The Royal Oak Republican Women's Club

Serving Royal Oak since 1938


Fiscally Conservative City Finances - Tuesday, September 18, 2007 - M&M Senior Center

City Commissioner and Mayor Pro Tem Mike Andrzejak Presenting


Mike Andrzejak, Royal Oak City Commissioner and Mayor pro Tem, discussed a fiscally conservative approach to City Government. City Commissioner Stephen Miller, Charles Semchena and Andrew Androff, all candidates for the Royal Oak City Commission this fall were also present. Mr. Andrzejak gave several examples from the past of how a conservative fiscal approach to city government could provide savings, for example:

The sale of the old senior center to the Fresard family by the Block Grant Committee and using the proceeds to build the 33% larger current Senior/Community Center on Marais.

Incorporating a new boys and girls center into the new Salter Senior Community Center, rather than spending $100,000 to upgrade the previous old boys and girls center.

Purchase of the 60% county portion of the Royal Oak Farmers Market by the City of Royal Oak. The money made by the Farmers Market is now fully returned to the City, and the market is becoming more self sufficient.

Each of these projects was accomplished by identifying a need or goal, determining how the dollars should be directed to meet the stated objective, and staying within the city budget. Budgets are a useful tool for City Government: they provide guidance to decision makers and constrain spending to pre-set limits. Royal Oak’s Budget has been on a stable footing since the 1920’s. Today our economy is slowing and we need to keep alert for cost saving opportunities in the face of rising costs.

There are 355 employees in Royal Oak; 350 get full health care. Labor contracts have been re-negotiated but only affect new hires, we still need concessions from the current employees. A SEMCOG Study show that RO workers earn more, on average, than the citizens of Royal Oak earn.

It is the fiduciary duty of the Mayor and the City Commission of Royal Oak need to reform the system to bring our expenses in line with projected revenues now and for the future. The bureaucratic system tends to maintain the status quo on spending, and the easiest solution for new or improvement projects is to raise taxes.

Mike Andrzejak suggested 10 new ideas that could reduce costs, so that new taxes/millages would not have to be levied. These are efficiency improvements in the system. Expenditures need to be lined up against revenues. Commissioner Stephen Miller suggests setting a template for the budget.

  1. Labor contracts need ongoing negotiation to reduce spending. The city has 70 health plans to administer; other cities have three or four. Manpower costs are 80% of the budget. This is the biggest challenge for the City.

  2. Core City Services are: Fire, Police, Clean streets, and Waste removal. Other services that enhance our Quality of Life need to be prioritized, and some need to be outsourced and /or cut.

  3. The County Assessor’s Office can be used for the assessment of RO elections.

  4. Human Resources could be outsourced.

  5. Parking meter pay times could be increased to cover longer hours, e.g., 10am to 10pm, to take advantage of the evening visitors who come to Royal Oak.

  6. In 1993, parking ticket revenues were earmarked for a new court building (20%). The rest went to the general fund. Now that the new court house is done, there is $1.1M that can be transferred back to the general fund, leaving the court it’s requested $600k to meet its needs.

  7. The Treasurer has been working to refinance the city’s debt to lower interest rates.

  8. Unfilled positions (some 40-50) can be dropped from the budget, since they are still part of the expense. Twenty positions equal $1M.

  9. The Enterprise Fund is made of business entities owned by the City. They all need good oversight to assure that they are self-supporting, and competitive:

    • Farmer’s Market
    • Golf Courses
    • Ice Arena
    • Parking system
    • Other?

  10. All recreation has been lumped into Parks and Recreation. Their Board holds monthly meetings, and apparently little time is spent on oversight of these enterprise entities. As a result, items are not covered by the CC as they do not get on the agenda.

A comment was made from the audience regarding the The Mackinac Center for Public Policy which has developed recommendations for City Governments. Mayor Andrzejak acknowledged the center as a useful source for information.

Mike Andrzejak summed it all up by saying that it’s important to make sure that City government can change, since the bureaucracy functions by maintaining the status quo. Improvements in inefficiencies at all levels must be considered first when economic challenges arise.

We must live within our budget and find creative ways to change our governmental structure to assure the most efficient system. Millages are not the answer to every need.

Relevant information links

  1. Wikipedia Definition of Fiscal Conservatism
  2. Cliffs Notes on Economics and Fiscal Conservatism
  3. Michigan Act # 72 of 1990: local govvernment fiscal responsibility act

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