The City of Ferndale is poised for a significant budget shift as it anticipates a 12% reduction in its overall millage rate for the fiscal year 2026. This decrease, amounting to approximately 0.2347 mil, reflects a broader trend of declining city operating millages, positioning Ferndale among the lower tax levying municipalities in the region.

During a recent City Council Budget Workshop, officials highlighted the implications of the Headley Amendment and Proposal A, which limit property tax revenue growth. These regulations have forced Ferndale to navigate a challenging financial landscape, where rising housing prices—up 202% since 2012—far outpace the city's taxable value growth of 83%. This disparity has created a funding gap that the city must address to maintain essential services.

City leaders discussed three primary strategies to bridge this gap: pursuing new development, reducing municipal services, or seeking a millage override. The latter was previously attempted in November 2024 but was met with resistance from residents. As a result, the city is now considering a more balanced approach that includes a Headley override to stabilize operating revenues while being mindful of cost-saving measures.

The budget for fiscal year 2026 is projected at approximately $30.9 million, with property taxes and voted millage accounting for about 51% of total revenue. Personnel costs, particularly in public safety, dominate the expenditure side, comprising 64% of the general fund budget. Despite recent improvements in managing retiree healthcare costs, labor pressures and inflation continue to challenge the city's financial stability.

As Ferndale prepares for the upcoming budget year, the focus remains on finding a sustainable balance between revenue generation and community needs, with residents set to weigh in on potential millage proposals in the near future.