BY BENJAMIN J. GOHS, EDITOR
In the weeks leading up to its Tuesday April 12 public budget hearing, Boyne City Commissioners met to parse the tentative 2016-2017 finances.
Boyne City Manager Michael Cain presented the budget to commissioners during a budget work session on Tuesday March 22, during which time he indicated—despite Boyne City’s growth—financial factors make it necessary to be careful when planning for future operations, infrastructure improvements and community enhancement projects.
“I don’t like to think I’m a pessimistic person. I like to be realistic in what we present you in regards to the budget … but we’re going into fiscal areas that are a little bit more uncharted for us,” Cain said. “It’s going to be tight and … I’m not looking to be a negative person … but sometimes I’m going to be pushing back and saying ‘no’ and saying ‘we can’t just spend; let’s look at how we can do more with less as we have been doing for the last decade.’”
The budget document was released to the public late last week. It is attached at the bottom of this story.
The public budget hearing is scheduled to occur during the regularly scheduled 7 p.m. Tuesday April 12 meeting. Reminder: the temporary Boyne City Hall facilities are located in the Honeywell building across the street from old city hall.
Breakdown in Dollars
The projected general fund expenditures alone are $3,484,140.
Projected total expenditures for the next fiscal year (including inter-fund transfers) are $17,106,308.
Each of the following funds, projects and departments is shown with its dollar amount and the percentage it represents:
- Airport, marina, cemetery, and rubbish collection — $326,464 (2.12%)
- Ambulance — $967,165 (5.65%)
- Streets — $1,330,003 (7.77%)
- General Fund — $2,609,338 (15.25%)
- City facilities and debt service — $6,801,961 (39.76%)
- Motor pool — $298,950 (1.75%)
- Water/Wastewater Funds — $2,246,549 (13.13%)
- Transfers from general fund — $874,802 (5.11%)
- DDA/LDFA/Thunder — $991,331 (5.8%)
- Fire dept. fund — $623,745 (3.65%)
Cain said the city must take care in the next few years while it works through what he sees as a bubble.
“We just spent a whole bunch of money on a new DPW facility. We’re going to spend a whole bunch of money on a new city hall. We’re not exactly sure what all that’s going to cost us,” Cain said.
“We have some really huge bills out there that we want to spend on, whether it’s the open space (475 North Lake St.) or the pavilion, improving restrooms down at the river mouth—things of that nature.”
He added, “Our appetite’s still huge but I’m going to temper that appetite at times. And, I know you’ll challenge me, as you should, to say, ‘Well, we still want to do it. Find a way for us to do it.’”
Cain said the city has fewer resources to work with moving forward, and that state grants will be harder and harder to obtain.
Cain mentioned the low-and-moderate-income survey currently in production, which could mean some grant moneys for the area.
Boyne City Commissioner Ron Grunch said Boyne City’s status as a low-to-moderate-income area in previous years was a big help.
“That was really one of the keys to our success during this growth spurt that we’ve had,” Grunch said.
The Pot’s Empty
The overall takeaway from the budget work session seemed to be that the city was in good shape financially but that it needs to be careful moving forward.
“The city is still in very sound financial health, despite my doom and gloom stuff,” Cain said. “We just don’t have the pot of cash that we’ve been able to maneuver with as quickly or as agilely as we have in the past.”
He added, “If there is a huge grant opportunity out there, even if we get the low-and-moderate-income things, we just don’t have the matches in the pots of money like we used to. We have basically spent down almost all of our funds that we had the large pots in.”
Cain said the city still has fund balances in all its funds and it is still making its debt payments but the amount of extra money it used to have is nearly gone.
Aside from city spending on major projects, Cain said the decrease in state revenue sharing is also affecting the city’s finances.
“Just this year alone, compared to 2002, we are bringing in about $60,000 less in one year, in real dollars,” Cain said in reference to the State of Michigan’s change in how it shares tax revenue with local governments, adding that the way revenue sharing is now being funded, the city actually lost out on nearly $170,000 just this past fiscal year.
“That’s a little over a mill for us on an annual basis,” he said. “That’s really helped frame a lot of the discussions that we’ve had for as long, probably for longer, than I’ve been here as your city manager.”
Cain added, “With all the progress and the great things that we’ve been doing, in the background we’ve always kind of been—at least on a staffing level and in many respects—in a bit of a cutback state.”
Cain said what has happened in Lansing in regard to revenue sharing is shaping how the city plans for future growth, indicating city leaders want to explore more improvement projects but are limited by decreased revenues.
“It all comes down to the almighty dollar: Boyne City’s done a good job over the last decade or so with regards to masking a lot of what’s gone on or been handed down to us at the state level; I think, in many respects, much better than a lot of communities around us,” he said. “The grants we have received and what we have been able to do with them with regards to our infrastructure, our buildings downtown, things of that nature, has really kind of countered the trend—at least on a temporary basis—with regards to overall revenues.”
Cain added, “The city has been progressive with regards to making changes with regards to benefits and things like that to minimize our costs but there’s still implications with regards to that.”
Cain said this isn’t just a Boyne City problem, adding that discussions like this one are happening all over the state.
“The state has basically put the burden of putting their financial house somewhat in order on our backs,” he said. “My opinion is they’ve done a crummy job of it anyway: the roads are still falling apart, we’re not investing in state parks the way we should.”
Cain said, while state revenue has increased by 29 percent, its revenue sharing with local communities has gone down by 56 percent.
In his narrative provided in the proposed budget report, Cain said this year’s budget is balanced but required a draw from the city’s fund balance of $62,527.
“That draw down is tiny in comparison to the $2,209,582 draw down that we proposed last year in the budget,” Cain stated. “But, that was a one-time undertaking to fund the construction of our recently completed Department of Public Works facilities and we are currently projecting that we only need to dip in to the fund balance by $1,276,357 to make our current fiscal year balance.”
According to Cain, the city facilities project construction period will cause some additional expenses in regard to several of the city’s temporary relocation efforts.
“It also requires us to undertake some long-term debts and costs as we build our new facilities,” he stated. “For the first time since the fiscal year ending (FYE) April 30, 2009, we will have a debt service millage on top of our normal city operating millage. This will bring to an end our string of years of the city’s lowest millage rate in over 35 years.”
Cain added, “[W]e anticipate needing to levy 1.32 mills to cover this year’s temporarily reduced debt payment. In FYE 2017-18, we anticipate the rate will increase to the 2.18 mill range, which is still about a half-mill less than the 2.69 mills that was indicated on the May (2015) ballot. The actual millage rate will ultimately depend on the amount of the city’s taxable value.”
The city facilities debt millage is expected to continue for 20 years.
“While this budget proposes spending more than we are bringing in, we are using a combination of money saved for these purposes, grants and current revenues to continue to help make great things happen here in Boyne City,” Cain stated.
The city plans to collect roughly the same in property taxes as it did last year.
“That means we are still intending to accomplish what we are proposing with a projected $244,576 less in taxes than we budgeted during the 2009/2010 fiscal year,” Cain stated.
The city’s rate of 15.51 mills to cover operating costs will remain the same as recent years prior but the city facilities millage will be an additional 1.32 mills.
The city may legally levy up to 20 mills by its charter. But, anything over 16.01 mills requires a vote of the people.
Every mill the city levies in taxation raises nearly $166,860.
Look for this week’s public budget hearing coverage in the April 20 edition of the Boyne City Gazette.