Boyne City proposes 2021 budget

 

With a relatively small increase to the facilities debt millage, and no change in its general millage rate, Boyne City proposes a total levy of 17.76 mils for its 2020-2021 fiscal year with total projected expenditures of $14,624,693.

If approved by Boyne City commissioners, the proposed general fund rate will remain at 15.51 mils—the lowest rate since 1999—and the city facilities debt millage rate would increase from 2.2 to 2.25 mils.

“Overall, Boyne City continues to fare very well,” stated Boyne City Manager Michael Cain in his budget summary to the Boyne City Commission. “Until a week ago, I would have said the outlook for the coming year remains much the same. The COVID-19 situation is one that we didn’t see coming just a short while ago and are, at this point, uncertain what overall impacts it will have.”

But, he added, “By continuing to hope for the best but plan for the worst, I remain very confident that Boyne City is in a very good position to handle pretty much whatever might come our way. Our house is strong and in good order. We are well positioned to continue to build a better Boyne.”

Voters approved the city facilities millage in 2015 at a rate of 2.69 mils.

“[W]e want to levy just enough to be able to make our required payments, which increase annually a few thousand dollars each year,” Cain stated. “The actual millage rate in future years will depend on the amount of the city’s taxable value. This debt millage will continue for another 17 years—through 2036.”

Two major challenges Boyne City Faces are the COVID-19 pandemic and the area’s rising water levels.

“The City remains in very good financial shape. However, it appears that we will need to work even harder to maintain that position,” Cain stated. “While the budget as presented forecasts a $150,000 surplus for the coming fiscal year, the projected deficit for the current fiscal year has ballooned from an originally projected deficit of $199,651 to $909,963. The increase in the current year’s deficit are related to the deferral of major grant proceeds of $408,515 for the (Veterans Park) Pavilion project and $243,880 for the Boyne Valley Trail—as well as increased costs to the general fund for projects like the Pavilion (and) Cedar and Terrace Street project.”

He added, “The positive but, in my view misleading, appearing result of this is the projected increase in the fund balance through the expected receipt of these deferred revenues. As I have reported in the past, we remain in a position where we could quickly strengthen our financial position and fund balance by decreasing or eliminating optional projects.”

Cain said he considers optional projects to be ones which are not necessary to carry out the city’s primary public operation and service responsibilities.

Another challenge the city faces are its pension obligations, which are forecast to peak in 2022 at a cost of $511,000 and begin decreasing in 2023 to $355,000. In 2024, the figure is expected to decrease to $88,900 and stay in that range for the following years until the city’s defined benefit obligations end.

“These projections could be challenged and need to be revised if the recent economic uncertainties and fluctuations turn into a long-term economic downturn,” stated Cain.

Boyne City expects property tax collections for city operations to increase by approximately $91,000. This is potentially $81,972 less in taxes than the $2,901,851 the city had budgeted during the 2009-2010 fiscal year.

“Boyne City continues to be in good financial health for its current operations,” stated Cain. “It allows us to maintain excellent services to our citizens while undertaking a steady number of projects to improve our community.”

He added, “[I]t should continue to be noted that funds are not currently available for the expansion of services unless we can create new efficiencies resulting in cost reductions or generate additional revenues. Given what I have reflected upon earlier, I do not see this situation changing prior to FYE 2024.”

During this past year, Boyne City had numerous significant events and projects which included:

  • Completed first Special Assessment District in about 20 years
  • Completely rebuilt Cedar and Terrace Streets creating a more sensitive Storm Water collection system.
  • Approved the downtown Lofts on Lake Street Development and associated PA 210 financial support.
  • Successfully completed Boyne Mountain sanitary sewer force main project.
  • Received up to $408,515 MEDC for Veterans Park Pavilion Expansion and Renovation
  • Completed the final phases of Veterans Park Pavilion Expansion and Renovation -Began construction on the Boyne Valley Trail
  • Establish Sister City Relationship with the Boyne Valley in Ireland
  • Main Street program recognized as one of top eight nationally
  • Resurfaced North Lake Street
  • Developed plans for Second Section of North Lake Street/Michigan Resurfacing / Trail Projects
  • Facilitated environmental protection, redevelopment and opening of 437 Boyne Avenue
  • Completed the SAW grant
  • Saw completion and opening of the new Surgical Center in the Business Park
  • Completed Recreation Master Plan Update
  • Undertook Planning efforts for Avalanche and Open Space parks
  • Applied for Marina Expansion grant
  • Applied for MNRTF recreational facilities grant -Complete Avalanche Trail System
  • Jointly Secured Continued the City’s Financial Forecast model development
  • Continued work on Boyne City Trail extension plan
  • Completed installation of North Boyne wellfield Emergency Generator
  • Replaced DPW 3/4-ton Truck with Plow
  • Purchased DPW Underbody Blade and Conveyor Belt
  • Converted DPW equipment trailer
  • Replaced 5 sets of Fire Dept Turnout Gear
  • Installed new playground equipment at Peninsula Beach Park
  • Installed new shelter at Waterworks Park
  • Applied for County recreation grant
  • Maintained all existing programs & services

Significant proposed budget items for next fiscal year include:

  • Complete Boyne Valley Trail
  • Complete Second Section of North Lake Street/Michigan Resurfacing/shoulder widening
  • Begin Marina Expansion work
  • Replace DPW Dump Truck with Plow and Sander
  • Replace Vactor Truck
  • Undertake several recreation enhancements projects
  • Replace Police car
  • Replace 1988 Fire Dept Equipment vehicle
  • Replace Water/Waste 3/4-ton pickup
  • Replace DPW 1/2-ton pickup
  • Replace Kubota tractor
  • Replace Police Dept. laptops
  • Replace five EMS patient monitors
  • Explore water/wastewater distribution and collection system expansion options
  • Continue utility meter conversion
  • Maintain existing program & services

Millage Rates and Fees
Boyne City is authorized by its charter to levy up to 20 mils.

Since each mil levied in the city generates approximately $181,809 for the general fund, the 4.49 mils that the city is below its charter limits represents about $816,323 in unused capacity.

For the city to levy a millage rate higher than 16.33 mils, a vote of the public would be necessary.

The Boyne City Commission could, on its own, increase the millage rate by 0.5 mils and generate an additional $90,905 this fiscal year.

However, Cain said city staff encourages caution regarding any millage rate increase to avoid putting too much of a financial burden on taxpayers and placing Boyne City at a competitive disadvantage when seeking new residents and businesses.

City Funds
The city’s cemetery, ambulance, fire, rubbish, and local and major street funds continue to require contributions from the General Fund and will continue to do so for the foreseeable future.

Contributions to the ambulance fund were significantly revised eight years ago in working with the city’s partnering and contracting Townships.

The airport fund will not require contributions from the general fund in the coming year but may need assistance from time to time.

The marina’s future expansion and financing needs and options are continuing to be explored and will be discussed with the commission further in the coming fiscal year.

A 1.0 percent Water and Sewer rate increase is proposed in keeping with the recommendations of the city’s financial consultant.

“[W]e have gone with smaller rate increases on an annual basis over the years in order to avoid less frequent but larger future increases,” Cain stated. “It is our hope that, by implementing a rate increase this year, we can avoid larger increases in the years ahead.”

He added, “If we are to continue undertaking important infrastructure improvements, including the city’s underground city utilities, we need to raise adequate funds for those purposed.”

Airport Hangar rates are proposed to remain unchanged this year and the city has no hangar vacancies.

 

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