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Southeast Michigan Council of Governments

Southeast Michigan Council of Governments. SEMCOG University: Restructuring Under Shrinking Revenue January 27 & 29, 2009 The workshop begins at 9 a.m. Southeast Michigan Council of Governments. Agenda. 9:00-9:05 Welcome and Introductions

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Southeast Michigan Council of Governments

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  1. Southeast Michigan Council of Governments
  2. SEMCOG University: Restructuring Under Shrinking Revenue January 27 & 29, 2009 The workshop begins at 9 a.m. Southeast Michigan Council of Governments
  3. Agenda 9:00-9:05 Welcome and Introductions Paul Tait, SEMCOG Executive Director 1/27/09 Mark Vanderpool, Sterling Heights City Mgr. 1/29/09  9:05-9:30 Property Tax Revenue Outlook for 2009 and 2010 Xuan Liu, SEMCOG Data Center Manager  9:30-10:00 Restructuring Techniques and Best Practices Dave Boerger, SEMCOG Efficiency Consultant  10:00-10:10 Break  10:10-11:00 Case Studies Discuss your fiscal issues and successes in breakout sessions  11:00-11:40 Report out from Breakout sessions Representative from each breakout session  11:40-11:50 Q&A 11:50-12:00 Closing remarks and evaluation - Dave Boerger
  4. Property Tax Revenue Outlook for Southeast Michigan Xuan Liu Manager of Data Center SEMCOG University: Restructuring Under Sinking Revenues January 27, 2009 Southeast Michigan Council of Governments 535 Griswold St., Suite 300 Detroit, MI 48226 www.semcog.org
  5. Revenue Sources for All Michigan Local Governments2005-2006 Source: Census Bureau
  6. Change of Housing Units
  7. Home Prices, SEVs, and Taxable Values Home Prices: S&P Case Shiller Index SEVs: State Equalized Values Taxable Values: Impact of Proposal A, approved by the voters of the State of Michigan on March 15, 1994
  8. Home PricesYear-by-year Percent Changes
  9. Home Prices, SEVYear-by-year Percent Changes
  10. Home Prices, SEV, Taxable ValueYear-by-year Percent Changes
  11. Percent Change in SEV 2007-2008Real Property Large loss, -5% to -11.7% Moderate loss, -2% to -4.9% Small loss, down to -1.9% Gain, up to 13.7%
  12. Percent Change in Taxable Value 2007-2008Real Property Loss, -2% to -6.9% Small loss, down to -1.9% Small gain, up to 1.9% Gain, 2% to 28.2%
  13. Percent Change in Taxable Value 2007-2008Residential Property Loss, -2% to -11.6% Small loss, down to -1.9% Small gain, up to 1.9% Gain, 2% to 7.8%
  14. Taxable Value as Percent of SEV 1999-2008Real Property
  15. Changing Assessing Practice Using one-year study of home sale prices instead of two-years Including foreclosed housing sales in the study Consequences: Greater decline in assessed values
  16. Forecast Home Prices
  17. Forecast Home Prices, SEV
  18. Forecast Home Prices, SEV, and Taxable Value
  19. Taxable Value as Percentage of SEVReal Property 2005 2008 80% or less 80.1% to 85% 85.1% to 90% 90.1% or more
  20. Taxable Value as Percentage of SEVResidential Property 2005 2008 80% or less 80.1% to 85% 85.1% to 90% 90.1% or more
  21. Percent of Parcels with Taxable Value to SEV Ratios of 90 Percent or GreaterTop Communities
  22. Analysis by Parcel Community Total Taxable Value = 75% SEV Smallville A Smallville B Assuming: (1) SEV decreases 10%, and (2) Inflation rate is 5% Smallville B: 5% loss Smallville A: 5% gain
  23. Example Assuming -10% SEV change, 5% inflation, and no new construction Aggregated Taxable Value/SEV = 92% If tax rate is 10 mills, it will lost 1 million in tax.
  24. Summary Significant loss of taxable values in SE Michigan in the next two years Following types of communities will lose more: High concentration of residential High rate of newly developed property High rate of recently sold property Local governments will have tough choices to make.
  25. Brian Parthum Senior Planning Analyst Parthum@semcog.org 313-324-3432 Xuan Liu Manager, Data Center liu@semcog.org 313-324-3441 Southeast Michigan Council of Governments 535 Griswold St., Suite 300 Detroit, MI 48226 www.semcog.org
  26. Restructuring Local Government Dave Boerger Local Government Effectiveness and Collaboration SEMCOG University: Restructuring Under Sinking Revenues January 27 & 29, 2008 Southeast Michigan Council of Governments 535 Griswold St., Suite 300 Detroit, MI 48226 www.semcog.org
  27. Fiscal Challenges Poor economy reducing home prices Property tax collections down Expenses for energy & healthcare up State revenue sharing flat at best Municipal revenues shrinking
  28. And it’s getting worse! Credit crunch continuing Stagflation – negative growth with rising costs More auto restructuring risks Further drop in housing prices State TxV restrictions if SEV’s drop State revenue sharing losses
  29. Bottom Line: Somehow survive ~20% revenue reduction over the next 3 years?
  30. Typical First Steps Hiring/pay freezes Layoffs Benefit reductions Service cuts Tax increases Tap fund balances More debt Etc, etc, etc…..
  31. Fiscal Alternatives Improve efficiencies ~3-5% and Restructure your local government ~10-20%
  32. Improving Efficiency SEMCOG AgileGov searchable database of >400 successfully implemented ideas Self assessment tool – 25 characteristic of the best local governments Long range financial plan Benchmarking comparisons Accelerating service delivery processes
  33. Value Matrix Focus here 1st - Reduce , eliminate or privatize High Cost/Low Importance Services Focus here 3rd - Improve efficiency of High Cost/High Importance Services Focus here 2nd – Reduce or eliminate Low Cost/Low Importance Services Focus here 4th – speed delivery of Low Cost/High Importance Services Program Cost Prioritized Importance
  34. Benchmark Comparisions
  35. Sterling Heights expenses up 40% vs. CPI of 34% since 2000
  36. For additional help or more information contact: Dave Boerger SEMCOG boerger@semcog.org 248-875-7120 Southeast Michigan Council of Governments 535 Griswold St., Suite 300 Detroit, MI 48226 www.semcog.org
  37. Restructuring Worksheet Complete the worksheet in your folders in preparation for the breakout session Include an example of a successfully completed cost savings approach within your local government Indicate the current challenges/areas of greatest restructuring need for your local government Take a 10 minute break when you are done
  38. Breakout Session Assignment Move to your breakout room Identify a volunteer to take notes & report out Share your successes with the group Learn from the successes of others Share your greatest restructuring needs Offer ideas to address the needs Learn from your peers Return to the Main Room and report out
  39. Report Outs/Sharing Lessons Learned Take 5 minutes to recap the discussion from each breakout session Briefly focus on the success themes Concentrate the bulk of your report out time on restructuring needs and potential solutions Save questions until the end of each recap
  40. Q&AWrap-up andEvaluation
  41. SEMCOG University: Restructuring Under Shrinking Revenues Thank you for participating in this SEMCOG University workshop. Dave Boerger Xuan LiuSEMCOG, Consultant Manager Local Government Effectiveness Data Services Office: 313-324-3427 313-324-3441 boerger@semcog.org Liu@semcog.org Southeast Michigan Council of Governments
  42. Southeast Michigan Council of Governments
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