EDITORIAL: The City’s Five Year Capital Improvement Plan

FROM A TRAIN STATION to sidewalks, the city’s 2015-2020 Capital Improvement Plan (CIP) is jam-packed with projects that city staff suggest will “provide for large, physical improvements that are permanent in nature that are needed for the functioning of the community, including transportation, parks, utilities, and municipal facilities improvements.” The  CIP is a 34 page to do/wish list. City Council is not permitted to delete items from the CIP, but instead decides which of the items will be funded. In other words, City Council members control the purse strings.

With the election of Ward 4 Council member Jack Eaton, City Council now has four members who ran for office promising to hold on to the taxpayers’ purse strings. Ward 2 Council member Jane Lumm can be relied on to irritate her more profligate Council colleagues by consistently asking about funding mechanisms and pushing to make sure that proposals that require funding identify funding sources.

Ward 1 Council member Sumi Kailasapathy, a CPA, has repeatedly shown that having a Council member who can cut through the financial gobbledly gook served up by city staff and others is crucial to the public’s understanding of how its money is being spent. Kailasapathy’s questions, while tedious to those who would prefer  not to answer them and who would prefer less financial detail, often reveal important facts and make clear exactly how spending decisions will impact the General Fund.

The CIP includes projects that are crucial to the upkeep of the city’s infrastructure such as street construction and sanitary sewer repairs and improvements. There are mechanical repairs and improvements to each of the city’s fire stations, and concrete repair work on Barton Dam. The five year CIP includes a proposed $42 million dollars in repairs, maintenance and improvements to the city’s parks and park facilities. In also includes, in fiscal year 2015, $47 million dollars in spending related to what is now referred to as “The Ann Arbor Station,” a train station whose construction no City Council has ever approved and the public has never voted to support.

In total, the CIP proposes $782 million dollars in capital improvements over the next five years. City Council members must not only take into account the need to fund capital upkeep and improvements, they must take into account the growing $260 million dollar retiree pension and health care funding gap. This gap requires increasingly large extra payments from the city’s General Fund which pays for services such as police and fire. An additional payment of over $11 million dollars is budgeted to go to the pension funds in this fiscal year.

Mayor Hieftje and Council members who served between 2005 and 2011 did not have the collective will to overhaul the city’s pension ordinance or to negotiate union contracts that included sustainable benefits. Taxpayers have paid dearly for this recalcitrance. The retiree pension fund went from being 128 percent over-funded to $100.1 million underfunded.

Capital projects which require bonding, such as the “Ann Arbor Station,” raise the city’s debt—payments for which are also taken from the General Fund. Council members must keep the purse strings tightly shut for all but the most crucial capital projects. In conjunction, a complete overhaul of the pension ordinance should top Council’s to-do list in 2014-2015, including a plan to retire the $260 million dollar funding gap. It’s time to get the city’s retiree benefit plans in order.