Monday, July 9, 2012

Livingston's Airport Selling Assets to Make Ends Meet

The State of Michigan wants some answers from Livingston County -- the Republican-run entity that every election season brags about how sound its finances are.

Turns out, the Livingston County Commission in 2011 allowed three of its funds to run deficits. And that's a big no-no. The state has demanded a deficit elimination plan for each of the three funds.

The details of only one deficit elimination plan have become public yet. That is the plan to wipe out a $88,895 deficit for the Spencer J. Hardy Airport, not by cutting expenses or raising revenue to bring them into balance but by selling off assets. In this case, the county plans to grant an easement to Enbridge Pipeline Co. for a new pipeline across airport land for $500,000. Of course, Enbridge hasn't agreed to pay half a million dollars for the rights to a strip of airport land, but that's the county's "plan" for eliminating the deficit.

Also running deficits are the community corrections fund and the septage receiving station, but the county has yet to reveal the amounts of the red ink or the plan for eliminating them. In fact, the deficit in the airport fund only came to light because Livingston County Democrats noticed the discussion in the county commission's minutes.

It was an interesting discovery, since two years ago Democrats running for county commission pointed out the red ink in the little-used airport and were ridiculed by Republicans for daring to suggest that their financial management skills were lacking. For example, Richard Pine, Livingston County Aeronautical Facilities Board member, touted himself as "a finance guy with 33 years of experience at the car company that wasn’t take over by the government": and claimed that "Even with the present economic downtown, the airport generates enough cash to pay back its loan (from the county for airport construction) and then some."

Turns out that wasn't true.

The county commission insists that the airport is run "like a business" and even has a policy that "any services that lose funding (either charges-for services, fees, or contractual, etcetera) or which costs exceed the revenue generated and which services are not basic to the health and safety of the residents of Livingston County and/or the services are provided by others; shall be reduced commensurate with funding levels." Yet the commission did not require the airport facilities board to bring its spending into line with on-going revenues.

Despite not being able to pay its bills, the airport is in the midst of a huge expansion that includes a new terminal and a parking ramp largely paid for with federal funds, even though usage at the facility is declining. A Michigan Aeronautics Commission report from 2008 titled, "Michigan Airport System Plan," projects that the number of aircraft based at the airport is expected to plummet in coming years – from 137 in 2005, to 132 in 2010 to 103 by 2010 and to just 75 by 2030.

So if the airport can't afford the facility it has now, how will it make ends meet with an even bigger facility?