Released to the press, June 6, 2012
Study: Consolidation Savings at Least $500,000 a Year
A half-million dollars every year. That’s the minimum cost-savings projection should Saugatuck and Douglas consolidate their two separate governments into one, according to an eleven-city study of 2009-2011 municipal financial data released today by the Consolidated Government Committee.
To facilitate thorough and reliable comparisons, the highly-regarded Southfield, Michigan-based accounting firm, Plante Moran, which conducted the effort on the CGC’s behalf, identified eleven peer cities with similar populations to a combined Douglas and Saugatuck. To further enhance comparability, the eleven peers also had to be Lower Michigan Home Rule cities, and be located on or near the shoreline of one of the Great Lakes.
The cities that met these requirements were New Buffalo, Bridgman, Watervliet, Whitehall, Montague, Ferrysburg, Hart, Charlevoix, East Jordan, Sandusky, and Harbor Beach. Of course, none of these is identical to Saugatuck Douglas, but as a group, they offer the best opportunity to assess comparable government costs.
To establish a minimum cost-savings estimate, the effort focused only on “municipal overhead” expense. These expenses are presently duplicated in Saugatuck and Douglas. Overhead was defined as the two accounting categories: “general government” expense and “community and economic development” expense.
The source for all the financial data analyzed was the yearly statewide “F65 filings” required of every municipality and school district by the Michigan Department of Treasury. For the purposes of this analysis, it was assumed the only source of savings would be municipal overhead. Thus, no cost-savings at all from any other expense category such as public works, buildings and grounds, parks and recreation, debt service, and other commissions were included, even though some savings in these other expense categories following consolidation would be virtually inevitable. The savings projected, then, represent a legitimate minimum number arrived at using the most conservative analysis.
The average annual municipal overhead expense for the peer-group cities over the three-year period was $541,499. The combined Douglas and Saugatuck three-year average annual expense was more than double at $1,191,498.
Plante Moran concluded: “We believe that it is very reasonable for the combined overhead costs of a consolidated Saugatuck-Douglas city to approximate the average of this group of 11 peers. This equates to a conservative savings estimate in excess of $500,000, or $250 per resident, every year.”
Commenting on the study, CGC chairman, Travis Randolph, said, “Freeing up a minimum of a half-million dollars every year to lower property taxes, invest in our community, or some combination of both would be a big deal. It’s a pretty compelling argument for consolidation.”
A copy of the full Plante Moran study findings can be found immediately below.