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Oakland County Executive’s
Recommended
FY 2017 – FY 2019 Triennial Budget
Presentation to the Board of Commissioners July 20, 2016
L. Brooks Patterson Oakland County Executive
The Recommended Triennial Budget for FY 2017-FY 2019 is balanced
Balanced Budget
A strong leadership team working together
Thanks to . . .
LEADERS WORKING TOGETHER
Board of Commissioners
Jessica Cooper
Prosecutor
Michael Bouchard
Sheriff
Lisa Brown Clerk
Andy Meisner Treasurer
Jim Nash Water
Resources Commissioner
L. Brooks Patterson
County Executive
Nanci Grant Circuit Court
Linda Hallmark Probate Court
Julie Nicholson District Court
Dedicated and professional County employees
Thanks to . . .
An improved local economy
Thanks to . . .
For May 2016, Oakland County’s unemployment rate of 3.9% is less than the state and national rates, which are both at 4.5%.
Unemployment is Declining
By the end of 2018, it is projected that Oakland County will have replenished 92% of the jobs lost from 2000 to 2009.
Jobs are Increasing
Many of the new jobs predicted over the next three years will be within the Emerging Sectors strategy, which has generated $3.5 billion of investment to date.
Businesses are Investing
AdvantageOakland.com
Since 2009, per capita personal income in Oakland County has increased by 20% .
Per Capita Income is Increasing
The number of real property foreclosures are now below 2002 levels.
Foreclosures are Decreasing
The current total market value of property in Oakland County is $130.2 billion, which is 28% higher than 2012 post-recession values.
Property Values are Increasing
Acknowledged best practices for long-term financial planning and management
Thanks to . . .
Distinguished Budget Presentation Award
Since 1984
Certificate of Achievement for Excellence in Financial Reporting
Since 1991
Award for Outstanding Achievement in Popular Annual Financial Reporting
Since 1997
AAAAwardsTRIPLE
Laurie Van Pelt Director, Management & Budget
The County Executive Recommended Triennial Budget is balanced for the next three fiscal years.
FY 2017 – FY 2019 Recommended Budget
FY 2017 FY 2018 FY 2019
General Fund/General Purpose (GF/GP) $443,244,156 $450,332,208 $454,141,372
Special Revenue & Proprietary (SR) $411,087,701 $408,789,557 $406,419,823
Total All Funds Recommended Budget $854,331,857 $859,121,765 $860,561,195
Percent Change from Prior Year:
GF/GP 2.9% 1.6% 0.8%
SR 3.6% -0.6% -0.6%
All Funds 3.3% 0.6% 0.2%
Recommended Budget Highlights
Revenue adjustments
Projected use of fund balance through FY 2021:
Annual operations
Technology system replacements
Continued building security enhancements
Local road improvements
Employee compensation
Recruitment and retention
By design of law, governmental revenues are increasing at a slower pace than the economy
Tax Revenue Limitations
*(excluding planned use of fund balance)
Property tax revenue is approximately 53% of
total GF/GP ongoing revenue*
Taxable Value X Levy Rate = Tax Revenue?
March Board of Review
July Board of Review
Although property market values are
now increasing . . .
Growth in taxable value is intentionally
limited by State law
Estimated Taxable Value Increase
FY 2017 FY 2018 FY 2019
Current Budget Recommendation 4% 5% 4%
Previous Budget Estimate* 4% 4% 4%
Increase from Prior Year’s Estimate 0% 1% 0%
*From budget adopted on September 17, 2015
Estimated Percentage Change in County-wide Taxable Value
County General Operating Millage Rate
Maximum Millage Millage
Year Authorized Millage Levied Differential
1994 4.4805 4.4805 0.0000
1995 4.4805 4.4805 0.0000
1996 4.4805 4.3805 0.1000
1997 4.4805 4.3505 0.1300
1998 4.4630 4.1900 0.2730
1999 4.4188 4.1900 0.2288
2000 4.3688 4.1900 0.1788
2001 4.3259 4.1900 0.1359
2002 4.2886 4.1900 0.0986
2003 4.2602 4.1900 0.0702
2004 4.2359 4.1900 0.0459
2005 4.2240 4.1900 0.0340
2006 4.2240 4.1900 0.0340
2007 4.2240 4.1900 0.0340
2008 4.2240 4.1900 0.0340
2009 4.2240 4.1900 0.0340
2010 4.2240 4.1900 0.0340
2011 4.2240 4.1900 0.0340
2012 4.2240 4.1900 0.0340
2013 4.2240 4.1900 0.0340
2014 4.2240 4.1900 0.0340
2015 4.2168 4.0900 0.1268
2016 4.1868 4.0400 0.1468
3.8000
3.9000
4.0000
4.1000
4.2000
4.3000
4.4000
4.5000
4.6000
Mill
s
Oakland County History of County General Operating Millage Rate
Maximum Authorized Millage Millage Levied
Proposal A was approved in 1994. Beginning in 1996, properties with ownership transfers became “uncapped” which accelerated the effect of the Headlee millage rollback calculation.
millage rate differential
The major variables that impact the Headlee rollback calculation include:
Taxable value uncapping from property transfers (“pop-ups”)
The greater the number of pop-ups, a greater impact on rollback
Change in CPI
The lower the CPI, a greater impact on rollback
The higher the CPI, a lesser impact on rollback
Losses in personal property (recent tax exemption) will have a greater impact on rollback
Variables Affecting Millage Rollback
State Equalized Values vs. Taxable Values
$- $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000
2008
2009
2010
2011
2012
2013
2014
2015
2016
$74,491
$67,858
$57,745
$52,453
$50,839
$51,429
$55,084
$60,806
$65,085
$64,745
$62,416
$55,081
$50,798
$49,235
$49,235
$50,048
$51,895
$52,786
Millions of Dollars
TV
SEV
Potential future uncapping of
properties
Annual Taxable Value Increase is Capped by
the IRM for Non-transferred Properties
-0.5%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
1.9%
3.2% 3.2%
1.5%
2.3% 2.3%
3.3% 3.7%
2.3%
4.4%
-0.3%
1.7%
2.7% 2.4%
1.6% 1.6%
0.3%
1.0%
1.9%
2.3%
Inflation Rate Multiplier (IRM) for Annual Taxable Value Cap
Note: the IRM is based on the change in the Consumer Price Index (CPI) for the fiscal period of October through September of the preceding year.
*Source of estimates for 2017-2019: State of Michigan Consensus Revenue Agreement, May 17, 2016.
Lower IRM = larger Headlee rollback
2016 Equalization Report, TV Change
Total County taxable value (TV) increased by 1.72% in 2016
Real property TV increased by 2.84%
Personal property TV decreased by -12.22%
For the first time, this includes the effect of the new exemption for manufacturing personal property (EMPP)
The reduction in the market value of personal property was $948 million as reported in the 2016 Equalization Report which was published in April.
Since the issuance of the Equalization Report, the State extended the exemption filing deadline which resulted in a further reduction in personal property with market value of $34.4 million.
State Reimbursement for PPT Exemptions
The State is expected to reimburse local governments for 100% of personal property tax (PPT) exemptions this year
Oakland County’s estimated reimbursement is $2.4 million for FY 2016 which is anticipated to be received in November (after the end of the fiscal year)
Reimbursement in future years is expected but not guaranteed and depends on how much is collected by the State for the new Essential Services Assessment (ESA)
Reimbursements to local communities are prioritized with Tier 1 as the highest priority (local schools, TIFs, police, fire & ambulance); Tier 3 is the lowest priority which includes County general operations
Property Tax Revenue Adjustments
FY 2017 FY 2018 FY 2019
Estimated property tax revenue from adopted budget, 9/27/15 $220.1 $229.1 $237.4
Adjustments:
Increase in taxable value 0.0 2.1 3.1
Personal property exemptions* (2.4) (2.4) (2.4)
Adjustment for tax captures (1.4) (1.4) (1.4)
Net adjustments ($3.8) ($1.7) ($0.7)
Revised recommended property tax revenue estimate, % change in taxable value $216.3 $227.4 $236.7
Percentage change from adopted budget estimate -1.7%
Percentage change from recommended budget for prior year 5.1% 4.1%
*Reflects estimated amount of personal property exemptions for FY 2016
(in millions)
Proactive Monitoring and Planning
The County levies and collects it property taxes in arrears as a result of the passage of Michigan Public Act 357 of 2004
Property taxes are levied in July for the fiscal year which begins on October 1 of the preceding year
This requirement adds greater uncertainty for budgetary planning, since property taxes and the millage rollback must be estimated approximately 18 months for budget purposes
The County Executive recommends continuing the County’s prudent past practice of maintaining a millage rate which remains below the maximum authorized rate
The Administration will continue to monitor the variables that impact the Headlee rollback calculation in order to foresee the potential constraint on the millage rate for the future
Annual operations
Technology system replacements
Continued building security enhancements
Local road improvements
General Fund Balance,
Five Year Outlook
Attention to Fund Balance
A healthy fund balance is an essential ingredient for long-term budget flexibility and sustainability = adequate cash flow
Past increases in General Fund equity reflect the County’s deliberate, planned approach to balance future years’ budgets for continued sustainability
Over the next several years, fund balance will be drawn down gradually as planned
Long-term Forecast of General Fund Balance
Jordie Kramer Director, Human Resources
TOTAL COMPENSATION PACKAGE/ RECRUITMENT & RETENTION
• Deferred Compensation Match
• Retiree Health Savings Contribution
• General Salary Overview
• Recruitment & Retention
HUMAN RESOURCES
Deferred Compensation 457(b)
Plan Enhancement - Fidelity
Voluntary Deferred Compensation Plan
Available to full-time eligible employees
Currently 1,892 out of 3,300 employees participate
Pre-tax employee contributions
Employer Match program - $300 match
Eliminated in FY 2010
Reinstated in FY 2016 – effective January 1, 2016
FY 2017 recommended increase to $500 match - January 1, 2017
Retiree Health Savings plan (RHS):
Effective January 1, 2006 – elimination of retiree health coverage for new employees
New employees provided Retiree Health Savings plan
FY2016 increase county contribution - $50 to $75 bi-weekly
General Salary Overview
General salary decreases during tough economic times 2.5% reduction FY 2010
1.5% reduction FY 2011
No general salary increases FY 2012 and 2013 October 2012 - one-time payment of $500
Restoring general salary increases
2% FY 2014
3% FY 2015
3% FY 2016
Proposed 2% FY 2017
Employee Recruitment and Retention
One third of the County’s current workforce is expected to turn-over in the next three to five years
Retirements
Voluntary turnover
Competition in recruitment and retention efforts
Low unemployment rates creating competition in the labor market
Shortage of skilled and qualified workers
Median tenure of employees in the general workforce is 4.6 years
Employee Recruitment and Retention
Increased effort to promote Oakland County as an employer of choice:
Health Care Benefits
Tuition Reimbursement
Parental Leave
Competitive Salaries
Intangible Benefits
Employee Recruitment and Retention
Recruitment Efforts
Social media
Human Resources website re-design
Relationship building with colleges, universities and high schools
New Hire applicant system - “NEOGOV”
Implemented June 2015
User friendly / mobile friendly
New Hire onboarding Fall 2016
Disabled Worker Pilot Program
Working with MORC (Macomb Oakland Regional Center)
Initial placement and new opportunities
Employee Recruitment and Retention
Training and Employee Development
Launched Human Resources Connection
Redesign of supervisor training courses
Promote talent development and inclusion in the workforce
On-going training of employees and supervisors
Succession Planning
Identifying needs within departments
Developing strategies
OakFit Wellness Program
L. Brooks Patterson Oakland County Executive
In Closing
The recommended budget is balanced through FY 2019
The longer term five-year includes continued but diminishing use of General Fund Balance through FY 2021
Fund balance will continue to be closely monitored prior to recommending use of fund balance to fund future capital projects
Oakland County retains its AAA rating, which would not be possible without the continued support from the Board of Commissioners, the elected officials, and the County’s workforce
Postscript: A detailed overview of the Recommended Budget will be presented by Fiscal Services at the August 11th Finance Committee meeting
Thank you