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May 1, 2013

City manager highlights proposed 2013-14 budget

By Mary Beth Almond
C & G Staff Writer

ROCHESTER — When looking at the city’s 2013-14 proposed budget, which includes no increases in taxes or fees, City Manager Jaymes Vettraino said Rochester’s future looks as certain and positive as it ever has.

Since October, the city has been working on preparing the budget, which Vettraino explained during an April 22 public hearing. The city’s budget defines anticipated city revenues and sets the legal limits for expenditures by the government. The city’s fiscal year begins every July 1 and ends on June 30.

The overall proposed city budget for fiscal year 2013-14 is $23,920,487, which is approximately 9.5 percent higher than the previous year. Vettraino said the increase is due primarily to a total of $1,516,185 in grant-funded projects and a special one-time donation for the building of a band shell in Rochester Municipal Park.

“Within that, there is $1.5 (million) for grants and a single, private, one-time donation for projects, so when you net those out, the budget is approximately 2.5 percent higher than last fiscal year,” Vettraino explained.

The city is obligated to pass a balanced general fund budget — meaning revenues must equal expenses. The balanced general fund budget is about $9.85 million, which is 2.6 percent higher than the 2013 budget and includes no appropriation of the fund balance, Vettraino said. This is the second consecutive fiscal year with an increase to the general fund budget after six consecutive years of decreasing general fund budgets, he noted.

The citywide property tax value increased by 2.44 percent — from $627,374,220 in fiscal year 2013 to $642,686,450 for fiscal year 2014. Vettraino said the increase in overall taxable values resulted in an increase of approximately $153,000 in revenue for the city’s general fund from property taxes, the first increase in taxable value since 2007.

Residential taxable values increased by 2.68 percent, which Vettraino said was good news for the city because residential properties make up 72 percent of the property value of the city and therefore has the most significant impact on the city’s budget. Industrial taxable value increased by 1.13 percent, primarily due to a single expansion by JHP Pharmaceuticals, which Vettraino said was a $10 million addition to the community last year. But commercial taxable values decreased by 1.56 percent, which resulted in a reduction of approximately $36,816 in revenue for the Downtown Development Authority budget.

Property tax levies for fiscal year 2014 remain unchanged at 12.4303 mills — 11.596 operating mills and 0.834 debt mills — which Vettraino said is 15 percent lower than the city’s highest rate in 2003.

The city has a low level of debt, Vettraino added, noting that the city has not taken on any new debt since 2001. He said the city’s debt expense for fiscal year 2014 is $458,116, which is less than 2 percent of all budgeted expenditures. By fiscal year 2015, he said, the city’s only bond debt will be the 2001 Older Persons’ Commission Building bond payment of $97,799.

Rochester isn’t exempt from pension liability or health care liability — it has a pension liability of more than $4 million and other post employment benefits liability of more than $1.8 million. However, Vettraino said the city designated cash on hand to cover those liabilities in full.

The City Council will consider the 2013-14 budget for adoption May 13.

While Mayor Pro Tem Jeffrey Cuthbertson said no budget is perfect, adding that there are “a handful of matters” he’d like to see be “a little different,” he said he’s “pretty happy” with this budget.

“The city’s done a good job to get much more efficient. We’ve reduced spending by something like 25 percent off its peak,” he said. “I’m very pleased. I’d like to thank administration and my colleagues for a lot of work on this budget. I think this is a very good proposal and I think it serves the interest of Rochester taxpayers and residents very well.”

Mayor Stuart Bikson called the budget “excellent.”

“I think it’s a responsible budget. There are not gimmicks in this. It is clear. We only spend money that we have, we plan for the future, and I think this is something that everybody on this council and administration can be extremely proud of. We do not have a lot of the problems that, unfortunately, other cities have, and a good bit of that is because of our conservative fiscal budgeting policy,” he said.

Councilmember Kim Russell said she thinks this is a “fantastic” budget.

“A lot of work has (gone) into it. There’s been a lot of tug of war at it, but I think it’s come to a place that we can be proud of,” she said.

A copy of the city’s proposed budget is available for download at www.ci.rochester.mi.us.

“The entire budget document is available on our website, and I would encourage everybody to visit that. The first 20 pages are a narrative of the highlights of the budget, and they include graphs that demonstrate the budget over multiple fiscal years,” Vettraino said. “If there are any questions, please contact myself or the finance director.”

You can reach C & G Staff Writer Mary Beth Almond at malmond@candgnews.com or at (586)498-1060.