City of Sterling Heights CITIZEN'S GUIDE TO FINANCES HOW THE CITY ALLOCATES ITS MONEY

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$33.0 HOW THE CITY ALLOCATES ITS MONEY GENERAL FUND 2017/18 General Fund Budget: $93.9 $714 per 2015/16 2016/17 2017/18 REVENUES Actuals Actuals Budget $19.4 The financial information presented here is intended to provide City s with general information about how the City's revenue is utilized. Detailed information can be found in the City's award winning budget document. As you will note, over 68% of the dollars spent are for Public Safety and Public Works. The City's General Fund Budget of $93.9 equates to $714 spent per. WHERE THE CITY GETS ITS REVENUE City Operating Taxes $40,154,340 $38,159,790 $39,083,290 Federal, State & Local Returns 11,772,080 17,503,110 15,497,770 Charges for Services 9,719,470 9,842,020 11,664,220 Police & Fire Pension Tax 7,992,150 7,914,370 8,297,370 Safe Streets Tax 7,121,200 6,786,370 6,942,620 Refuse Tax 4,786,970 4,418,200 4,464,060 Other Revenue 3,043,560 2,605,580 2,920,170 Cable Revenue 2,595,400 2,579,600 2,650,000 Fines & Forfeitures 3,057,420 2,944,500 2,626,650 Licenses & Permits 2,149,070 2,568,900 2,297,500 $251 per Police $147 per Fire $11.3 $4.5 Refuse Collect. $86 per Public Works $7.6 $58 per City Admin. $7.2 Fines & Forfeitures 2.7% Licenses & Permits 2.4% $55 per Trans. Out Charges for Services 12.1% $6.1 $46 per City Dev. $3.4 $26 per 41-A Dist. Court State & Local Returns 16.1% $2.7 $20 per Public Library Cable TV 2.7% Other Revenue 3.0% Property Taxes 61.0% $1.8 $1.4 $14 per Gen. Exp. $11 per Com. Rel. TOTAL REVENUES $92,391,660 $95,322,440 $96,443,650 OTHER FINANCING SOURCES Transfers In 1,350,060 0 0 TOTAL REVENUES & OTHER FINANCING SOURCES $93,741,720 $95,322,440 $96,443,650 2015/16 2016/17 2017/18 EXPENDITURES Actuals Actuals Budget Police Department $32,935,260 $31,614,920 $32,996,430 Fire Department 16,585,310 16,870,390 19,353,120 Public Works Department 6,279,890 6,381,360 6,858,000 City Administration Department 6,810,640 7,204,710 7,653,610 City Development Department 5,625,780 5,687,710 6,062,790 Refuse Collection 4,767,020 4,437,520 4,464,060 41-A District Court 3,223,740 3,242,870 3,366,950 Public Library Department 2,493,100 2,524,650 2,730,870 Parks & Recreation Department 1,900,650 2,016,840 0 General Expenditures 1,025,080 1,118,900 1,766,770 Community Relations Department 1,022,790 1,095,330 1,430,000 TOTAL EXPENDITURES $82,669,260 $82,195,200 $86,682,600 OTHER FINANCING USES Transfers Out 7,217,320 7,255,500 7,176,880 TOTAL EXPENDITURES & OTHER FINANCING USES $89,886,580 $89,450,700 93,859,480 REVENUES OVER EXPENDITURES $3,855,140 $5,871,740 $2,584,170 *Prior to 2017/18 the Parks & Recreation Department was budgeted as part of the Community Services Department in the General Fund. In fiscal year 2017/18 after voter approval of the Recreating Recreation millage the Parks & Recreation Fund s pre-existing expenditures are expensed in Transfers Out.

FINANCIAL & DEMOGRAPHIC BENCHMARKS Top 10 Comparable Michigan Cities by Population (Excluding Detroit) TAXES PAID 1. Southfield $892 2. Dearborn 874 3. Grand Rapids 757 4. Warren 733 5. Ann Arbor 697 6. Lansing 677 7. Troy 612 8. Farmington Hills 588 9. Livonia 570 10. STERLING HEIGHTS 499 POLICE & FIRE RETIREMENT SYSTEM PERCENT FUNDED (GASB VALUATION) 1. Troy* 108.4% 2. Livonia* 101.4% 3. Ann Arbor* 83.8% 4. Grand Rapids 81.4% 5. Farmington Hills* 77.5% 6. Dearborn 75.1% 7. Southfield 74.2% 8. Lansing 65.3% 9. STERLING HEIGHTS 63.8% 10. Warren 58.2% * Includes general employees GENERAL EMPLOYEES PENSION SYSTEM PERCENT FUNDED (GASB VALUATION) 1. Troy* 108.4% 2. Livonia* 101.4% 3. Ann Arbor* 83.8% 4. Grand Rapids 82.9% 5. STERLING HEIGHTS 78.1% 6. Farmington Hills* 77.5% 7. Dearborn 75.8% 8. Southfield 68.9% 9. Warren 59.4% 10. Lansing 50.5% * Includes police & fire employees STATE EQUALIZED PROPERTY VALUE (billions) 1. Ann Arbor $7.1 2. Troy 5.9 3. Grand Rapids 5.6 4. STERLING HEIGHTS 5.3 5. Livonia 4.7 6. Warren 4.1 7. Farmington Hills 4.0 8. Dearborn 3.7 9. Southfield 3.0 10. Lansing 2.3 CITY BOND RATINGS 1. Farmington Hills AAA 2. Troy AAA 3. Ann Arbor AA+ 4. Grand Rapids AA 5. Livonia AA 6. Southfield AA 7. STERLING HEIGHTS AA 8. Warren AA 9. Lansing AA- 10. Dearborn A+ FULL-TIME EMPLOYEES PER 1,000 RESIDENTS 1. Grand Rapids 8.1 2. Southfield 7.8 3. Dearborn 7.6 4. Lansing 7.6 5. Ann Arbor 6.5 6. Livonia 6.0 7. Warren 5.2 8. Farmington Hills 4.4 9. Troy 4.3 10. STERLING HEIGHTS 3.6 GENERAL FUND RESERVES 1. Southfield $465 2. Warren 412 3. Troy 403 4. Farmington Hills 387 5. Dearborn 330 6. Grand Rapids 259 7. Ann Arbor 221 8. Livonia 118 9. Lansing 117 10. STERLING HEIGHTS 88 TOTAL GOVERNMENT DEBT 1. Ann Arbor $2,760 2. Dearborn 1,968 3. Lansing 1,936 4. Southfield 1,201 5. Warren 1,154 6. Livonia 663 7. Grand Rapids 614 8. Farmington Hills 415 9. Troy 367 10. STERLING HEIGHTS 183 AVERAGE RESIDENTIAL MONTHLY WATER & SEWER BILL 1. Lansing $118 2. Southfield 101 3. Dearborn 81 4. Grand Rapids 78 5. Ann Arbor 76 6. Farmington Hills 75 7. STERLING HEIGHTS 74 8. Livonia 73 9. Warren 70 10. Troy 66

LOSS OF PROPERTY TAX REVENUES LOSS OF STATE REVENUE FUNDING TO CITY LOW CITY FULL-TIME STAFFING Loss of $119.5 City property tax revenues historically increased, despite a declining City tax rate, due to inflationary property assessment increases and new development. Starting in 2009, revenues declined due to falling assessments, partially offset by a millage adjustment in 2011, 2015 and 2018. The City s second largest revenue source is State Revenue Sharing, which is distributed to communities by the State. The State has cut the City s funding by $43.4 cumulatively since 2002. When inflation is factored in, the City has now lost $91.6. City full-time staffing has declined by 27%, or 178 positions since 2002, saving $13.9 annually.

FUNDING FOR LONG-TERM RETIREMENT LIABILITIES LONG-TERM RETIREMENT ASSETS VS. LIABILITIES LONG-TERM RETIREMENT PLANS PERCENT FUNDED The City contributes 100% of the actuarially required funding for all long-term retiree liabilities including police & fire pensions, general employee pensions, and retiree medical. The amounts contributed have increased from $13.9 in 2009 to $23.0 in 2018. 62% of the increase is to fund police & fire pensions. Amounts have stabilized in the past six years due to benefit reforms. $412 has been set aside to fund future long-term retirement liabilities. The City has closed its General Employees pension plan and Retiree Medical Plan, which will begin to reduce long-term liabilities. Nearly 50% of the gap between assets and liabilities is a result of medical inflation, which has increased retiree medical liabilities. The City has worked hard to reduce the growth of the liabilities by changing benefits and eliminating benefits for new hires. Both the General Employees and Police & Fire pension systems have seen a decrease in funding levels due to prior year declines in the stock market and reductions in the long-term rate of return assumptions. The General Employees pension system and retiree medical plans are both closed to new members. In addition, all employee pensions and medical benefits have been reduced with new labor contracts.

MACOMB COUNTY CITY TAX RATES - 2016 DECLINING TOTAL PROPERTY TAX BILLS (AVERAGE RESIDENT) MONTHLY FAMILY HOUSEHOLD BILL COMPARISON 1. Centerline 38.98 2. Warren 27.67 3. Fraser 25.28 4. Eastpointe 25.15 5. Roseville 24.09 6. Mount Clemens 22.06 7. St. Clair Shores 21.23 8. Utica 20.99 9. Richmond 16.56 10. STERLING HEIGHTS 15.19 TYPICAL MONTHLY BILLS CITY TAXES Police $30 Fire $17 Public Works & Refuse $11 City Administration $7 Gen. Exp. & Capital $7 City Development $5 Library $4 41-A District Court $3 Debt Service $3 Community Relations $1 CITY TAX BILL $88 Macomb Average: 22.30 mills The City s property tax rate is lower than most cities in Michigan. It is also one of the lowest of any city in Macomb County. The tax rate in Sterling Heights is 7.2 mills below the average of all cities in Macomb County. The tax rate in Warren, for example, is over 12.5 mills or 82% higher than in Sterling Heights. Despite an increase in the City s millage rate in 2014 due to the voter approved Safe Streets Proposal, and in 2017 due to the Recreating Recreation Proposal, the average homeowner s tax bill remains $88 or 3.3% less than it was ten years ago due to lower property assessments. In addition, the inflationary adjustment in taxable value was only 1.6%, in 2014 and 2015, 0.3% in 2016, and 0.9% in 2017. Over 60% of the total tax bill goes to fund school and county operations. For the average, the City-only portion of the tax bill is only $88 per month, which is lower than many other typical household monthly bills.