Local Citizens Get Consolidation Facts From Citizens Research Council Official
“This (municipal consolidation) rarely happens in Michigan. This rarely happens in the United States,” Eric Lupher of the Citizens Research Council of Michigan (CRC) told an audience of about 50 people during a public meeting at the Saugatuck High School auditorium on Tuesday night.
Lupher spent the evening summarizing the CRC study’s conclusions concerning the proposed merger of the cities of Saugatuck and Douglas, then he responded to questions the attending public had written out on note cards.
Providing the nation’s latest merger as an example - Princeton Township and Princeton Borough consolidation in New Jersey - Lupher noted, “They (taxpayers) are paying less taxes. It can, in fact, happen.” But then he added, “I can’t guarantee it. It’s an assumption. You make your own assumption.”
The CRC study projects about $192 a year in tax savings for Douglas residents and $184 for Saugatuck residents based on an average property value, of $E200,000 ($100,000 in taxable value).
The cities jointly commissioned the CRC, an independent, non-partisan public affairs research organization, for $10,000, to conduct the study meant to shed some light on the issue.
What makes this proposed municipal consolidation case even more exotic than others is the fact that the Saugatuck/Douglas area is a tourist destination and consists of two very small communities, said Lupher.
“Saugatuck and Douglas are among two of the smallest cities in Michigan (Saugatuck’s population at 925 and Douglas’ at 1,323),” said Lupher, adding, “I know there has been talk about big government. This is not bigger government.”
He reiterated for the audience what is contained in the CRC report, completed this summer.
“We are calculating half a million dollars ($500,000) in savings (per year). That is consistent with earlier studies by Plante Moran, Michigan State University and Western Michigan University,” he said.
The costs for the merger process can be expected to run in the hundreds of thousands of dollars as a one-time expenditure, but Lupher noted the newly merged city can apply to the state of Michigan to get reimbursement.
And what are the chances of a merged city getting reimbursement grants?
“The state, in a bill signed by Gov. Rich Snyder this year, created the CGAP (Competitive Grant Assistance Program); it was created exactly for this purpose,” said Lupher.
“The state is watching. Some people in the state are anxious to see what happens in Saugatuck and Douglas. I can’t guarantee you will get the money, but you are the only communities thinking of wholesale consolidation,” he added.
Meant to help offset the cost for municipalities in consolidation or sharing of services, in fiscal year 2012, CGAP funding totaled $14.8 million, according to state government reports.
One of the trickiest issues is how to go about repaying the debt from each respective municipality that would eventually carry over if consolidation is approved, noted Lupher.
Saugatuck has much more long-term debt with a street and infrastructure bond debt over $3.4 million compared to Douglas’ total debt of $954, 651 coming from loan agreements, capital improvement bonds, etc.
Dealing with the Douglas debt is easy, but Saugatuck’s debt is more complicated.
“The bad news tonight is that I don’t have the answer,” said Lupher, referring to case law and statutory law providing no guidance.
“One scenario is that you carryover the debt for the property owners in Saugatuck. Another option is to spread the debt across the new merged city. It is something you have to figure out down the road when you pay a high-priced attorney to come and figure that out for you.”
Asked what he had learned about those cases where municipal consolidation has been defeated in the state of Michigan, such as, among the few cases, the voter-rejected proposed to dissolve Onekama Village and join Onekama Township as one municipality, Lupher said,
“What we have learned is that people appreciate place. That people are willing to pay more taxes to have their place.”
He continued, “What does it take to have a sense of place? I ask you (the attending audience), does it require two communities for you to get that sense of place.”
The majority of the savings in the CRC report comes from eliminating a duplicate municipal workforce (city manager, treasurer, and clerk).
Savings would also come from merger public works departments and from funding the cost of having one city council and not two.
The question of whether the cities should combine or not combine will go before voters of both affected municipalities in the form of a referendum on the November 5 general election.