Boyne City’s annual budget forecast includes a mix of optimism, kudos for accomplishments, and caution against potential financial concerns.
In his March 13 letter to the Boyne City Commission, Boyne City Manager Michael Cain discussed the past, present, and future of the city’s purse.
“The city continues to be in very good financial shape, but there are warning signs that I believe greater attention needs to be paid to,” Cain stated. “As shown, our projected fund balance at the end of the coming fiscal year is estimated to be $1,533,265. That represents about a 38 percent fund balance—well above the city commission’s established policy of 25 percent, and much better than was projected at this time last year.”
He added, “The warning is that the budget is not balanced. We are projected to be dipping into that fund balance next year by $204,491.”
Cain said some of that money is going to one-time extra expenses like the $125,000 that is budgeted to provide matching moneys for the Rivermouth Restrooms project.
“But, other matters, like our increasing pension payments—something that we will need to account and budget for until 2024—give me pause,” he said. “They cannot simply be made to go away.”
Cain added, “Unless something changes, we cannot continue to spend at our current rate. If we did and saw similar deficits in the coming years, by FYE 2022 we would have drawn our fund balance down to about $920,000, about $100,000 less than what our 25 percent fund balance policy requires.”
The fund balance, Cain reminded, is intended for emergency situations and not to fund regular operations.
“In response to this issue, I am proposing in this budget that we retain the services of a municipal financial consultant to help us create a financial forecast model which will give us a clearer picture of what the coming five years or so holds for us financially,” Cain stated.
The proposed city general and city facilities debt millage rates for the coming year will hold steady at their current rates of 15.51 and 2.30 mils respectively.
“The proposed general operating millage rate remains at its lowest rate since FYE 1999,” Cain stated.
Boyne City is authorized by charter to levy up to 20 mils. And, since each mil levied generates approximately $169,745 for the general fund, the 4.49 mils the city is below its charter limits represents nearly $762,154 in unused capacity annually.
However, for the city to levy a millage rate higher than 16.33 mils, a vote of the public would be necessary.
“The city commission could, on its own, we believe, safely roll up our millage rate by .5 mils and generate an additional $84,873 this fiscal year,” stated Cain. “Staff encourages caution regarding any millage rate increase to avoid putting too much of a financial burden on our taxpayers and putting Boyne City at a competitive disadvantage.”
Ultimately, Cain said his concerns shouldn’t be taken as “some sort of doom and gloom message” but an opportunity for the city to plan for future financial issues.
“Overall, Boyne City continues to fare well,” Cain stated. “We have a very good workforce—one that continues to improve and serve our customers better each year. I am confident we will continue to accomplish even more great things as we move forward.”
Boyne City will hold a Public Hearing at 7 p.m. on Tuesday April 10, in the Commission Chambers of City Hall, 319 North Lake St., to hear comments and consider written comments from the public concerning the proposed Annual Budget for Fiscal Year 2018/2019.