FRASER — For the fiscal year beginning July 1, the City of Fraser will balance its budget with the help of a 1.5-mill increase for general city operations.
After several budget hearings, the City Council on May 9 voted 7-0 to approve the 2013-14 budget with the general operating millage increase — the first tax increase the city has enacted since 2001, in spite of falling property tax revenue and state revenue sharing dollars. The millage is projected to generate about $670,000 for the city, helping fill a projected revenue shortfall.
“I’ve looked at this and looked at this,” said Fraser Councilman Dan Accavitti at the City Council’s May 9 meeting. “It’s obvious that we have to make millage adjustments.”
Accavitti said, plain and simple, taxes have dropped in recent years while city services have not, and that was something the city could not maintain any longer.
The city currently assesses a 16.8846-mill general fund millage. While the actual tax increase will vary by household, City Manager Richard Haberman said the increase for an average residential property will be around an extra $50 per year.
City officials pointed to a reduction in taxes for the city’s general fund, which have dropped from $10.9 million in 2009 to about $7.84 million in 2012, about 28 percent. And with Michigan’s Proposal A limiting how much the city can raise taxes as home values increase, Haberman said it will be years before tax revenues reach pre-recession levels.
“You can go down quickly; you just can’t go back up (quickly),” City Attorney Jack Dolan added.
In the past, the city has balanced its budget using one-time revenues, but Haberman said the city had “gone to the bottom of the hat, pulled out all the rabbits that are there and now all we’re getting is dust.”
Still, city officials pointed out that even with the 1.5 mills, residents would still be paying less in property taxes overall than in recent years because property values have steadily decreased since the economic downturn. As a result, one mill — equal to $1 for every $1,000 of a property’s assessed value — generates fewer dollars for the city than it has in recent years.
The City Council opted to go with a 1.5-mill increase for the general fund after rejecting several alternatives, including privatizing trash services, cutting non-essential services like the library and recreational programs, dipping into the city’s rainy day funds and drawing on the Public Safety department’s gambling and drug forfeiture funds.
Mayor Doug Hagerty proposed boosting 1 mill for sanitation, 1 mill for general fund and 1 mill for library services, but he ultimately voted with the rest of the council. The mayor has advocated for longer-term, multi-year budgets, which he says will introduce more certainty into the city’s finances.
“We have to be very careful as a small city; we can get swamped very quickly by economic conditions,” Hagerty said.
The budget also applied a 1 percent fee to cover the administrative costs of distributing and processing the tax bills for city services. Previously the fee had only applied to non-city-related taxes collected, like those for schools, which comprise the largest portion of residents’ tax bill. The administration fee will help defray some of these costs, Haberman said.
However, the approved budget did not solve other large-scale problems for the city, like underfunding of legacy costs and the city’s aging capital infrastructure, which city officials said is being addressed.
One option, supported by Councilwoman Barb Jennings, is taking out a bond to cover capital improvement projects on an as-needed basis.
As city officers noted, budgets are fluid, working documents that are routinely adjusted throughout the fiscal year, as necessary.