2012/13 Budget: $4.3M cut; Employees told of lay-offs


The city is expected to release its budget on the city’s website on Friday, March 30.  The following letter signed by Mark Vanderpool was distributed among employees today:

March 29, 2012

Dear Employees:

Later today, the City of Sterling Heights will issue its Proposed 2012/2013 City Budget.  The proposed budget totals $133.3 million, a decrease of $4.3 million as spending will fall to its lowest level in nine years.

Due to lower property tax revenue, lower state shared revenue and the potential loss of industrial personal property tax, the city continues to implement its long-term financial plan.  The primary components include reduced expenditures, revenue replacement including economic development initiatives (to grow the revenue pie) and partial use of reserves.  As many of you know, the city has reduced expenditures through position reductions, expanded use of technology, innovative partnerships, employee concessions, use of part-time employees, and the use of volunteers.

While these expenditure reduction efforts are significant, they are not enough to address the projected $11 million in revenue loss over the next few years due, in large part, to a seventh year of property tax revenue decline and partial loss of the personal property tax.  As such, in order to remain financial viable, further position reductions are required.

The proposed budget that will be sent to the City Council for consideration includes the elimination of 32 vacant positions, which will save the city $2.7 million.  Also, for the first time in decades, the proposed budget includes layoffs affecting 27 full-time and 9 part-time positions to reduce expenditures by another $2 million.  The reductions will be implemented upon approval of the budget and will be effective July 1.  Over the next year, further collaboration is required with stakeholders including City Council, residents, businesses, employees and union leaders to determine the level of service desired, along with required funding, compared to continual reduced city service levels under the current declining revenue environment.

Today I am, along with department directors and union leadership, meeting with employees that are affected by this announcement.  During our conversations with these individuals, I am expressing our deep regret knowing the impact on our employees’ lives.  I will also outline eligibility for support services that will be provided including; a severance package, unemployment benefits and, in some cases, an Early Retirement Incentive Program for those not currently eligible to retire.  In addition, the city will be providing outplacement services for full-time employees to assist with resume writing, honing interview skills and connecting with employers currently hiring.

It troubles me greatly to convey this message today, but maintaining a financially secure organization is our chief responsibility to the residents and taxpayers of Sterling Heights.  I urge all of you to become more familiar with our financial plan and Proposed 2012/13 City Budget. I also invite you to review the Proposed Budget and all of the supplemental information online beginning tomorrow at http://www.sterling-heights.net

One of the great sources of pride we share as a team is care, support and compassion for one another.  Even if you weren’t directly impacted by today’s news, please continue to show your co-workers the kindness, empathy and understanding that you would appreciate if placed in this unfortunate position.

– Mark

It’s unfortunate that people are being notified they will lose their jobs this summer, but it is heartening to know that the transition will be eased with outplacement services and several months of continued employment.  Presumably some of the jobs might be retained depending upon the direction Council takes.

Any cuts made are bound to be painful.  However, it remains to be seen whether the budget goes far enough towards restoring the city to a sustainable financial circumstance.

One thing Mr. Vanderpool says in his letter seems to foreshadow the possibility of a proposed tax increase:

Over the next year, further collaboration is required with stakeholders including City Council, residents, businesses, employees and union leaders to determine the level of service desired, along with required funding, compared to continual reduced city service levels under the current declining revenue environment.

The bolded text above indicates to me, at least, that there is momentum building for another tax increase in Sterling Heights.  I am not convinced that this is something residents can afford under any circumstances.

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Posted on March 29, 2012, in Where does the money go?. Bookmark the permalink. 2 Comments.

  1. Concerned Citizen

    These cuts are nothing more than a bandaid on a bullet wound. The City won’t make any progress until the overly generous pension and benefit programs of the Police & Fire department (and maybe other departments as well?) are modified.

    Pension plans that give Police & Fire department employees their full regular salary (or more) for the balance their retirement are irresponsibile for a city (or any employer for that matter) to provide. There’s a reason why almost all private sector employers have frozen their pension plans at current levels and replaced them with 401k plans that can be contributed to as the employer’s budget permits. Why should SH should be an different? Ferndale did it a long time ago.

    Retired employees (or their Unions) should also be responibile for managing their healthcare costs as well. The city should provide HSA’s and nothing more, just like the private sector employees who pay their salaries get.

  2. Most residents from the City of Sterling heights do not realize that police and fire can retire with 70% pensions and full medical benefits ( spouse included ) for the rest of their lives after only 25 years of service. That means that if a person starts in the police or fire dept. out of school, say at age 22, he could retire at age 47 with a full pension and medical benefits until age 65.( medicare starts then ) Not a bad deal ! of course we as residents all pay for it. Time for a change ?

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