In terms of fiscal health, Oxford Township and Village both scored a big zero, according to a state report, while Addison Township racked up a two ? but don’t worry these are all good scores.
‘I was pretty happy,? said Oxford Twp. Treasurer Joe Ferrari. ‘I think in general the township has always tried to be proactive on issues like that.?
A fiscal indicator score of 0-4 means the local government is ‘fiscally neutral.?
‘Local units that score in this category are deemed to be managing their financial circumstances appropriately,? according to the Michigan Department of Treasury website.
Each community received their score last week as part of a report showing the degree of ? or absence of ? fiscal health in Michigan’s 1,858 units of local government
Scores were based on 2006 financial data submitted by each municipality to the state last year.
No score was available for the Village of Leonard because it did not submit an annual fiscal report to the state for 2006-07. Due to its small size and budget, Leonard is only required to have an audit done every two years.
Nine fiscal indicators ? including things such as population growth, real taxable value growth, general fund expenditures as a percentage of taxable value, general fund operating deficits and general long-term debt ? were used to create an aggregate score for each community.
Points were awarded for negative financial factors such as deficit spending, shrinking tax bases, a general fund balance of less than 13 percent, and declining population.
A low aggregate (0-4) score reflects fiscal neutrality while a higher total score (eight or above) shows significant fiscal stress.
Governments scoring an eight or more ‘are considered to be in poor financial condition? and their governing bodies ‘should take immediate corrective actions to improve the financial health of the local unit,? according to the treasury department website.
The state cautioned that local governments should not interpret a fiscally neutral score ‘as an indicator that they are in anyway insulated from financial concerns.?
‘It is a snap shot of a local unit’s financial condition. It is not an indicator of ability to pay,? according to the treasury website. ‘Local decisions that impact a local unit’s finances or deviations from their current financial strategies may result in changes to future fiscal indicator scores.?
Hard work, tough decisions
Oxford Township and Village both scored zeros for all nine fiscal indicators.
‘I guess zeros are a good thing in this case,? said village Manager Joe Young. ‘At this time, we’re in a good sound financial position.?
Young said the village’s been committed to maintaining a balanced budget and healthy reserves by ‘wisely? spending its money and ‘controlling expenses.?
The village has also worked hard to keep the community ‘viable and attractive,? which makes it ‘desirable and therefore more valuable? from a tax base standpoint, according to the manager.
Ferrari attributed the township’s good score to officials foresight in dealing with financial situations ‘before the other shoe drops.?
‘The township board, especially in the last couple years, has had to make some difficult decisions in terms of staffing and things like that,? he said. ‘But we realized that these are issues we had to tackle because we didn’t want to be in a spot where we were in a deficit.?
Dark clouds looming?
Ferrari’s main concern these days is how the township’s going to pay its $10.7 million water bond debt, which could negatively affect its future financial health. ‘That’s the only issue that could really impact us,? he said.
The township has enough to make its second bond payment this year and both payments in 2009, however, beyond that, things are uncertain. ‘Right around that period (2010), it’s going to be a little difficult,? Ferrari said. ‘It’s going to be a struggle.?
Back when the bond was floated in 2005 to build two water treatment plants, a new 1 million gallon water tower and various other projects, the township had a proposed 2,500-home development on the Koenig Sand & Gravel property before the planning commission and officials were ‘anticipating a big growth period? to help pay off the debt.
But that growth never happened, leaving the township 612 new water taps (or $3.7 million) shy of where officials thought they’d be today in terms of paying off the debt. ‘If we had the Koenig development, we probably wouldn’t even be talking,? Ferrari noted.
The treasurer noted that ‘a couple good developments? could help turn things around. For instance, if the POH Medical Center expands its existing building, as has been discussed, ‘that helps us out quite a bit,? Ferrari said.
Legal bills cost Addison two points
Addison received its two points because of an operating deficit in 2004 and 2005.
In 2004, Addison had revenues equalling $1,075,282 and expenditures totalling $1,092,767. The next year the township had revenues of $1,082,197, yet spent $1,115,641.
Treasurer Dan Alberty explained these deficits were the result of higher-than-anticipated legal bills brought on by numerous lawsuits in which the township was forced to defend itself.
‘The score reflects a time when the township was spending a lot of money on legal bills,? he said. ‘We had to stand up and defend our ordinances.?
In 2005, Addison had budgeted $186,000 for legal and audit fees. But in reality, the township actually ended up spending $286,000.
Alberty noted that in 2004, the township experienced significant state revenue-sharing cuts, which also contributed to the deficit.
These days Addison is by no means in any financial trouble. The 2007-08 fiscal year, which ended March 31, closed with a $100,000 surplus, which brought the township’s total reserves up to approximately $700,000.
‘I think we are in very good financial condition,? Alberty said.