Why it's important to embrace a 38% increase

Supporters of Ferndale's Headlee override proposal this May shouldn't run away from or deny it's an increase of 38%.  Instead they should embrace it, promote it, and use the magnitude of the remedy as a measure of how crippled the city may become without the millage's passing.

One of my favorite lines from "Clear and Present Danger" occurs when the president's advisors are discussing what to say about the discovery one of the president's close friends was laundering money for a drug cartel.

From FilmSite.Org:

The President's advisors suggested that if the news became public, they could defuse it by downplaying the President's association with Hardin. Ryan suggested the opposite - if the President were to be asked if he and Hardin were good friends, he should answer: "We're lifelong friends...There's no sense defusing a bomb after it's already gone off."

The budget bomb has gone off in Ferndale just as it has the rest of the country.  Pretending the collateral damage is a measly 11% is a whitewash of the problem and insulting to voters' intelligence.

Ferndale's operating millage is currently 14.5448 mills.  If approved, the May ballot proposal will allow council to raise that rate to 20 mills by 2013.  To keep all the deniers honest I'll show my work.

20 - 14.5448 = 5.4552 (the increase)
5.4552 / 14.5448 = 0.375061878
0.375061878 * 100 = 37.5061878% (the percentage)
round(37.5061878) = 38%

Another way we can find this number, or one very close to it, is by figuring out how big the deficit is as a percentage of the revenue Ferndale's general fund receives from property taxes.

According to the budget estimates for fiscal year ending 2012, Ferndale anticipates property tax receipts of $7,573,000.  The budget deficit is estimated in the same document to be $2.3 million.

2,300,000 / 7,573,000 = 0.303710551
0.303710551 * 100 = 30.3710551
round(30.3710551) = 30%

So, which property tax increase do you think has a better chance of covering a 30% hole; a 38% increase or an 11% increase?

Some people confuse my supporting FACT's publishing the millage is a 38% increase over the Yes to Ferndale's Future's 11% increase as evidence my support for the millage is superficial.  What it really demonstrates is my commitment to honesty and integrity, especially when lying is too easily proven by doing simple math (which I think should be a prerequisite to running for office).

Saying the increase is anything other than 38% is an attempt to make the tax increase more palatable to voters.  This is also known as spin, and is disrespectful to voters and property tax payers.

11% is wrong not just because it's unsupported by math, but because it trivializes Ferndale's desperate budget situation.  If the budget was only short 11%, then I'd advocate a NO vote and demand city council find 11% to cut.  An 11% deficit is not an emergency.  An 11% deficit does not warrant a Headlee override.

Instead, our budget deficit is an emergency.  The city can not replace over 30% of its revenue with traffic tickets or parking meter fines.  Our city's obligations to its retirees, whatever voters think of its extravagance or past-councils' approval of such rich benefits, can not be addressed with budget resolutions, wishful thinking, or understatement.

No, our city's deficit is real, it's large, and it requires appropriate and proportionate action to remediate.

There are other problems with both the Yes and No camps' literature and public statements I may address in future posts.  In February I recommended to voters what they should do in both May and November, and unless someone proves my numbers wrong I stand by my recommendations.

Oh, Farmdale is the place to be!

After reading various stories in the Ferndale 115, Ferndale Patch, and The Daily Tribune, I couldn't get this song out of my head.  So the only natural thing to do, was to share it.

(Sing to the tune of Green Acres)


Oh, Farmdale is the street for me
Coops of chickens laying eggs for free
Spreading feces on my garden plot
I'll pretend I'm a farmer and care for my neighbors not

 When I bought my house I felt lucky
Now, I'm living in Ferndale-tucky
I have a chicken coop next door
As if housing values weren't low enough before

.. Group think!
.. The stink!
.. I'll share!
.. Don't care!

 Madison Heights had 'em first
Ferndale couldn't do worse
Oh, Farmdale we are there!

Not paying our way

At Monday's council meeting I was reminded how big a debt I'm leaving behind for my kids to pay, and every voting-age adult should be ashamed.

Bluntly, if the ladder truck approved for purchase Monday night is so important to Ferndale then we ought to have paid its entire cost ourselves and not depended on a FEMA grant.

The truck's cost was $964,512.  Here's how those costs break down:

FEMA Grant	$675,000
Federal Taxes		$405,000
Federal Debt		$270,000
City of Ferndale	$289,512
Matching funds		$75,000
City Funds		$214,512
Total Cost	$964,512

Some budget crisis, eh?  With one vote city council spent nearly a whole millage point of property tax revenue.

Ferndale Fire Chief Pat Sullivan noted the department's been without an operable ladder truck for quite a while.

So at a time when federal, state, county, and city budgets are bending under the weight of the economy, the United States of America, all its taxpayers and the world's biggest lenders chipped in nearly $675,000 dollars for a fire truck to serve a city of 19,900 where only 5% of 2009's 2277 runs were fire emergencies.

It's important to have the right equipment for the job, and that truck may be the right equipment.  But if it was that important to the council and residents of Ferndale, perhaps Ferndale residents should have paid for it themselves.

The question that needs to be answered is if we had to pay for it ourselves would we have bought it?

Certainly, if we had to pay for it ourselves there would have been more discussion and its necessity would have been more thoroughly analyzed.  We may still have purchased it, but we would have done so without depending on taxpayers from around the country and borrowing money the country's taxpayers will still be paying long after the truck is no longer in service.

What immigration giveth, emigration can taketh away

[Note: This article originally appeared in the April 2011 edition of Ferndale Friends] 

I promised Ferndale Friends’ interim managing editor I wouldn’t write anything about a specific ballot issue on May’s ballot for which the publish-date of this edition of Ferndale Friends presents an opportune time to promote my position on the subject.

Geography is against me here. The place to discuss the issue I’m not allowed to discuss is elsewhere discussed in this magazine. For this issue, at least, this column’s space has become a don’t-discuss-the-thing-you’re-not-supposed-to-else-you’re-sleeping-in-the-garage zone.

If that wasn’t hint enough, the interim managing editor is my wife, Tiffani (Hi, babe!). So for a while I can get away with admitting I think my boss is hot.

It is Lent, which means that for the 40 days leading up to Easter many Christians will either give something up or try to do something positive so they may become better Christians, or better spouses, students, or maybe just thinner. Many people will take a Mulligan on their New Year’s resolutions.

This Lent, I thought I’d try something similar and not criticize city council or even try writing something nice about each of them. But criticizing government isn’t really a vice and writing nice things about council wouldn’t fool anyone for a minute, so we’ll just see how it goes. I’ll definitely stick with my promise to Tiffani and not discuss the burning question on everybody’s mind as they head out to vote on May 3, “Do I need to bring a #2 pencil?”

The new Jamestown?

The latest census numbers show Detroit lost a quarter of its residents and Ferndale a tenth of its population.

Mayor Bing will likely both challenge Detroit’s numbers in court and go looking for uncounted Detroiters throughout the city’s 139 square miles.

It’s been said the two largest school districts in Michigan are Detroit Public Schools, and Detroit Public School students attending non-DPS school districts.

If estimations of Michigan’s second largest school district are accurate don’t be surprised to find Mayor Bing and DPS Emergency Financial Manger Robert Bobb driving through Centerline, Hazel Park, Ferndale, Oak Park, and other Detroit-bordering school districts looking for Detroiters that have falsified their addresses.

My favorite quote concerning Ferndale’s loss of 10% of its population (2205 people since 2000) came from Ferndale Mayor Dave Coulter in the Ferndale Patch, “"My job is to make the city the best place I can for the people here now.”

(I’m counting that as a nice thing said about council.)

What I like about Mayor Coulter’s comment is its pragmatism. Neither nostalgia nor spin color his perspective. He doesn’t hearken back to images of Ferndale’s past when Irish Catholics bunked children one atop the other in bedrooms and closets.

Pundits, politicians, and cheer-leaders are tripping over themselves in the press, online forums, and Facebook trying to convince the remaining population that losing 10-20% of the population was expected, and that plans are being made to tie meat around south-east Michigan’s neck so Millenials will play with us.

Exactly how many Millenials does it take to screw in a compact fluorescent light bulb, replace the economic activity of 2205 residents with beer and Buffalo-wings, or repopulate our school system?
In case you’re unfamiliar with the definition of Millenials, they’re typically described as 20-somethings. But they’re not just in their 20s. Millenials are also in their teens, tweens, and many still have their baby teeth—and Ferndale lost over 1200 Millenials under the age of 18. Statistically, I’m not as confident as Craig Covey that folks in the narrow age range of 18-to-30 exist in sufficient numbers to make up the difference.

(Craig isn’t on council anymore so I don’t count that as a criticism.)

According to a focus group on the Craig Fahle show (March 28) 20-somethings are just as likely to uproot themselves from cool cities after they start families and go on the hunt for high-performing school districts as their parents’ generation did.

For a different perspective on our region’s population loss we need to back up 130 years-or-so to the late 1800s when waves of Italians arrived looking for opportunity, or the Irish before them.

If that’s too far back we can look at what put Detroit on the population map and gave it the one of the nation’s highest median incomes—the auto industry.

Between 1900 and 1930, Detroit’s population ballooned from 265,000 to 1.5 million with immigrants from other states and countries. 100 years later, people are now emigrating to opportunities elsewhere.

Can we blame them? Should we hold them back? Should we discourage our loved ones from seeking their fortunes in the southeast or southwest or anywhere else they’re lured by the century-later equivalent of $5/day?

Not if we want them paying our Social Security and other government health and retirement benefits.

We should be proud of anyone that leaves to seek their fortunes elsewhere. They’ve more in common with the people that came to Detroit 100 years ago and built the Paris of the West than they do the tour guides at The Coliseum.

Well, we’ve made it this far and I’ve kept my promises.

If you have comments or criticisms for me don’t wait for a religious holiday. Write me at tggagne@gmail.com.

Wow, Ferndale's population decline worse than previously reported

More census data is in and the news is worse for Ferndale than previously reported.

The Ferndale Patch reported this morning that Ferndale lost 2,205 residents, over twice the 963 reported earlier in the year.

Complete age break-downs aren't available yet, but the number of eligible voters (18+) has been released and those numbers fell to 16,615 from 17,601 in 2000 or 5.5%.

Apparently, the in-flux of millenials (born between the mid-70s and early-2000s) isn't what we thought it was.

In Ferndale, we hear a lot from politicians and other community activists about how the face of Ferndale is changing because of the increased number of residents under 30.  But is that more propaganda than fact?

65% of Ferndale's population loss, or 1209 residents, were under the age of 18.  Even though they can't vote yet, that's half the Gen-Y population.

There's no data to prove it, but it may be that politicians and others are commenting more on the visitors to Ferndale's downtown than folks that actually live here.  If our downtown's population has increased between the hours of 8PM-2:30AM, it's fair to ask our council persons, DDA, and other armchair policy quarterbacks if that is the population our ordinances, zoning, and budget decisions should be based on.

Add pit bull terriers to the list

Like many people, I read with horror the story of the 10-day old child that was mauled to death in Jackson while sleeping in a basinett.


As reported in today's Detroit Free Press:

The mother of the boy said she laid her son down for a nap in the bassinet and fell asleep in another bedroom. The pit bull entered the room and attacked the sleeping infant.

Officers said a preliminary investigation has not uncovered any negligence at this time.

If I give the parents the benefit of the doubt and assume they're as responsible as ourselves in matters both of the child and the dog, the only guilty party is the pit bull.  The parents, providing they've any sense of humanity, will be tortured the rest of their lives for the gruesome death of their child.

I wonder if they'll ever question their choice of dog breed.  I wonder if they'd ever bring suit against the breeder or pit bull advocates for defending the breed in light of the evidence against it.


It reminds of cigarette companies and their defending cigarettes from the mounting evidence of their negative health affects, and the massive lawsuit and windfall that became for states.


Nothing similar will likely happen with pit bulls, rottweilers, or other dangerous dog breeds.  There simply isn't enough money to make it worthwhile for lawyers to start the campaign pro bono.


The question is, does the government have the right to tell citizens which animals they may or may not have?


The answer, at least in Michigan, is yes.  There are many animals citizens are restricted from keeping including  stock, exotics, endangered species, and wild animals.  


And eventually, maybe pit bull terriers and Rottweilers.


Would laws banning pit bulls and related breeds be for the family's protection or their neighbors?


Similar to smoking, the state has already decided it can violate private property rights and require property owners to prohibit smoking in their own bars and restaurants.  I'm not a big fan of that law but it is a Camel's nose under the tent.


In 2011, is there any practical reason to have any breed of dog in a residential area except that people want them?  After the feeding, vet bills, and poop scooping, isn't it less expensive just to get a burglar alarm?  No one has ever had to pick-up after their Guardian Alarm System in my lawn, nor has anyone's kid had to wipe the ADT stickers off their pants after playing in the park.


PS  While looking at pictures of pit bulls through history I noticed they seem to look different today than the pictures I found at SaveABull.com.  I wonder if something different hasn't happened in their breeding that can be reflected both in how they look and their disposition.

Yes in May, No in November

[Note: Unlike other of my posts, I reserve the right to make changes or corrections to this article.  Specifically if my math or facts are off a bit I'll correct them.  And I may change some statements to emphasize or de-emphasize a point.  If necessary, errata will be noted at the bottom of the article.]

Ferndale voters should pass the Headlee Override ballot proposal.  Then in November they should begin the process of replacing city council persons that would rather spend money on pet projects and self indulgences with candidates that promise restraint and self control.

The first part can be done quickly on Tuesday, May 3, in only a few minutes time.  The second part, replacing council persons with shorter "what I want to do for you" agendas with replacements promising "my agenda isn't as important as the city's" (as well as the ability to do simple math) will take over 33 months and longer-term memories than voters are normally reckoned to possess.

Households must manage their budgets, as should governments.  When a household's income is reduced its expenses must be reduced, depending on how much cash has been saved.  When a household can't meet its legal obligations (mortgage, utility bills) or its needs (food, clothing), the household is bankrupt and its assets liquidated to pay-off its obligations.

The popular theory is that governments should do likewise.  When their revenue shrinks so should their expenses. Just as employees don't have the privilege of demanding increased wages from their employers, governments shouldn't demand increased taxes from their citizens.

The difference is we created our government and charged it with the responsibilities of both custodian and guardian.  Its custodial responsibilities include the stewardship of public assets like buildings, property, parks, and infrastructure like streets, drains, and lighting.  It's also a guardian of the public and the public's assets through public safety and in keeping the peace between neighbors in the area of establishing and enforcing zoning ordinances.

But because we created it we are also responsible for it.  We are responsible for electing its trustees and for providing them the resources needed to discharge their responsibilities.  But citizens are not required to provide the resources for the trustees pet projects, pipe dreams, or indulgences.

That is why this article makes two related recommendations.  The first is to pass the Headlee Override requested by city council and recommended by the 12-member Financial Planning Committee so that the city may have the resources needed to meet its duties to the citizens.  The second recommendation is to replace at least three city council persons that have proven their willingness, or compulsion, to spend taxpayer money on frivolous and indulgent projects even when facts and economic conditions urged otherwise.

The immediate issue at hand, however, is May's ballot issue to increase property taxes by 5.4 mills through 2015.  There's is enough time before November to discuss council elections in other articles.

Many pass-the-override advocates point out it may take years to return to 2009's nearly $20 million revenue number.  They're correct in that it will take years to return to that revenue, but they're incorrect in using 2009 as the benchmark against which subsequent years should be measured.

They are wrong because 2009's $19.5 million budget was based on property taxes collected on 2007's inflated property values.  It's important to remember that inflated means the property values were irrational.  They were irrational because Ferndale's property values were not grounded on any objective measure like scarcity of land, Ferndale's location, the performance of its school system, job or population growth.  Instead, like real estate all across America, property values were based on speculation, weak mortgage qualifications, and a similar irrational exuberance that created the Internet Bubble that burst in 2000 and the savings and loan crisis that exploded in 1989.

So to find a rational budget number to begin with it is necessary to look at tax revenues before the housing bubble started; 2002/2003.  Since taxes are collected approximately two years after assessments a better budget year to begin with is fiscal year-ending (FYE) 2005's more modest $17 million ($16,955,150 to be more accurate).

To come up with some a grounded estimation of what our budget should be we can index 2005's budget to the rate of inflation and come up with more rational numbers ($ in millions):

FYE	Inflation	Actual Revenue	"Rational"
2005	2.68%	$16.9552	$16.9552
2006	3.39%	$17.3681	$17.5299
2007	3.24%	$18.7683	$18.0979
2008	2.85%	$19.0812	$18.6137
2009	3.85%	$19.5104	$19.3303
2010	-0.34%	$18.4913	$19.2646
2011	1.64%	$16.8639	$19.5805

So using an inflation-based, rather than an inflated-based projection, this year's budget should have been closer to $19.6 million rather than the $16.7 million it is, which is $2.9 million short of the indexed-to-inflation 2005 budget amount.

State revenue sharing also has a major impact on the city's revenue.  In 2005 Ferndale received $3.2 million, or 18.9% of its budget, from the state.  In 2011 that amount is budgeted to be $2.2 million--40% less than 2005's contribution adjusted for inflation, and only 13% of the budget.

If the numbers in the table above include state revenue sharing, the case for passing the Headlee amendment is only slightly less compelling with those numbers removed.  2005's revenue less state revenue sharing was $13.7552 million.  Adjusted for inflation that number should have been $15.8850 million in 2011, but will only be $14.6639 million, or $1.2 million short of where it rationally belongs.

If, as former city manager Bob Bruner estimated, each mill levied in Ferndale property taxes will generate about $500,000, then non-state-revenue sources are approximately 2.4 mills short.

Coincidentally, May's ballot language calls for limiting the first year's Headlee Override to just three mills.

Citizens created the government and have elected its trustees.  Dissatisfaction with council's earlier spending is, at least in the case of local elections, not a legitimate reason to vote no on the millage increase.  Nor is starving the beast a substitute for electing more fiscally conservative and market-aware  trustees.  Both the city's budget and its council need correcting, but medicine for one is not medicine for the other.  Even if the current council had a better record of fiscal restraint the millage increase would still be necessary.

In May voters should pass the millage.  November may require something different.

Errata
2011-2-24  Mike Shuler pointed out that immediately below the chart, 19.6 - 16.7 = $2.9 million,  not $1.9 million.

---

Inflation calculator
http://146.142.4.24/cgi-bin/cpicalc.pl

Inflation chart
http://www.inflationdata.com/inflation/inflation_rate/CurrentInflation.asp

Ferndale Budgets
http://www.ferndale-mi.com/Services/Finance/Overview.htm

Financial Planning Committee's 1/10/2011 Presentation to Council
http://www.ferndale-mi.com/Resources/Agendas/FinancialPlanning/2011/110110Presentation.pdf