For the first time, village officials have looked at the future of their budget and they don’t like what they see.
It’s possible, based on some current assumptions in salaries and health care, the Village of Lake Orion will have a negative fund balance of over $31,000 by 2008.
Lake Orion Village Manager JoAnn Van Tassel attended a seminar on financial planning tools last January. ‘Several municipalities were using forecasting. They seemed to have a better handle on things,? she said.
She asked the village’s financial director Jan Adams to put together information on the village’s budget through 2008-09.
‘She loves doing things like that. Jan did all the legwork. It was a wake-up call,? Van Tassel said. ‘Unless health care insurance costs change we’re not going to be in business.?
This year’s budget shows a budget of $2,019,600, expenditures of $2,250,250 and a fund balance of $347,440.
The future budget projections were based on salaries increasing using the current rate of inflation and health care costs going up 15 percent a year.
Village council members have made changes in its health care program and are working with village bargaining units for implementation.
Because prescriptions are so high, village officials would like to see its employees pay $10 for generic drugs, $40 for brand names. Higher deductibles would also help
According to Van Tassel, the village took a big hit in its finances when it changed its retirement program allowing employees 30 years and out. Thats when longtime employees starting retiring retired.
The village pays out retirement benefits to nine people (two from administration, three from the police department, four from the department of public works).
Although the village has replaced these retirees with younger people at earlier steps in the village’s pay scale, that’s not really a plus, Van Tassel said.
‘The village has to contribute a higher percentage to funding pensions than it did in the past,? she added.
Plus, younger employees have families and that adds up to higher health insurance costs.
‘It would be more cost effective if we could hire only single people, but obviously we can’t do that,? Van Tassel said.
The state’s poor economy isn’t helping either. ‘Our revenue sharing has been cut three times, she added. ‘To balance the state budget, the legislature has taken some of the gas and weight monies and issued them to the secretary of state. The state gets its share first.
‘Gas taxes haven’t been raised in a while and as vehicles become more gas efficient, less gas tax will be paid.
‘Everyone suffers. We’re no different than the schools and private industry.?
Village officials have no plans to lay anyone off. ‘We can’t afford to lay anyone off. We have to provide services,? Van Tassel said.
Council members are also asking the Downtown Development Authority board to help more with general fund expenditures.
Van Tassel said the DDA is being cooperative, asking that the village identify future projects it would like the DDA to pay for so it can be planned for in future budgets.
Half of the money to pay for the paving of Atwater Street is being paid for by the DDA. It’s paying 100 percent of the cost of paving Flint Street from Orion Road to west of M-24.
Despite all the tax base growth in the village, Atwater Commons, Walgreens, Tire Warehouse, etc., the village isn’t getting any of those additional funds. All the growth is occurring in the DDA district which allows it to capture new tax money.
Community Development Block Grant funding has decreased. Van Tassel said the village used to receive around $13,000. That’s dropped to $7,500.
What’s the best thing that could happen to help the village’s finances?
‘We need to get the state’s economy going, turned around? Van Tassel said. ‘People will be paying more in taxes.?