Northville Won't Need to Raise Taxes, But Cuts Still Ahead

Northville voters won't be asked to make up for a projected 12 percent drop in revenue through an increased millage rate next year after all. That's because the projection was overestimated and inaccurate, said Patrick Sullivan, Northville city manager.

In fact, Sullivan said, property tax revenue is projected to increase 2.5 percent in Oakland County and drop only 1.2 percent in Wayne County. Given those figures, Sullivan now projects a 1 percent drop, or about $50,000, for the entire city, which sits in both counties.

The original 12 percent projection had city officials and staff preparing to ask voters for a substantial millage increase in February to make up for the lost revenue. The council voted Monday not to seek a Headlee Override election in February 2011.

"I'm tickled to death," City Council member Doug Bingham said. "I think this is very, very good."

Northville Mayor Chris Johnson viewed the new numbers with cautious optimism.

"The economy isn't really clear right now," he said. "There are a couple of good trends and there are a couple of bad trends out there, so I'm not sure if we're going to see a steady hold or increase in the next year or two."

The projections are based on information provided by equalization departments in Wayne and Oakland counties, respectively.

Sullivan said the original and new projections differ so much because the counties have changed the way they value foreclosures. The original projections caused the city to estimate Northville's revenue would drop about $1.2 million over the next three fiscal years. About 70 percent of the city's operating revenue comes from property taxes. The city was preparing to make up for the losses by raising $600,000 through millage increases and cutting $600,000 in expenses.

The new projections negate the need for the millage increases, at least for the next year.

"That is good news in the sense that we will not need a Headlee Override this year in order to balance our budget," Sullivan said.

But that doesn't mean the city won't have to cut expenses. It will still have to cut $600,000 so expenditures match revenue, Sullivan said. "We still have to go to our employee groups and seek concessions and we still have to make substantial cuts to balance our budget," he said.

The city's budget committee recommended several ways to increase revenue and reduce expenses in a Nov. 1 report. Among them: increase employees' contributions to health care and raise deductibles/co-pays, a 5 percent to 15 percent reduction in union employees' wages and layoffs through attrition.

"The tough cuts still need to be made," Johnson said.

Northville has cut $600,000 in expenditures in the last two years. The city's workforce has been cut by nearly 16 percent, wages have been frozen and some services such as snow removal have been contracted out.