Birmingham financial forecast looks five years ahead

By: Mary Genson | Birmingham-Bloomfield Eagle | Published February 3, 2025

 Assumptions were shared about the city of Birmingham’s finances for the next five years during a five-year financial forecast meeting Jan. 25. The meeting was presented by the city’s finance department and a representative from Plante Moran.

Assumptions were shared about the city of Birmingham’s finances for the next five years during a five-year financial forecast meeting Jan. 25. The meeting was presented by the city’s finance department and a representative from Plante Moran.

Photo by Erin Sanchez

Advertisement

BIRMINGHAM — At the beginning of every year, the city of Birmingham holds a long-range planning meeting that opens with a five-year financial forecast from the city’s finance department. This year’s meeting was held Jan. 25.

In the forecast, assumptions are made and presented from estimates of the revenues and expenditures for the next five years. With every forecast, there are limits such as assumption risk, changes in policy or priorities, future department projects or service levels, and unforeseen disasters or undeveloped projects. The forecast specifically focuses on assumptions for the general fund, major and local street funds, and the water and sewer funds in Birmingham.

The forecast does not predict the actual finances for the projected time period. Rather, it is intended to be used as a tool by the city.

Mark Gerber, the city of Birmingham’s finance director, said at the meeting, “It’s not something that is meant to be a solid representation of what the future is, but kind of gives you a glimpse of kind of what the future may look like.”

Early in the presentation, Philip Femminineo, a representative from Plante Moran, summarized Birmingham’s revenue status. In Birmingham, revenue has risen nine out of the past 10 years, with the only down year being from 2019-2020, during the COVID-19 pandemic. This is expected to continue to increase, primarily led by property tax revenue.

Femminineo said that expenditures will fluctuate depending on what projects the city plans and personnel costs.

“With the projected increase in revenues, the city is still able to fund the future projects that are planned,” Femminineo said at the meeting.

The forecast shows a steady difference between the city’s taxable value and state equalized value. Femminineo said it is ideal to have a cushion between these because it leaves room for growth during declines in the market.

As for the forecasted fund balances, there is a small dip in 2025 due to capital projects such as sidewalk construction replacement. However, the general fund is forecasted to steadily grow after that. The major and local street funds are forecasted to fall this year, but go back to remaining steady in the years to come.

As for the city’s water and sewer rates, the forecast looks at the expected units sold and compares that to the cost for the water and sewer fund to determine what the expected rate is to cover the costs.

A smooth increase in water and sewer rates is expected on a year-to-year basis.

When looking at the forecasted unrestricted net position of the water and sewer funds, it shows growth in 2025 and 2026, with a decrease in 2027, as funds are expected to be used. However, the fund balance is expected to start increasing again in 2028.

The final graph in the presented forecast shows the forecasted five-year infrastructure plan spending. This shows increases in 2026-2027 and 2027-2028 for water, sewer and streets, as projects use up the fund balance with significant projects, with a drop in 2028-2029, due to some projects being completed or less projects being planned.

City Manager Jana Ecker points out that the infrastructure projects take up a significant amount of the city’s assets, which is based on the City Commission’s goal of upgrading Birmingham’s infrastructure, especially roads, water and sewer.

Mayor Pro Tem Clinton Baller shared some comments at the meeting.

“This is what I hear, ‘We pay a lot of taxes and look at our roads.’ We can be 85% funded on retiree pension and health care, and we can do great in all these other areas, but our people drive our roads every day,” Baller said. “That’s what they see, and that’s what they want fixed, so there needs to be some balance there. I’d be willing to give up 10% on funding of retiree pensions for a street improvement.”

For more information on the city’s forecasted finances, Birmingham’s five-year financial forecast can be reviewed in the long-range planning packet found on bhamgov.org.

Advertisement