FAQ - Special Millage Election
Is it true that although the City millage rate may increase by up to 1.90 mills, my overall 2010 tax bill will still decrease compared to 2009?
- Yes, assuming no changes to other taxing jurisdiction millage rates, except for the 1.9 Mill City proposal. Here are examples of the effect of the 1.9 Mill proposal on eight different valued homes.
I keep hearing that my City taxes on my home will increase 29% with the passage of the proposal. Can that be true?
- No. Your City tax bill will not increase by 29%. While the Operating Millage may increase by 1.9 Mills with the passage of the proposal, Operating millage is only 70% of the total City taxes you pay. You also pay Capital, Debt, and Refuse taxes to the City. The current total City millage rate is 9.28 Mills.
Taxes are a function of Rate (Mills) times Value (Taxable Value), or T = R * V. This is important to understand.
A 1.9 Mill City increase is 20% above the 2009 'Rate', not 29%. However, coupled with an estimated 12% drop in the average Taxable 'Value' the actual change in City taxes is 3.4%. ($1,151.54 / $1,113.73 = 1.0339). Not 29%, not 20%. It's 3.4%.
While the Rate may increase by 1.9 mills, the Value has decreased. Thus, the overall change
is neither 29%, or 20%, but 3.4%. And this is only on the City portion of your tax bill.
All of the other taxing jurisdictions are expected to show a significant drop in their taxes
on your property because of the reduction in Value. Thus a net overall reduction in the average tax
bill of $392.78 (which is a 9.5% overall reduction). This is graphically displayed under the first
FAQ, with the first example.
If you happen to own one of the few homes in the City that will only be receiving the .997 CPI reduction in your Taxable Value, the average overall tax change from 2009 to 2010, with the 1.9 City Mill increase will be 5.18%, not 29%.
I keep hearing that my City taxes on my business will increase 29% with the passage of the proposal. Can that be true?
- No. Your City tax bill will not increase by 29%. While the Operating Millage may increase by 1.9 Mills with the passage of the proposal, Operating millage is only 70% of the total City taxes you pay. You also pay Capital, Debt, and Refuse taxes to the City. The current total City millage rate is 9.28 Mills.
Taxes are a function of Rate (Mills) times Value (Taxable Value), or T = R * V. This is important to understand.
A 1.9 Mill City increase is 20% above the 2009 'Rate', not 29%. However, coupled with an estimated 16% drop in the average commercial/industrial Taxable 'Value' the actual change in City taxes is 1.3%. Not 29%, not 20%. It's 1.3%.
While the Rate may increase by 1.9 mills, the Value has decreased. Thus, the overall change is neither 29%, or 20%, but 1.3%. And this is only on the City portion of your tax bill. All of the other taxing jurisdictions are expected to show a significant drop in their taxes on your property because of the reduction in Value. Thus a net overall reduction in the average tax bill of 12.68%.
For Commercial Personal Property, assuming no new purchases, the overall Commercial Personal Property Tax bill will decrease 5.80%, even with a 1.9 City Mill increase.
For Industrial Personal Property, assuming no new purchases, the overall Industrial Personal Property Tax bill will decrease 4.02%, even with a 1.9 City Mill increase.
Even if you are one of the very few properties that only receives a CPI reduction of .997 in your Taxable Value, the overall change in real property taxes is a 3.64% increase. There would be the same decrease in Personal Property, assuming no new purchases.
Here is an example of a business property
How many City Boards, Commissions or Committees have come out in opposition to the millage proposal?
Is Troy alone in its financial difficulties?
- No, Troy is not alone.
- Oakland County Executive L. Brooks Patterson addresses financial difficulties in the region in an Oakland Press Article.
- It is up to the leadership in each community to decide how best to address declining revenues and increasing expenses.
Will 1.9 mills over 5 years generate $45 million and will it result in a surplus? Will expenditures over revenues without the 1.9 mill increase generate $22 million? Where is the excess money? Does the full 1.9 mills need to be levied?
- A 1.9 millage increase over 5 years would not generate $45 million dollars; it would generate about $37.7 million
- The Taxable Value over the next 5 years is projected to decline each year.
- The reduction in quality of life and public safety services were included in the cuts to be made in Option 1 of the proposed organizational restructuring plan. If these services were put back there would still be a shortfall of $2.2 million in fiscal year 2014/2015, even with a 1.9 mill increase
- City Council would decide each year (during budget study sessions) how much of the 1.9 mills would be levied. See Chart
Why the need for a special election in February 2010, which will cost $75,000? That could save one job.
- The 2008 City Charter amendment to Section 9.16.5 removed City Council's ability to increase the millage rate within the Charter allowable maximum rate without an affirmative vote of the Troy electors.
- The February date will give us time to base our 2010/11 budget on the outcome of the election.
- Any election dates after that would require City Management to submit a budget that is referred to as Option 1 of the proposed organizational restructuring plan for the 2010/11 budget
Would 10% wage cuts solve the deficit?
- No, employee concessions alone cannot solve the deficit.
- A 10% wage cut would not cover the deficit, even in the first year of the 6-year plan.
- A 10% wage cut would be a one-time fix that would not help beyond the first year of the 6-year plan.
- For example, a 5% wage cut would yield approximately $2 million; we would still be over $20 million short.
Why not delay capital projects, use fund balance, put the money in general operations and wait until things improve? Why not provide the same service with less people?
- Delaying a capital project would be a one-time fix and in some cases the cost of the project would be higher in the future.
- Included in the City's 5-year capital improvements plan are necessary road projects. Other capital improvements will be reviewed at budget time.
- City Council has agreed to utilize some fund balance, while maintaining an adequate reserve of 15% of the General Fund budget.
- We are looking at regionalization, consolidation and privatization to reduce costs. It is unlikely that the service level will remain the same.
Why all of a sudden do we need to make these difficult decisions?
- One major reason is the State mandated a switch to a 1-year sales study for commercial/industrial properties. This moved the projected reduction in Taxable Values up 2 years.
- Real estate property values have declined dramatically causing a significant decline in the City's primary revenue source.
- While the bulk of the residential foreclosure crisis has passed, bank sales of those foreclosed properties have forced a further reduction in residential Taxable Value.
- Real estate property values are expected to continue to be flat and not increase.
- State-shared revenue continues to decline.
- Two years ago City Management communicated that the City was heading into difficult financial times.
Why didn't December's tax bill show a reduction in Taxable Value?
- The December 2009 tax bill is still based on the 2009 Taxable Value.
- Residents will see a reduction in both Taxable Value and their total tax bill in 2010.
- Your new "Change in Assessment Notice" will be mailed in February 2010.
What has the City done over the past several years to cut costs?
Staff Reductions
Reduced workforce by 63 full-time employees in the last 6 years.
This equates to almost 13% of the full-time workforce.
The 13% reduction includes a 5% reduction in Police Department staffing and 17% in non-Police areas.
Changes to Employee Health Insurance
Offer 'cash-in-lieu' of health insurance at reduced rate starting in 1989.
Eliminated Traditional Coverage; plan options include HMO or PPO starting in 1992.
Premium cost-sharing by employees.
Changes to Employee Pension Plans
Defined Benefit (DB) Plan replaced with Defined Contribution (DC) Plan for new hires in all employee groups, starting in 1998.
Employer Contribution to DC Plan reduced for all groups starting in 2003.
Retiree Health Insurance replaced with Retiree Health Savings (RHS) Plan for new hires in all employee groups starting in 2006.
Changes to Employee Benefits
Eliminated longevity pay for new hires for all employee groups beginning in 1993.
Eliminated tuition reimbursement for non-union employees in 2008.
Other Efforts to Cut Costs and Generate New Revenue
In the face of this financial challenge, the City's 6 unions have expressed a willingness to negotiate wage and benefit concessions.
The City will utilize Federal Energy Efficiency and Conservation Block Grant funds to make a variety of efficiency upgrades to City facilities including heating and cooling improvements and purchasing hybrid vehicles.
Seeking vendor and consultant concessions.
Reduced operating supplies.
Restricted employee training and associated costs.
City departments have implemented innovative ways to generate new revenue, including increasing administrative fees.
Troy's Fleet Division contracts with 7 neighboring communities and the Troy school district to maintain and service their vehicles.
Troy Police provides lock-up, dispatch and animal control services for the City of Clawson.
Negotiations are underway with other communities to provide similar services.
Will the City really need to close the Library, the Museum, the Nature Center and the Community Center as well as lay off 47 people in the Police Department if the millage fails? Is this just a scare tactic?
Yes, if the 1.9 millage proposal fails, City Management will submit a budget that is referred to as Option 1 of the proposed organizational restructuring plan.
Yes, if the 1.9 millage proposal fails, City services in all areas will be cut to a bare minimum, and the quality of life services and public safety will, in fact, be dramatically impacted.
No, it is not a scare tactic.
What cost reduction programs and reductions in staff will take place regardless of passage of a millage?
Even if the millage passes the City of Troy workforce will be reduced by up to 90 full-time employees.
Services in many departments will be privatized, regionalized, eliminated or consolidated with other areas to cut costs.
How much will the increased millage cost me?
The estimated average residential 2010 Taxable Value will be $103,000.
If the 1.9 millage passes, the average residential home would still see an overall reduction in the total tax bill of $392.
The City portion of the tax bill would increase by $38 over 2009 City levy.
Is there a sunset date on the millage request?
Yes, the proposed millage levy will expire in 5 years.
City Council would decide each year during budget study sessions how much of the 1.9 mills would be levied.
How do we know that there is a shared sacrifice by the employees and the burden is not totally being born by the taxpayers (homeowners & businesses)?
Management is seeking and has secured a 5% reduction in wages from several employee groups and even with the passage of the 1.90 mills there will be a reduction of 90 employees or approximately 20% of the full-time work force over the next five years. Please see the attached Two union groups TCOA and TFSOA Letters of Understanding for concessions.
How does the City of Troy's millage rate compare to other full service cities in Oakland County?
And how would it compare if the 1.9 Mill proposal passes?
Troy has the lowest millage rate of any full service city in Oakland County. If the 1.9 Mill proposal passes, Troy would have the 3rd lowest millage rate of any full service city in Oakland County. Please see the attached Oakland County listing of City Millage rates
