The City Council established the Finance Review Committee of four (4) citizens to work with a Council Liaison and a City Administrator-appointed staff member to develop recommendations on potential future revenue sources, which may include ballot initiatives.

After numerous meetings, the committee finalized its recommendation to the City Council on September 23, 2024. Their recommendation came with short-term and long-term recommendations.

Long-Term Recommendation:

In the Fiscal Year 2023 independent audit of the City’s finances, it was noted, “A Headlee rollback will need to be considered by the City Council and voted on by the citizens to maintain the same level of services.” After significant committee discussion of the positive and negative aspects of the limited options available to municipalities for raising revenue, the Committee agreed with the auditor’s assessment and recommended that the City Council add a ballot question to approve a Headlee Override to the November 2025 ballot. While this could be done at an interim or special election, the Committee felt strongly that this ballot question should appear during an election that would have the largest resident turnout, which would be a November election. The deadline for including a ballot question as part of the November 2024 election has passed, which means, the City will (potentially) propose the ballot question during the November 2025 election.

The Committee recommends that the Headlee Override ask voters to restore the Headlee-lowered general operating millage rate from the existing 17.3001 mills to the chartered rate of 20 mills and to restore the lowered refuse (trash) millage rate from the existing 2.5948 rate to the chartered rate of 3 mills.

Note: The current millage rates will be subject to another round of Headlee reductions before the November 2025 election. Adjustments to these figures may be necessary once next year’s Headlee application is complete.

Further, it is recommended that the ballot question include the locking of the charted millage rates for ten years, as other municipalities have done, which would protect these chartered rates from being lowered by Headlee for ten years. This would ensure that the City has the funds needed to operate for at least ten years and that Headlee would not return the City to a diminished revenue state. If approved, this would restore the assessed millages by 3.1051 mills, but not increase the millage rate beyond that which should be assessed according to the City Charter. The effect this increase will have on residents will be discussed below.

The Committee felt this option would increase revenue back to chartered levels and sustain that revenue for ten years. Approval of this Headlee Override would provide the City some breathing room in its budget to address increasing costs while simultaneously providing some additional funds to begin addressing deferred maintenance and capital expenditures. Because the City passed a similar Headlee Override in 2010 by greater than a 2 to 1 margin, the Committee is hopeful that residents would be willing to support such a measure again. The Committee fully understands that a tax increase could be a contentious issue for some city residents. However, to maintain the quality of life that Lathrup Village residents expect, increased revenue from a Headlee Override is necessary. The punitive tax laws and other factors discussed above, leave no choice for built-out cities like Lathrup Village other than to eventually cut services.

Short-Term Recommendation:

Unfortunately, placing a Headlee Override on the November 2025 ballot means waiting a year for this election and its result. If a Headlee Override is approved by the electorate, additional revenue would not be received by the City until August of 2026 with the summer tax bill. This means that the City would continue to remain in a strained budget situation for the next two years. Given the expected increases in expenses associated with fiscal year 2025, this delay would almost certainly result in budget cuts.

To avoid this situation, the Committee recommends that the City Council use its authority to enact a Public Act 33 of 1951 Special Assessment for Public Safety. Under this Act, cities with a population under 14,500 people can levy up to 10 mills for public safety operations and 10 mills for public safety capital. This would allow the City Council to determine its monetary needs for fiscal year 2025 and determine the expected shortfall. Once that shortfall is determined, the City Council would have the authority to levy the corresponding millage to the 2025 summer tax bill to make up that difference. The resulting funds would be earmarked for Public Safety and could cover the increased cost of the new police contract, as well as some existing public safety costs. This would forgo the use of some of the General Fund dollars for Public Safety, freeing up those general funds for other operational uses.

The Committee recommends that the proposed City Council resolution to provide this authority specifically state that the authority expires after one year. This is because PA 33 authority is recommended only as a stop-gap measure until the Headlee Override can be voted upon by the electorate. Further, the Committee recommends that the establishing resolution also limit the levying authority of the City Council to a maximum of 3.1051 mills. This millage figure is simply the millage amount that would be restored had both the general operating and refuse (trash) millages been set back to their respective chartered rates of 20 and 3 mills. While the Committee believes that it is unlikely the City would need to levy this entire amount, it believes City Council should have the flexibility, if needed.

All committee meeting documents can be found under the DOCUMENTS section of the website by utilizing the MENU button.