Beverly Hills, Mich. — The Road Commission for Oakland County (RCOC) has issued its three-year Financial Plan document covering the years 2011 through 2013, and the future does not look bright. The document was received by the RCOC Board of Road Commissioners yesterday, Feb. 11.
This document, essentially an agency budget for the three future years, allows RCOC to plan for anticipated revenue and needs changes in the coming years. It is compiled through an extensive financial planning process conducted by RCOC Managing Director Brent Bair, Deputy Managing Director/County Highway Engineer Dennis Kolar and all of the agency’s department heads. RCOC has been preparing three-year plans since 1982.
RCOC Finance Director Dennis Lockhart leads the process. He estimates future-year revenues based on his own analysis of revenue sources in conjunction with revenue projections provided by the state.
The plan notes that state road funding, derived primarily from the state-collected gas and diesel taxes and vehicle registration fees – the primary source of road funding in Michigan – declined by a cumulative 4.6 percent from 2000 through 2010.
That decline, coupled with dramatic increases in nearly all the costs associated with maintaining roads, have already hobbled RCOC, causing a 14 percent reduction in staff just since 2007 and reductions in the level of services provided in nearly all areas. The Three-Year Financial Plan does not anticipate things improving in the coming years.
In fact, the document calls for further reductions in staff in each of the three years covered, as well as further deferment of the purchase of sorely needed road maintenance equipment. All of this means the agency anticipates service levels will continue to drop throughout the three-year period covered in the document.
The Financial Plan projects that state road funding to RCOC will be stagnant during the three-year planning period. “The good news is, we expect the state funds to stop declining,” observed RCOC Managing Director Brent Bair. “The bad news is revenues will be basically flat, while all our expenses are expected to continue to rise.”
Bair noted that while all public agencies are going through tough financial periods right now, the difference for road agencies is that Michigan has been in the bottom 10 states in the nation in per capita state and local road funding for more than 45 years, according to US Census Bureau data. “Michigan road agencies have never had ‘good times’ in which to catch up with their needs,” he explained.
The Financial Plan calls for the elimination of an additional 19 positions in 2011, 14 in 2012 and 22 in 2013. In 2010, RCOC is already at the lowest staffing level seen since the 1960s.
“The drastic reductions in the workforce will have a significant impact on the level of service provided to the public,” the document states. As has been the case with staff reductions to this point, future staff reductions will be done through attrition if possible.
In addition to the reduced staffing levels, another significant impact of the lack of adequate revenues is the inability of the agency to replace aging trucks and other pieces of critical equipment. Nor is it able to perform the routine or preventive maintenance required to prevent the road system from deteriorating.
RCOC uses a sophisticated fleet maintenance analysis process to determine when it is more cost effective to replace equipment as opposed to continuing to maintain the equipment. Unfortunately, RCOC has not been able to replace equipment at this critical cost point for a number of years, as there simply has not been funding available for the replacement equipment purchases. That is expected to continue to be the case in 2011 through 2013.
By 2011, the plan projects RCOC will have a deferred-equipment-replacement deficit of nearly $20 million. That number is expected to grow to $22.6 million in 2012 and $25.2 million in 2013.
Other service areas where RCOC expects to make cuts during the 2011 to 2013 period include: gravel road maintenance, paved road maintenance, traffic management, drainage, guardrail maintenance and sign maintenance.
“This is probably the worst financial outlook this agency has faced in many years,” noted Managing Director Bair. “As a result, we have made – and will continue to make – many changes in the way we do business in order to operate more efficiently. We are cutting our costs every way and everywhere we can. However, without an increase in state road funding, our service level will continue to drop. The residents and businesses in this county deserve a better level of service, but there simply is no money to provide the level of service they deserve.”
The RCOC Financial Plan for 2011 through 2013 is available on the RCOC Web site at http://www.rcocweb.org/Lists/Publications/Attachments/82/FinancialPlan2011-2013.pdf.
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