Fenton's Five Year Forecast 'Not Rosy,' Lockwood Says

With losses in property taxes and state funding, the city of Five Year Financial Plan is looking more red than rosy. The report predicts deficits for the general fund in every year of the forecast and serious future financial stress — unless Fenton makes changes.

"It is not a rosy picture," said Councilwoman Pat Lockwood.

The five year plan, by Stauder, Barch & Associates, projects property tax revenues will decrease by $611,770 (down 15.6 percent) from the end of 2012-13 through 2015-16. In addition, the city's general fund will start receiving less funding from the Downtown Development Authority (DDA) — from $400,000 this year, to $350,000 next year and $325,000 for the following three years of the five year plan, said Paul Stauder, of Stauder, Barch & Associates.

Manager Lynn Markland said at some point, Fenton will find there's not much else it can do but ask voters for a Headlee millage override or millage for special services. He doesn't know when this will be, "but we are getting closer," Markland said.

Fenton's current millage rate is 10.6226 mills, down from the 13 mills its city charter allows.

Fenton has an interesting dynamic with its DDA and Local Development Finance Authority (LDFA), Stauder said. These entities have played very large roles in the progress, development and growth of the community for the last 20 years. Now, however, most of the tax base growth in the business park is captured by the DDA and LDFA and isn't available for the city's general fund, the five year plan states.

If nothing is changed, Fenton's fund equity will be severely challenged in two to three years, Stauder said. He's not making recommendations, and it is up to city council to deliberate what its options are.

The fund equity for this year is $1.7 million, and it's projected at around the same for the year coming up. Two years from now, the fund equity could hit the minimum recommended level and drop quickly after that. At $1.1 million-$1.2 million, Fenton crosses the line for a comfortable level of fund equity, Stauder said.

The five year forecast should raise some big red flags for people, Lockwood said. While many believe property taxes are bottoming out and may be increasing, it could be 10 years before Fenton realizes income from this.

It's in the city's best interest to really look at each project it is considering and to make sure services Fenton is responsible for occur, she added.

She believes it will be a tough annual budget work session for the city on April 28, Lockwood said.

Markland said Fenton has been doing five year financial forecasts for so many years, and the results might seem to be the same each year. But this report is not, and some people don't take it as seriously as they should. A copy will be available on the city's website, and people will be able to look at it.

He encourages residents, especially those who have lived in Fenton for a period of time, to look at their property tax bills for the last four to five years. Some homes' tax bases have decreased by one-third, Markland said. People should begin thinking about city services that have been impacted by decreasing revenue, and what might have to take place in the future to have the same level of services they expect.

City department heads and staff have done a good job keeping Fenton in the good financial shape it's been in, Markland said.

Changes have included modifications to city employees' and The DDA is purchasing new

But, "There are only so many rabbits left in the hat," he said. "It's a serious situation, and it does get kind of scary when you start looking at the future."

Fenton isn't in dire straits yet, though, Stauder said. Many communities in Michigan have reached this point already, with the state taking control of their local governments. Places like Southfield, Dearborn, Troy and Lansing have asked voters for tax increases, ranging from modest increases to significant ones. These ballot questions have met with mixed results, he said.

People don't know how much things cost, Councilwoman Cheryl King said. Street lights in Fenton, for example, have increased in cost from $86,000 in 2006-07 to $138,000 this year. In 2015-16, the projected cost for street lights is $156,000.