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MISCELLANEOUS RESOLUTION #01184 July 19, 2001
By: Finance Committee, Sue Ann Douglas, Chairperson
RE: DEPARTMENT OF MANAGEMENT & BUDGET — REDUCTION IN STATE
REVENUE SHARING
To: The Oakland County Board of Commissioners
Chairperson, Ladies and Gentlemen:
WHEREAS, in accordance with the State Revenue Sharing Act (PA140 of 1971, as
amended by PA342 of 1996), Oakland County receives approximately $25 million annually as a
portion of the State distribution of Sales Tax Revenue to local units of government; and
WHEREAS this revenue is incorporated in the County budget based on per Capita
payments estimated by the State Department of Treasury in advance of the fiscal year, with
actual receipts fluctuating in tandem with the State's economy; and
WHEREAS based on the current economic downturn and the attendant reduction in Sales
Tax receipts, the State Department of Treasury has downwardly revised estimated FY2002
Revenue Sharing payments three times this calendar year, from $28.1 million in January to $23.5
million in June, for a total reduction of 16.6% from the original estimate; and
WHEREAS the County Executive's FY2002 Budget Recommendation includes $25.0
million to fund the preponderance of Oakland County's discretionary services, including: Family
Court Youth Assistance, Indigent Hospitalization, Community Corrections, Planning &
Development, Research and Law Libraries, Marine Safety and the Tr-Party Road Improvement
Program, among others; and
WHEREAS the State Legislature has within its discretion the ability to avoid the latest
reduction in estimated Revenue Sharing distribution (7.8% or $125 million) by appropriating
funds from the State's Budget Stabilization Fund, which has a current balance of $1.3 billion;
and
WHEREAS the express purpose of the Budget Stabilization Fund, otherwise known as
the "Rainy Day" Fund, is to accumulate surplus funds during good economic times with the
intent of using those funds to offset temporary reductions in revenues that are particularly
sensitive to fluctuations in the economy, rather than decimate worthwhile government services
that benefit our citizens and taxpayers.
NOW THEREFORE BE IT RESOLVED that the Oakland County Board of
Commissioners acknowledges the potential budgetary impact of a reduction in State Revenue
Sharing due to a reduction in Sales Tax collections and advocates that the State Legislature
utilize a portion of the $1.3 billion accumulated in the Budget Stabilization Fund, in accordance
with its intended purpose of offsetting disruptions in revenue caused by temporary economic
fluctuations, so as not to jeopardize worthwhile public services provided by local units of
government.
BE IT FURTHER RESOLVED that copies of this resolution be distributed to Oakland
County's State legislative contingent and lobbyists, the Governor; all Michigan counties, the
Michigan Association of Counties and the Southeast Michigan Council of Governments; for their
consideration during the concluding period of their budget deliberations.
Chairperson, on behalf of the Finance Committee, I recommend adoption of the
foregoing resolution.
FINANCE COMMITTEE
FINANCE COMMITTEE
Motion carried unanimously on a roll call vote with Moss absent.
NEMO
From:
To:
Subject:
Date:
Tim Soave, Chief - Fiscal Services
Jeff Pardee, Director, Management and Budget
Laurie VanPelt, Deputy Director, Management and Budget
-State Revenue Sharing
July 6, 2001
In follow-up to our conversation of yesterday, the State's estimated FY 2002 revenue sharing payment to
Oakland County has again been reduced. Unfortunately, this reduction takes us below our FY 2002 County
Executive Recommended Budget by almost $1.5 million: Below is a short history of how this situation has
developed.
As you are aware, state revenue sharing is based on the following formula:
4% of gross sales tax collections is set aside; -
Of the above 4% of collections amount, 15% is reserved for constitutional revenue
sharing, which is enjoyed by the CVTs;
Of the above 4% of collections amount, 21.3% is reserved for statutory revenue
sharing;
Of the statutory amount, 25.06% goes to counties and 74.94% goes to CVTs
The amount for each particular county is based upon the county's population multiplied
by a "factor". Basically, a "factor" equals $1.
In January 2001, after the first Revenue Consensus meeting (Governor, Treasury, and Legislature), the
Governor issued his budget recommendation which included $1,655.0 million for total revenue sharing (see
Attaclunent A), and specifically $243.4 million for counties. Oakland County's portion of that amount was
a factor of 23.5876. This factor would generate $28.1 million in revenue sharing payments.
As the economic forecast began to turn gloomy, the State Department of Treasury began revising their
revenue estimates, as detail below:
January 2001 Factor = 23.5876
April 2001 New Census
May 2001 Factor = 21.3448
Executive Budget Recommendation
June 19, 2001 Factor = 19.6808
Estimate = $28,145,196
Estimate = $27,784,607
Estimate = $25,469,042
Estimate = $25,000,000
Estimate = $23,483,524
The June factors are based on a second Revenue Consensus meeting held in late May. From that meeting,
total estimated revenue sharing has been reduced to $1,577.8 million, 5% reduction (see Attachment B).
County payments have been reduced to $226.9 million, 6.7% reduction.
To further complicate the issue, Scot Schrager, lobbyist for the Michigan Municipal League sent an e-mail
yesterday (Attachment C) warning of a potential additional $50 million cut in statutory revenue sharing.
Such a reduction would translate into a 5.5% reduction overall in that category. If the counties, and
Oakland in particular, received a proportional share of this reduction, revenue sharing payments may be
reduced to $22,192,875,,a further cut of $1.2 million.
With last year's budget, you recommended we identify certain programs that would be targeted for
reductions should our revenue sharing payments shrink. Attachment D provides the list of those programs,
the amounts included in the FY 2002 and FY 2003 County Executive's Recommended Budget, and those
program's share of the current $1.5 million revenue sharing reduction (based upon the June 19 factors).
Because of the fluid situation, Treasury has not calculated new factors based upon the possible $50 million
reduction; therefore, we have not included that potential loss in our analysis.
Attachment D will provide you with a starting point to discuss what to do with the estimated $1.5 million
shortfall. If I can provide additional information, please let me know.
(AT-Ice of Revenue ft Toix
State Revenue Sharing Payments
FY 1999-00 Through FY 2001-02
(millions of dollars)
Sales Tax Constitutional
Cities, Villages, Townships
FY 2001-02 Growth From
FY 1999-00 FY 2000-01 Governor's FY 2001-02
Actual Estirnatesm Recornm. (2) Amount Percent
$628.4 $648.8 $683.9 $35.1 5.4%
Sales Tax Statutory
Counties $214.3 $230.9 $243.4 $12.5 5.4%
Cities, Villages, Townships $619.7 $690.4 $727.7 $37.4 5.4%
Statutory Total $834.0 $921.3 $971.1 $49.9 5.4%
General Fund Special Purpose Total $1,462.5 $1,570.0 $1,655.0 $85.0 5.4%
Special Census (3) $7.6 $0.4 $0.0 $0.0 0.0%
Total Revenue Sharing
8% Cap Minimum increase
$1,470.1 $1,570.0 $1,655.0 $85.0 5.4%1
8.0% 1.4% 6.3%
1) The estimated figures are based upon the January 11, 2001, Revenue Consensus. If actual sales tax revenues
are lower, the distributions wI//be reduced. If actual constitutional revenue shanng payments are higher than the
$661.4 million appropriation, then the statutory payments to cities, villages, and townships MI/be
reduced by an equal amount.
2) The estimated twes are based upon the FY 2002 Governor's budget recommendation and upon the
January 11,2001, Revenue Consensus. If actual sales tax revenues are lower; the distributions wI//be reduced.
3) General Fund/General Appose amounts are for special census payments. There is no funding in Fiscal Year
2000-01 because the decennial federal census MI/be used and per be revenue sharing act special
census counts cannot Occur until 2003.
Last Updated: February 9, 2001
Statutory Total $834.0 $912.2 $905.2
'Total Revenue Sharing $1,470.1 $1,554.5 $1,577.8
8% Cap Minimum Increase 8.0% -2.7% -4.9%
(6)
Office of Revenue mod Tax Artalwis
State Revenue Sharing Payments
FY 1999-00 Through FY 2001-02
(millions of dollars)
FY 1999-00 FY 2000-01 FY 2001-02
Actual Estimates' ) Estimates (2)
Sales Tax Constitutional
Cities, Villages, Townships $628.4 $642.3 $672.6
Sales Tax Statutory
Counties $214.3 $228.6 $226.9
Cities, Villages, Townships $619.7 $683.6 $678.3
General Fund Special Purpose Total $1,462.4 $1,554.5 $1,577.8
$7.6 $0.0 $0.0 Special Census (3)
1) The estimated figures are based upon the May 15, 2001, Revenue Consensus Conference.
If actual sales tax revenues are lower, the distributions will be reduced.
2) The estimated figures are based upon the June 2001 target agreements. If the legislature approves
different amounts, this page will be updated after that date.
3) General Fund/General Purpose amounts are for special census payments. There is no funding in Fiscal Year
2000-01 because the decennial federal census will be used and per the revenue sharing act, special
census counts cannot occur until 2003.
Last Updated: June 19, 2001
Prepared By: Office Of Revenue and Tax Analysis. Michigan Department of Treasury
Filename: Mortairevshare4Actual_Est_Payments_061901.x1s1Sheet1
Updated: 8/19101 1:39 PM
Printed: 8119101 2:58 PM
Tan Sckwe
F:om:
Sent:
To:
IVIMFOA" Board and Committees IMMFGA-BCCONICOLISTSERV.MML.ORG ] ch behalf of
Scott Schrager [schrageraMML.ORG ]
Thursday, July 05, 2001 10:00 AM
IliiNiF0A-BDC011/1@i_lSTSERV.MML.ORG
The latest budget target agreement of the legilsazure reduces funding for
revenue sharing by about $50 million below the amount that would otherwise
be produced by the statutory formula. Because the constitutional part of
revenue sharing is guaranteed , this means that the statutory part has
actually been cut below last year's levels. These changes have been
incorporated into a conference report that will, be voted on by the
legislature next week. If you are concerned about these reductions you
should contact your legilsators or suggest that the elected officials or
managers with whom you work make these contacts. The Department of Treasury
will not put up revised estimates until after the budget passes. Below is a
Senate Fiscal Agency link which has payments on a state fiscal year basis.
http://www.senate.state.mi.us/sfa/
1
Cekiand Count!, Michigan
Revenue Sharing Report
Net County Cost of Selected Programs
Circuit/Family Court
Indigent Hospitalization
Community Corrections
Planning and Development
Library Board
Tr-Party Agreement
Marine Safety
EMS
Sheriff Aviation
MSU Extension
OLHSA
Family Counseling
Prosecutor
Area Agency on Aging
Traffic Improvement Assoc.
Watershed Councils
FY 2002 FY 2003
Net County Prorated Net County Prorated
Cost Percent Reduction Cost Percent Reduction
$ 6,211,850 21.94% $ (329,138) $ 6,417,146 22.10% $ (331,545)
3,833,367 13.54% (203,113) 3,833,367 13.20% (198,053)
3,421,737 12.09% (181,302) 3,369,612 11.51% (174,093)
3,160,257 11.16% (167,448) 3,602,516 12.41% (186,126)
2,507,969 8.86% (132,886) 2,660,643 9.16% (137,464)
2,250,000 7.95% (119,217) - 2,250,000 7.75% (116,248)
1,675,438 5.92% (88,774) 1,677,041 5.78% (86,645)
1,264,996 4.47% (67,026) 1,268,987 4.37% (65,563)
1,121,148 3.96% (59,405) 1,088,808 3.75% (56,254)
1,027,157 3.63% (54,424) 1,029,034 3.54% (53,166)
868,127 3.07% (45,998) 868,127 2.99% (44,852)
537,748 1.90% (28,493) 537,748 1.85% (27,783)
335,219 1.18% (17,762) 335,219 1.15% (17,319)
59,329 0.21% (3,144) 59,329 0.20% (3,065)
23,000 0.08% (1,219) 23,000 0.08% (1,188)
12,300 0.04% (652) 12,300 0.04% (6351
$ 28,309,642 100.00% $ (1,500,000) $ 29,032,877 100.00% $ (1,500,000)
In Testimony Whereof, I have hereunto set my 1-1A ,g and/Affixed the seal of the
County of Oakland at Pontiac, Michigan this 19144, _ f July, 2Q
Resolution #01184 July 19, 2001
Moved by Douglas supported by Appel the resolution be adopted.
AYES: Causey-Mitchell, Coleman, Crawford, Dingeldey, Douglas,
Galloway, Garfield, Gregory, Law, McPherson, Melton, Millard, Moffitt, Moss,
Obrecht, Palmer, Patterson, Suarez, Taub, Webster, Amos, Appel, Brian,
Buckley. (24)
NAYS: None. (0)
A sufficient majority having voted therefor, the resolution was
adopted.
HERE5
L. Brooks Pa rson.
THE FOREGOING RESOLUTION
Date
COUNity EXOCUtiVO
STATE OF MICHIGAN)
COUNTY OF OAKLAND)
I, G. William Caddell, Clerk of the County of Oakland, do hereby certify that the
foregoing resolution is a true and accurate copy of a resolution adopted by the
Oakland County Board of Commissioners on July 19, 2001 with the original record
thereof now remaining in my office.
G. William Caddell, County Clerk