigerator, washer, dryer and any other appliance or furniture were all subject to personal property tax for 10 years after purchase with a reduction each year for depreciation, we would have a revolt.

Anyone wishing to understand how the tax works and its effects can go to Personal Property Tax Reform in Michigan The Fiscal and Economic Impact of SB 1065-SB 1072, Anderson EconomicGroup  http://www.andersoneconomicgroup.com/SearchAEG/tabid/59/articleType/ArticleView/articleId/8021/Personal-Property-Tax-Reform-in-Michigan-The-Fiscal-and-Economic-Impact-of-SB-1065SB-1072.aspx or the Citizen Research Council at  https://crcmich.org/TaxOutline/index.html

This is not just an elimination of the Personal Property Tax for some small businesses. It is about much more.  It is my estimation that it was not necessary to place anything on the ballot to allow the reduction of that tax. Everything they needed is presently included in the State Constitution as defined in the Headlee Amendment.

Article IX  Michigan Constitution

§ 25 Voter approval of increased local taxes; prohibitions; emergency conditions;

repayment of bonded indebtedness guaranteed; implementation of section.

Sec. 25. Property taxes and other local taxes and state taxation and spending may not be increased above the limitations specified herein without direct voter approval. The state is prohibited from requiring any new or expanded activities by local governments without full state financing, from reducing the proportion of state spending in the form of aid to local governments, or from shifting the tax burden to local government. A provision for emergency

conditions is established and the repayment of voter approved bonded indebtedness is guaranteed.

Implementation of this section is specified in Sections 26 through 34, inclusive, of this Article.

§ 26 Limitation on taxes; revenue limit; refunding or transferring excess revenues;

exceptions to revenue limitation; adjustment of state revenue and spending limits.

Sec. 26. There is hereby established a limit on the total amount of taxes which may be

imposed by the legislature in any fiscal year on the taxpayers of this state. This limit shall not

be changed without approval of the majority of the qualified electors voting thereon, as

provided for in Article 12 of the Constitutio n……. If responsibility for funding a program or programs is transferred from one level of government to another, as a consequence of constitutional amendment, the state revenue and spending limits may be adjusted to accommodate such change, provided that the total revenue authorized for

collection by both state and local governments does not exceed that amount which would have

been authorized without such change.

§ 29 State financing of activities or services required of local government by state

law.

Sec. 29. The state is hereby prohibited from reducing the state financed proportion of the

necessary costs of any existing activity or service required of units of Local Government by

state law. A new activity or service or an increase in the level of any activity or service beyond

that required by existing law shall not be required by the legislature or any state agency of

units of Local Government, unless a state appropriation is made and disbursed of Local Government for any necessary increased costs. The provision of this section shall not apply to costs incurred pursuant to Article VI, Section 18 to pay the unit. 

There are 10 Senate Bills connected to this proposal. Nowhere in the ballot language is a Personal Property Tax mentioned specifically. The bills range from SB821 through SB830. For brevity and simplification I will address SB822 which must be passed for most of the others to take effect.

 .

We start our problem with the establishment of yet another Authority which would be granted enormous power. Since this new Authority would not be elected by the voters, there would be no true accountability but they would have the responsibility of handling a huge amount of our money.   

“BEGINNING ON OCTOBER 1, 2015, THE SPECIFIC TAX LEVIED UNDER SUBSECTION (1) INCLUDES BOTH A STATE SHARE TAX LEVIED BY THIS STATE AND A LOCAL COMMUNITY STABILIZATION SHARE TAX AUTHORIZED BY THE AMENDATORY ACT THAT ADDED SECTION 2C AND LEVIED BY THE

AUTHORITY, WHICH REPLACES THE REDUCED STATE SHARE AT THE FOLLOWING RATES IN EACH OF THE FOLLOWING STATE FISCAL YEARS”

Legislation then goes on to define the state’s portion of “THE LOCAL COMMUNITY

STABILIZATION SHARE TAX RATE TO BE LEVIED BY THE AUTHORITY IS THAT RATE CALCULATED BY THE DEPARTMENT OF TREASURY ON BEHALF OF THE

AUTHORITY… THE STATE SHARE TAX RATE IS THAT RATE DETERMINED BY SUBTRACTING THE LOCAL COMMUNITY STABILIZATION SHARE TAX RATE FROM 6%.”

The state then declares the revenue portion from 2015-2016 through 2029 without knowing the accuracy of the amount listed. They will also be committing future legislatures to a dollar amount.

This Authority would be granted an enormous responsibility. That cannot be good for taxpayers.  The line in the proposal that limits the used/sales tax to 6% does not address the expansion of the sales tax to, for example, internet purchases or fines or penalties for failure to comply. It does not address other things that they may choose to include as taxable by the sales tax which they seem to think they have the authority to adjust.

Whatever your feelings on taxes, this proposal does not give the taxpayer more security. The language does not reflect the full nature of the outcome if it passes.  If you have concerns, I will be glad to forward copies of the bills.  Please feel free to contact me with any questions or comments.  wctaxpayers@comcast.net .  313-278-8383.

The Wayne County Taxpayer Association suggests vote NO on Proposal 1

Until Next Time

I am sorry to announce that the Part Time Legislature Committee has informed me that they will not be able to collect enough signatures to place the issue on the ballot. For the hundreds who received petitions from the Wayne County Taxpayers Association  I am asking that you destroy the petitions.  It is their intentions to try for the 2016 elections but those petitions you have are dated and can not be used. There are a number of reason why they were not successful but they hope to have those problems worked out for the 2016 election.

Gun Rights

On September 25th,1994 the Jon Coon, Libertarian for US Senate campaign hosted a "Brass Roots" rally, honoring both the Second Amendment to the US Constitution and Article I, Sec. 6 of the Michigan Constitution. The 10,000 Michigan gun owners who attended contributed hundreds of pounds of spent brass "from firearms they vow to never give up" that was melted down and cast into a 4' x 6' plaque.

Shortly after its creation, state representative, Leon Drolet, got legislation to install the plaque on the Capitol grounds adopted by the House on a 104-0 vote.  Unfortunately, the bill was not taken up by the senate. 

We are now making a second attempt to finally put this monument to our cherished right to keep and bear arms in a deserved place of honor -- where it will serve as a continuing reminder to both public officials and the public generally of the one right upon which all the others depend.

Rep. Martin Howrylak, along with 15 cosponsors, has introduced HB 5595 to accomplish this long-sought goal -- hopefully in time for a dedication ceremony on the 20th anniversary of the original "Brass Roots" event. 

Any help you might provide in this effort would be greatly appreciated.  Please take a moment to call your state rep and urge support for HB 5595.  Then forward this e-mail to every other Michigan gun owner you know.  Thank you.

Yours for liberty from one who was there,

Tim O'Brien

LATEST PENSION “REFORM” FAD THREATENS TO DO MORE HARM THAN GOOD

by Justin Mordarski

The latest sortie into fixing our broken system is a push by some to assume an artificially low rate on investment returns.This sounds innocuous, perhaps even prudent…right?

Not even close. Even a very small difference in the assumed rate of return can have a massive effect on forced taxpayer contributions. A recent report on the pension system of Rhode Island illustrates the danger in manipulating the assumed rate of return. Lowering the rate by less than 1%, from 8.25% to 7.5%, increases the shortfall by over $2 billion, from $4.7 billion to $6.8 billion!  Lowering it to 6.2%, increases the amount taxpayers owe by $4.5 billion.

     
 What does this mean for a Michigan city or township?  While it varies by the size of the fund, lowering the assumed rate of return by even 1 percentage point could translate into several millions of dollars per year in additional, required payments by the city or township.

The pension fund’s assumed rate of return, or discount rate, is one of the primary variables in determining its funded ratio and it is ultimately the funded ratio that determines the bulk of the amount that taxpayers are required to contribute to the fund. It is expressed as a percent, usually between 7.5% and 8.0% and it is used discount the liabilities (what is owed) that are presented on the fund’s financial statements, so if it is too low, the liabilities appear artificially high and, most importantly, the required taxpayer contribution toward said liabilities is much higher than it needs to be.

The exact value of the discount rate should be based on the fund’s historic, long-term average rate of return in its investments.  Generally, this period should be rather long, usually 20 to 30 years; provided, of course, the pension boards has accurate records going back that far.
The latest fad in pension “reform” is to lower this rate, sometimes considerably.  The belief in is that doing so will somehow be “safer” or “more cautious”, which is why a lot if well intentioned, thought misinformed, conservative activists have been drawn to it.
The problems of artificially lowering the rate of return are significant and real, while the benefits are questionable at best.

First problem is higher taxes.
There is a direct link between the rate of return used and the amount taxpayers much contribute every year: the lower the rate used, the more residents and businesses must pay.  There is no way around this relationship. So understand that if some well-intentioned bureaucrat wants to lower it be even 1%, the taxpayers in that city or township would then be forced to increase annual payments to the fund, which, depending on the fund size, could be an extra million dollars a year or more.

This extra money can really only come for one of two places, higher property taxes or service reductions; so either homeowners and businesses pay more property taxes or needed services, such as road repair, are cut.
For most areas, the fragile housing market is just now starting to recover, the last thing we need to do is stunt its recovery by large property tax increases.

 While I strongly support closing local pension systems to new entrants, understand that this does not magically make existing unfunded liabilities go away – they must be paid and the assumed rate of return determines how much taxpayers will be paying.So even under the scenario where a traditional pension fund is replaced by the 401 (k) style plan, local residents and businesses could still end up paying hundreds of extra dollars a year in property taxes if too low an assumed rate of return is used to calculate the remaining balance.

Second, there exists a real danger to the taxpayers in overfunding. Pension boards in Michigan have quite a bit of autonomy and are, as a practical matter, usually controlled by the employee groups; and it this autonomy which confers upon them a good deal of discretion in how to deal with any overfunding; overfunding which becomes “extra” money to the board, who historically find a way to spend it to enrich their supporters. 

Perhaps the best known example is the infamous 13^th Check paid by Wayne County.  Even though not required by any contract, the 13^th Check was a bonus paid annually to existing retirees.  One of the main justifications for doing so was that there was “extra” money in the pension fund, so why not spend it. 

More commonly, the “extra” money in the pension fund is allocated to existing employees in the form of enhancements regarding how their pensions are calculated.  One frequent methodology is to allow unlimited overtime or unused vacation time to be included in their final average compensation; thereby increasing or “spiking” their pensions considerable. 

Another disastrous use of this “extra” money advocated by pension boards is a DROP, or Deferred Retirement Option Program, which allows employees to collect a full pension while still working. As long as pension boards are allowed to treat overfunding as “free money”, overfunding can be just as costly to taxpayers as underfunding.

Third, it is simply wrong and not supported by the available data. 

The assumed rate of return is supposed to be based upon real data, namely, decades of investment return data by the fund or similar funds.  It is not supposed be based on outliers (a few bad or good year), but on a long-term average.  Nor, should it be based on or influenced by the investment experiences of individual persons.  I mention this last point since many well-meaning activists like to suggest that since they only make 1% in back CD’s or their personal portfolio only made 4% last year, the pension should reduce its rate in kind.  Pension funds have a diverse investment pool including foreign currency, stocks, real estate and exotic investment products too myriad to list, and employ complex hedging strategies to achieve a fairly consistence average return rate over diverse economic conditions.  A pension fund is nothing like the investment products used by most individuals.  Another mistake many individuals make is to focus on bond yields (currently very low) and use this as a reason to reduce a rate of return for a pension fund.  Traditionally, stock and bond yields move in opposite directions, so when bond yields go down, fund managers just move assets from bonds and into stocks.  A recent report by JP Morgan indicated that US corporate pension funds increased their funding status from approximately 77% to almost 100% in just two years, primarily due to gains in the stock market.

The data over the last several decades strongly supports the 8% average rate of return used by most pension funds both in Michigan and throughout the nation.  According to the National Association of State Retirement Administrators, the median, average annual rate of return for all public pension funds was 8.5% in the 25 year period 1986 to 2011.  The average for the state of Massachusetts’s pension funds has been 9.6% since 1986.  Even the much maligned CalPERS (one of largest funds in county) posted a 8.38% average 20 year return.  These returns are reported by the funds themselves, so perhaps it is healthy to be skeptical.  Even sources outside the pension funds themselves support the 8%.  The Standard and Poor’s Composite Index retuned 10.14% for the period 1926 to December 31, 2013.  Even the Wall Street Journal recently reported that the 30 year annual return of a large bundle of stocks selected by Morningstar was 11.1%.  The data is pretty conclusive that an 8% projected rate of return is more accurate than the 4% or less some are suggesting.

Forth, this is distracting us from the real issues and does nothing to fix the underlying problems with most municipal pension funds.  The demise of a municipal pension fund in our state usually follows a simple, basic path: the municipality will contribute to the fund based upon an employee’s base salary, say $50,000; then, usually just before retirement, an enhancement is added (this can take the form of allowing overtime to be included, unused vacation pay, a ceremonial promotion, or any of a number of things) and these enhancements now increase the pension to say $80,000.  It is the gap between the $50,000 pension the funding was predicated upon and the actual pension of $80,000 that produces the shortfall.  This $30,000 may not sound like much, but it paid every year the person receives his or her pension; so $30,000 a year for 40 years is a $1.2 million shortfall in the fund for just one person!

The other problem starting to afflict more and more pension funds relates to mortality assumptions: retirees are simply living longer than the pension board had predicted. Every incident of pension distress I have seen here in Michigan came from one, or both, of these causes.  I honestly cannot find one fund where distress was caused by investments not achieving an appropriate, long-term return on investments. 

(If you know of any, please send me an email , because I have been looking and still cannot find even one.)

              
This brings us the so-called Grand Bargain in Detroit and the desire by some to use almost $200 million in state money to bail-out Detroit.  So why are they asking citizens from Grand Rapids, Plainwell, Graying and every other city and township in the state to contribute their hard earned tax dollars to Detroit?  It seems all this money is going toward the two Detroit pension funds since Orr wants to lower the rate of return to around 6.5 % for each fund.  As demonstrated earlier, all lowering this number does is increase the amount of money the taxpayers are forced to contribute.  Another issue with the $200 million Orr wants state taxpayers to spend is that it is based on old valuations of the funds, valuations that likely do not reflect recent gains in the stock market.  It seems rather plausible that is Orr used a rate of return based upon historical averages (closer to 8%) and applied to a more recent valuation, the $200 million in bail-out money would not even be needed.

 In summary, there is no need to pay higher taxes to fix a problem that does not even seem to exist.  Instead, we should focus on the true and proven problems in our pension system, such as pension spiking, and address those. This current fad of trying to manipulate the rate of return in pension funds for political reasons needs to go the way of other past fads such as popped collars on dress shirts.

Contacts in All 83 Counties are Now a Reality for Part Time Legislature Petitions

Collecting signatures on a petition for a Part Time Legislature is really easy. Very few people will turn you down. Well, maybe some legislators,their staff and their relatives. Maybe a few other self serving lobbyists and there is also a few people who don't care or don't know the facts. Don't let that deter you. You can now get petitions in all 83 counties through county coordinators. Simply click on This Link and you will be able to click on your county and be able to contact your county contact.

 I thought I would answer a few questions that a few people ask.

 Q. How will they be able to get their work done?

 A. They only work 120 days as it is and half the stuff that they are working on should not even be on their agenda. We are only one of four states that have a Full Time Legislature - New York, California, Pennsylvania and Michigan. This should tell you almost all you need to know. The Texas legislature only meets every other year.

 Q.It says that the governor can call emergency sessions, How doe we know that this power will not be abused?

 A.That language is the same as the language that exists in our present constitution and it doesn't happen now. For one thing the legislators would not like being called back and if the governor or his party ever expects to get elected again I don't believe they would want to play that game unless it really was an emergency.

 Q. How can we get quality people to run for office if we pay them so much less?

 A. We did it for 127 years before they decided to rewrite the constitution in 1963 and it was all or nothing for the voters. Quality people will run for office. Look at all these people who are out there working for better government and don't get paid a thing. (I hope we can include you.)

 Q. How will I know what to do to collect signatures?

 A. If you have never done this before, it is as simple as reading the directions on the flap of the petition. It is as simple as asking your friend, family, church or social group members to sign or if you are really dedicated to stand in front of a store or post office or walk your block to get signatures. You can also contact your county contact for events they might have scheduled so that people may sign the petition.

 If you have more questions, we will try to answer them. In the meantime, remember to sign as the circulator at the bottom and that you can collect signatures from all counties but all the signatures on sheet must be from the same county.

Making Full Time a Part Time Reality.

The Wayne County Taxpayers Association will have Part Time Legislature Petitions available at the meeting at Leon's Family Dining on Michigan Ave just east of Telegraph on Wednesday March 26, and May 28, between the hours of 7:00 pm and 9:00 pm.  If you are not able to attend but wish to obtain petitions call 313-278-8383 and we will work out a way to get you petitions.

The weather is warming and spring is almost here. Each day will make it easier to make contact with people after their winter hibernation. Please help us and get a few petitions to circulate. You can also make a request at wctaxpayers@comcast.net . It doesn't take much to ask your friends and family to sign a petition. If we all do a little, it will make the job easier for the rest of us.

Obamacare Strikes Again

President Obama and his administration behave more like thugs everyday.  They behave like we are criminals that need to be watched and intimidated to bring us into compliance with their idea of what is right. We have to put a stop to this before we become the shadow of other countries who are taking to the streets with violence.

There are not just one or two issues to concern ourselves with but a large number of fronts on which he and his administration should be confronted. We have a constitution to which he swore an oath. Our legislators took the same oath to protect and defend it. We need to become relentless in our efforts to hold them accountable.

Please don't let this go unaddressed. If you feel this is not a problem to you now, you can rest assured that it will be a significant personal problem in the future.

Part-Time Legislature Needed

Years ago we almost got our part-time legislature back. We just missed the mark. We also thought that Term Limits would help alleviate some of our problems and it did. Now it is up to us to make another attempt.  A Part-Time legislature just might help them come home to their constituents (they really only work part time anyway) and have to do work in the real world.  

Get a petition and circulate it. We have a much better network now to promote and make contact. Take the petitions to your work, church. clubs and family gatherings. If enough people get involved we can make this an easy job. Do your share and make it harder for the lobbyists to be heard over their constituents. 

If you are unable to circulate petitions, (that means you can't sign your name and have no friends) then you can at least make a contribution for printing the petitions and fighting those special interests that will be trying to defeat the proposal. As a matter of fact, do both.

Lets give this all we have got.
 http://parttimemi.com/

They Come to America II - Free

Wayne County Taxpayers Association Presents

They Come To America II

This is a documentary on immigration that everyone should see.

Wednesday, November 20, 2013

6:30 to 9:00 PM

Leon’s Family Dining

23830 Michigan Ave.

Dearborn, Michigan

( 1/2 block east of Telegraph)

This is a documentary that you shouldn't miss. Immigration effects our economy our taxes, all of our lives.  We agree that something needs to be done, but it has to be something well thought out and coordinated to make things better instead of destructive to our way of life.  The showing is free and you can bring anyone with you.

Please note that it starts a half our earlier than our normal meeting and is a week earlier due to Thanksgiving.

Liberal Fascism At Its Peak

How much more of this are the american people going to take. No one wants to believe that our president is trying to punish those who don't agree with him but the evidence is as clear as the nose on your face. He closed the open air World War II memorial that you just walk by to veterans and others. He closed the Lincoln Memorial that is outside and accessible to walking traffic. He closed the scenic roads that allow stops to view Mt. Rushmore which is not run by the government but a private company, He made people who own houses on government property leave their homes. People who operate businesses on government land were forced to close. In a stunning development, some military priests are facing arrest if they celebrate mass or practice their faith on military bases during the federal government shutdown.

Just before the weekend, the National Park Service informed charter boat captains in Florida that the Florida Bay was "closed" due to the shutdown. Until government funding is restored fishing is also prohibited at Biscayne National Park the fishing boats are prohibited from taking anglers into 1,100 square-miles of open ocean. Keep in mind that the enforcement of these closures cost more than keeping them open.

The worse of all the nonsense is the lack of funding to return our dead warriors to our country and the failure to transport their family to receive them when they arrive. The benefits of the fallen soldiers' families have been held back as well. These funds  have been passed in the house but Senator Reid has refused to bring it to a vote.

As much as liberals speak about bullying in our schools and workplace, our president is acting like a petulant child who is trying to bully and punish the whole country to get his way. The shutdown effect only 17% of our government and he has ordered that they should make it as painful as possible. Even if he denies that he gave the order, he could fix any of these situations with a stroke of a pen.

BIG BROTHER IS WATCHING

This week I opted out of a Smart Meter by calling DTE 's Customer Service (800) 477- 4747. I suggest you also opt out. While your at it tell your state and federal senators and representative that you don't want them either.  I was moved to do this as a result all the bad things I was hearing about them. People have reported health problems of all kinds.  In addition to that, the privacy issues were screaming in my head. I was watching a commercial on a security system where you could control your heat, lights, air conditioning and a camera in your home from your cell phone.  Smart Meters have the same type of technology. Your energy company would be able to do the very same thing.

The recent NSA scandal only makes this more horrifying. Companies have been cooperating with the government to monitor phones, email, personal pages and anything else can get their hands on. The most recent findings are that the government was sharing information from and with the IRS.  

This is a big issue. With the flick of a switch they can learn more about you and your habits than your family members.

 For those of you who do not know what a smart meter is, please click on the links below.

Michigan: Smart Meter Education Network

Smart Meters- Stop the Invasion!

Michigan Stop Smart Meters

IMPORTANT INFORMATION for all Allen Park Voter/Taxpayers!

 By Tim O’Brien

The Allen Park Emergency Manager

recently released a video of FAQ’s to

answer some “Frequently Asked

Questions” about the 6¾ mill tax increase

she has placed on the August 6th ballot.

State law does not permit public officials

to use tax money to advocate a tax

increase so the questions and answers

were carefully selected.

But before you vote on August 6th you should also consider the Frequently Avoided Questions

Q. How much will this millage cost the average Allen

Park homeowner?

A. As our Emergency Manager says: 74¢ a day. But

thinking of it as “less than the cost of a cup of coffee

or a soft drink” is, ironically, exactly what financial

planners warn people against doing! This tax increase

will cost the average homeowner $270 per year —

$2700 over the ten years it will last. Or to put it in the

most familiar context, an additional $22.50 a month

into mortgage escrow for the next decade. Assuming,

of course, a house with an SEV of $40,000.

 
Q. Will this millage go exclusively to providing police and

fire services?

A. That is a meaningless distinction. The city has only

two checkbooks -- one for water and sewerage and

the other for everything else. The basis of the claim is

that since 6¾ mills will generate almost $5 million in

annual revenue while expenditures for public safety

are more than twice that amount, it can be said that

the money raised is being spent there. That, of

course, frees up $5 million that went for police and

fire services last year to be spent on other things. It's

the same shell game that was played on voters years

ago when they approved a state lottery on the promise

that the revenue generated would go to education.

Money is what economists call a "fungible

commodity.” Just as one glass of punch is like every

other one dipped from the same punchbowl, one

dollar is just like every other one taken from the same

general fund. There is no way to ‘earmark’ it.

Q. Have residential property taxes really decreased 28%

in the last five years?

A. That's difficult to answer without knowing how the

calculations were made. But what does it matter to

individual homeowners in any case? The important

question is: Has your property tax bill decreased 28%

in the last five years?

Q. Are home values predicted to continue to decline?

A. Not unless recent trends suddenly reverse and values

start down again. The Zillow real estate website

shows current Year-over-Year selling prices for

homes in Allen Park at +12.4%. The Trulia website

puts the Y-o-Y number at +17.7%

Q. If this millage passes, will no additional tax increase

requests be made? Also, if fiscal stability is restored,

might this increase even be rolled back?

A. Both are speculations, not commitments. There is

nothing in the proposal that even hints at either one.

Q. If this millage proposal fails, what changes in city

services can residents expect as a result of the fallback

"Plan B"?

A. That's impossible to say. However, whether or not the

dire predictions are a 'scare tactic’ as some have said,

consider the warnings from public officials before the

last proposed millage increase — that if it did not

pass, the city's recreation center would close. The

millage failed. Stop by the rec center and interrupt all

the activities there to ask if it’s closed.

Q. Isn't that because operation of the rec center was

given over to a private company?

A. Indeed. And that certainly suggests what will actually

happen if this millage fails. At the top of the list of

services ripe for turning over to a private provider is

EMS. In this era of fireproof everything and smoke

detectors in every building the function of the fire

department has become primarily providing an

ambulance service. This doesn’t require a full-time

staff of 28 and such expensive equipment as, for

example, our 100-foot ladder truck. (In fact there is

the only one building in the entire city tall enough

where this specialized vehicle could ever even

possibly be needed -- which is probably why the only

action the truck has ever seen is in parades.)

 
Q. What has been done to reduce the $3 million per year

cost of providing health insurance for the city's 220

retirees?

A. Nothing yet. However, beginning in the new fiscal

year prescription co-pays will be increased to $10 for

generic drugs, $20 for preferred brand name drugs

and $30 for all others — from long-standing co-pays

of $1, $2 and $5 respectively. In addition both

current and reired employees will begin paying 20%

of the premium for their health insurance plans (that,

incidentally, will provide coverage that — like the copays

— will be closer to what most taxpayers have.)

Q. Have current employees been switched over from

"Defined Benefit" pensions to 401(k) type "Defined

Contribution" pensions?

A. No. And even though this — along with the goldplated

health insurance plans — is what bankrupted

two of the Big Three, it isn't clear how or when the

transition even can be made. Although government

employees — city and county, along with teachers —

are the only workers who still have this open-ended

benefit, ever increasing life-spans have made the cost

of funding it so enormous that the system cannot

afford to allow current employees to rto redirect

retirement savings into their own 401(k) accounts.

The contributions they make under the current

system are essential to continue paying benefits to

retirees.

Q. Hasn’t anything been cut from this year’s budget?

A. Yes. Pay for the mayor and council was cut by 50%

for an annualized savings of $24,000 and curbside

pick-up was transferred from DPS to trash contractor

Republic Services for an additional $200,000 per year.

A.

Q. Do appointed city employees really get 90 days of

annual sick leave?

A. Yes. Though that three months of sick time per year

will be changed to 12 days per year beginning with

the next fiscal year.

 
Q. Has the pension "spiking" been stopped?

A. No. Though this is something else that is scheduled

to be eliminated next fiscal year. In the meantime,

however, at least three — and perhaps more — city

employees will be using the (borderline fraudulent)

tactic of banking all of their vacation, comp time and

unused sick days to and converting them into cash to

enhance their last year's salary. The 2.9 pension

multiplier is then applied to this artificially inflated

pay scale to calculate their retirement benefit — a

“spiked” amount they will then draw for the rest of

their lives.

Q. 2.9 multiplier? Isn't that higher than average?

A. Higher than average? It is the highest in the entire

state! It is double the typical 1.25 to 1.5 range.

Adjusting it down to 2.25 is another change to begin

next year. Strangely, this is still 50% higher than the

1.5 pension multiplier that is part of Governor

Snyder’s “Best Practices” program for local

governments. Perhaps we can get our EM to confer

on this with the person who appointed her.

 The Bottom Line

Our experience with an Emergency Manager makes you wonder why people were so worried about giving an unelected official so much power. The Allen Park E.M. has done almost nothing to address our structural deficit. No property sold. No bonds renegotiated. No consolidation of services with other cities. No staff reductions. Not one provision of one labor contract has been revised. The only

substantial steps she has taken is to borrow another $2 million, and then put a proposal on the ballot to raise taxes by $5 million a year for the next decade.

They will only raise our taxes as a first resort!I

 

I need both the funding and some volunteer help to do the lit drop the week before the election.

Any help you can offer -- or point me to -- with either or both will be greatly appreciated.

TOBrien@SmallGov.us  

 313-359-7820

 Small Government Committee _ PO Box 118 _ Allen Park, Michigan _ 48101They