Cityhood for the Village of Oxford will not bring about a tax savings for residents unless they wish to give up township services like the public library and parks and recreation department.
And in some respects, cityhood would cost village taxpayers more than the status quo given the new services and responsibilities it would be required to take over from the township.
These were some of the main conclusions in Christine Burns? research paper which did a cost/benefit analysis of the possible transition of Oxford Village into a city.
‘The bottom line is you can’t do it for the financial reasons,? she told this reporter. ‘Looking at the numbers, it’s not a cost savings.?
Burns, who’s served as the village’s clerk, treasurer and assistant manager since August 2005, wrote the paper in order to obtain her Master of Science in Administration (concentration in Public Administration) from Central Michigan University.
Her research paper indicated a number of one-time and on-going costs associated with incorporating as a city.
Burns estimated $63,500 worth of one-time costs associated with incorporation including $15,000 for new signage, $500 for new stationary, $35,000 in pre- and post-incorporation attorney fees and $13,000 to print a new charter and ordinance book.
As for on-going costs, Burns? paper estimated they would be $182,843.70, which includes such expenses as $27,423 for assessing, $3,116 for a board of review and $3,600 for elections.
The two biggest on-going costs the village/new city would incur would be to maintain the township-owned Oxford Veterans Memorial Civic Center (commonly known as the Vets Hall) and the township cemetery on the north and south sides of W. Burdick Street.
‘After incorporation the ‘City of Oxford? (will be) required by (state law) to maintain the cemetery (and all properties owned by the township located within the newly formed city) formerly owned and operated by Oxford Township,? according to Burns? paper.
Burns told this reporter both cemetery and Vets Hall are financial drains meaning they currently cost the township more to maintain than they actually generate in revenue.
‘The maintenance of the Vets Hall in downtown Oxford cost $67,624.51 in 2005 while it generated only $1,125 in revenue. The Oxford Township Cemetery cost $46,392 to operate in 2005 and generated $20,705 in revenue during the same time period,? the paper stated.
In reality, losing these two properties to the new city would be a cost savings for the township, Burns noted.
These additional services and responsibilities would necessitate another on-going cost for the new city ? another staff member.
‘In order to maintain cemetery records, schedule grave openings and closings, maintain voter records (which was being performed by the township prior to incorporation), and distribute the additional tax revenue, an additional part-time administrative assistant (would be) necessary,? Burns wrote.
Working 1,040 hours per year, she estimated this new employee would add another $10,400 per year to the on-going costs.
It’s true city residents, unlike village residents, would no longer be obligated to pay the township’s 0.95-mill operating tax. But Burns said city residents would not realize a 0.95-mill tax savings because that much plus more would be needed by the new city.
‘The researcher labeled this millage issue as a ‘redistribution? rather than a savings due to the fact that there (would be) on-going costs associated with incorporation that would be borne by the new city,? Burns wrote. ‘Rather than contribute 0.95 mills to Oxford Township’s operating budget taxpayers (would contribute) that same 0.95 mills to the City of Oxford’s operating budget in order to offest the additional responsibilities undertaken by the city (i.e. Vets Halls Community Center maintenance, cemetery maintenance, etc.).?
But simply shifting the 0.95-mill tax from the township to the new city would not be enough, given it would only generate $138,506.10 in revenue.
Burns estimated the first year of incorporation would cost the new city $231,128.51 and therefor require a tax increase beyond the 0.95 mills.
‘A millage increase of 1.58 mills would be necessary, at least in the first year, in order to maintain the current levels of service throughout the city and assume responsibility for newly acquired assets (Vets Hall, cemetery, etc.),? Burns wrote. ‘It should be noted that due to one-time costs disappearing after one year, the millage rate could be lowered in subsequent years by appromixately 0.47 mills.?
However, that post-first-year reduction might not be possible looking at the City of Chelsea.
‘Chelsea was forced to operate for 16 months on 12 months worth of revenue due to the timing of their incorporation,? Burns wrote. ‘Consequently, the reduction of the millage rate after year one (especially if Oxford had to dip into its prior year surplus in order to balance a budget that extended beyond the normal 12 months) seemed unlikely.?
As for the argument that cityhood would lead to increased statutory revenue sharing monies from the state, Burns found this is not true.
‘It used to be your revenue sharing was based on whether you were a city, a township or a village,? she said. ‘In 2003, that stopped. So, everybody’s forumla is figured the same. What title you have is irrelevant.?
Prior to 2003, the poulation weight factor used for calculating state revenue sharing for villages was 1.5 and for cities 2.5. Burns discovered the state stopped using the population weight factor three years ago.
But even if it had remained in effect, Oxford would have only realized an increase of $5,294.42 as a city versus a village.
Becoming a city would also mean village residents would no longer be obligated to pay 0.8538 mills to the township parks and recreation department and 1.8482 mills to the Oxford Public Library. Both are taxes levied by the township.
However, if city residents wished to participate in recreation programs, they would now have to pay non-resident fees. ‘The additional fees ranged anywhere from $2 to $10 depending on the recreation program,? Burns wrote.
‘It (is) up to each household to weigh the opportunity costs associated with incorporation and determine if it (is) in their best financial interest based on their family’s participation in this program,? according to the paper.
The village’s incorporation as a city would mean a loss of $124,480.53 in revenue for the township parks and recreation department. Burns reported that Director Ron Davis told her ‘the loss of the revenue (would impact) every participant in the program, not just residents of the city? because it would mean ‘a reduction in programming and staffing.?
As for the library, cityhood would mean a $269,459.98 loss in revenue for the institution and savings for city taxpayers.
As for city residents being able to use the public library they no longer pay taxes for, Burns said Director Judy Doublestein told her ‘that after incorporation, a temporary contract between Oxford Township and Oxford City could be negotiated until such time as a district library could be formed.?
But this ‘district library? could lead to higher taxes for both the township and new city, if voters approved it.
‘As a township library, only 2 mills (total) could be levied while a district library could levy up to 4 mills,? Burns wrote.
Ultimately, Burns said cityhood ‘depends on what’s important to you? and that’s something ‘every household needs to look at.?
‘I use the library and I use parks and rec. and I think they’re valuable, so I don’t mind paying for them,? she explained. ‘If you’re not a library user or you’re not a parks and rec. user and those things are not important to you, well than yeah, cityhood’s going to be cheaper because you’re not going to pay for those things.?
‘I use those services so of course I don’t want to give them up. I’m willing to pay for them. If you’re not, that’s your decision.?
For a free copy of Burns? research paper contact her at the village offices (248) 628-2543.