I have been informed by a contact that the city has approximately $23 million in reserve (rainy day) funds. The city has had to use a few million of it the past few years to cover budget shortages.

Based upon what I have read, the city is not suing anyone. The city of Dearborn has contacted Ford in an attempt to resolve the tax dispute issue. The original article about it in the Times Herald is below:

http://downriversundaytimes.com/2010/09/04/property-tax-rates-in-dispute-for-automotive-companies/

Also, related to just how bad it is in Dearborn and other areas, below are some excerpts I’ve taken from an article.

The 10 American Industries That May Never Recover

by Douglas A. McIntyre
Wednesday, September 15, 2010

It has become clear that jobs in some industries may never come back, or if they do it will take years or decades for a recovery.
24/7 Wall St. examined the Bureau of Labor Statistics’ “Employment Situation Summary,” and a number of sources that show layoffs by company and sector. The weakness in these sectors will make it harder for the private industry, even aided by the government, to bring down total unemployment from 9.6% and replace the 8.3 million jobs lost during the recession. The losses in these industries have to be offset by growth in others before there can be any net increase in American employment.

Some of the industries are obvious. Detroit will never employ the number of people it did five years ago. Domestic car sales hit 16 million in 2005 and 2006. That number will be closer to 11.5 million in 2010. More cars and light vehicles are made overseas now, in places like Mexico, to keep labor costs down.

1. State and Local Government Jobs. The level of unemployment in this sector continues to rise. Budget imbalances in a number of states have already caused mass layoffs as tax receipts have dropped sharply. A recent report by the National Governors Association and the National Association of State Budget Officers found that 22 states furloughed employees and 25 laid off workers during fiscal year 2009-10. As an example, California slashed its workforce by tens of thousands — some were laid off permanently and some are out of work and may be recalled. Former eBay CEO Meg Whitman, who is running for governor of California, said she will cut the state workforce by another 40,000 and sharply cut pensions for new workers. Forty-six states face budget shortfalls that will total $112 billion for the fiscal year ending next June, according to the Center on Budget and Policy Priorities. Municipalities face similar difficulties as property taxes plummet.

4. Automotive Manufacturing. General Motors has cut over 100,000 people since the beginning of the recession in December 2007. Ford has cut over 20,000 and Chrysler 15,000. This does not include foreign car companies with workers in the U.S. By some estimates, every car company worker layoff leads to three more layoffs in related industries that supply the car and light truck manufacturing business. That includes hundreds of car dealerships that have been closed in the last two years.

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6. Big Telecom. AT&T, Sprint-Nextel and Verizon have passed their peak employment levels. Employment in the sector will not recover and could shrink for two reasons: (1) The landline business is falling rapidly as home phone users move to VoIP, and (2) Increased adoption of cell phones. The cellular subscription business has been damaged by price wars meant to gain market share in the wireless industry — one that has stagnated due to a 90% market penetration in the U.S. Sprint made substantial cuts as it posted three years of losses. The most recent was 2,500 people in November last year. In 2008, AT&T said it would lay off 12,000 people. Verizon recently said it would fire 13,000 employees from its land line business.

7. Newspapers. The layoffs in newspapers began in the 1980s as presses became more automated and tens of thousands of pressmen lost jobs. More recently, the changing habits of news consumption have increased Internet readers and hurt print, which has caused more job losses in press rooms. Reporters and editors have lost work as print subscribers have stopped paying for what they can get online for free. One recent study claims that the newspaper industry employee base fell from 767,000 jobs in 1998 to 619,000 jobs in 2008. The U.S. Department of Labor has forecast another 120,000 newspaper layoffs over the next 10 years.

9. Realtors. The National Association of Realtors reports that there were 1,370,758 realtors in October 2006 — the peak of the market. By the end of 2007, the figure was below 1.2 million. The number is below 1.1 million today and has continued on a downward trend. Home prices have dropped so far and so few homes are sold, that the ability to make money in the business disappears by the day.

10. Bank Tellers. Long before the recession, personal banking had begun to become automated. Over the last decade, banks have provided increasing access to banking accounts online, through call centers and at ATM kiosks. This technologically driven shift has been and will continue to be the chief cause of bank teller layoffs. According the the FDIC, since 2008, at the beginning of the recession, there have been 283 banks closed. Compared to the period 2000 to 2007, when only 27 banks closed, that’s nearly 10 times as many bank closings in less than half the time. And as of Aug. 20, state and federal regulators had closed118 banks this year, making it on pace to exceed the 140 banks closed in 2009. Although nearly all of these banks have been acquired by other financial institutions, bank branch closings still occur — employees and locations are consolidated. The single largest employee group at bank branches are bank tellers, and they will bear the brunt of the continued cost-cutting.

As usual, you bring forward the facts and common sense. I was beginning to think the only thing on this blog that provoked any real interest was “chickens in garages”.

You have an interesting question. Sorry, I don’t have the answer but I have a couple questions that maybe you know the answer to.

Does the city still have a large “Rainy Day Fund” or has it been depleted like I suspect?

Is it true that the city is joining other cities to sue the State Tax Tribunal to reverse its’ decision?

As “Wanting For a Better Dearborn” states, Dearborn voters gave the city the right to sell Dearborn Towers. Yes the timing is bad, but since the city is facing a projected $20 million budget deficit for the 2010 and 2011 fiscal year (July through June), and since there seems to be no end in sight for this recession, and the city may have to eliminate a large number of services and amenities, I don’t think the city has many other options at this point but to sell the Towers.

In numerous meetings this year I have heard the mayor state that the city has repeatedly approached Milford Township supervisors asking to have Camp Dearborn rezoned from recreation to either commercial and/or mixed use but Milford always turns this down. The mayor has stated that the Camp being zoned recreational makes it worth maybe a max of $25 million, yet it if was rezoned to commercial or mixed use it might be worth $50 million.

Based upon the financial figures I recently saw on the Camp, the golf course which used to make money to supplement Camp, has lost millions of dollars the past 2 years. Knowing that and the fact that in all my most recent visits to Camp there aren’t 1/20th the number of people as there used to be there using it, it is surprising that the Camp makes money.

But what we need to remember is that the Camp has oil wells out there pumping in around $300,000 profit to the Camp per year and that the profit the city talks about that Camp has made the past 3 years is operational expenses profit only. This simply means that the city uses another fund to pay for all the improvements in Camp. If they added in the expenses of upgrades/repairs/enhancements the city has done to Camp the past few years, it is highly likely that the Camp would not be making a profit.

And in order to sell the Camp, even if Milford changed the zoning, like the Dearborn Towers, it is the voters of Dearborn who must give the city permission to sell the Camp.

Lastly, we need to remember that during the Orville Hubbard years, Hubbard purposely under assessed residential properties and a much larger Ford Motor Company than today paid well over 80% of our city property taxes. Today we have a much smaller Ford and due to a state law change way back in the late 70′s or early 80′s which ruled against Hubbard’s taxation of Ford, Ford now pays approximately 20% of all city property taxes.

Recently Ford appealed the amount of their taxes again and a judge agreed, which means Ford is going to pay $4+ million less in property taxes, which is going to further devastate Dearborn and some other cities nearby.

The part I am not clear on and I am hoping someone can inform me about is that when I look at a detailed map of Dearborn it appears that all Ford properties take up well over 40% of the properties in Dearborn. So why does Ford only pay 20% of the property taxes in the city???

If you read my post:

I am pro police. I’m glad the city can’t lay off police and fire employees. My feeling about giving back is that if you look at other police departments many have given up money and benefits to help their city and job.

Sure, Camp Dearborn turned a profit THIS year but it may not next year or the year after that.

Camp Dearborn is a luxury. Profit or not this year, it also needs to go. Think of all the years it was a strain on the City.

Also that Performing Arts Center should be sold. Maybe with some good management it could also make a profit instead of being a drain on this City.

As long as this City keeps buying high (like the Montgomery Wards building) and selling low, we will continue to be in BIG trouble. We have no business being in the Real Estate business.

That said, my comment was simply to support Cloe – that there is a way to manage the news (which comes as no surprise to anyone) that “you are going to have to move out of your home.”

MTST and L&R – I agree with your comments on fiscal reality, but that wasn’t my point.

Let’s show leadership by showing respect for our citizens.