City gets budget update months into pandemic

Fund balance spending less than expected

By: Eric Czarnik | Sterling Heights Sentry | Published January 12, 2021

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STERLING HEIGHTS — Sterling Heights officials are crediting grant money and savvy budgeting for the city being on course to spend less of its fund balance than they had earlier thought.

The City Council unanimously adopted the 2020-21 fiscal year’s first appropriations ordinance amendment at its Jan. 5 meeting after unanimously introducing the amendment Dec. 15.

During the Dec. 15 meeting, Finance and Budget Director Jennifer Varney gave a presentation and said the appropriations ordinance recognizes budgetary changes such as new grants or decisions that the City Council has made.

And in this case, the COVID-19 pandemic had some effects. Varney said the city acquired millions of dollars in Coronavirus Aid, Relief, and Economic Security Act grant funding related to the pandemic, especially to fund public safety. In addition, state revenue sharing estimates are higher than expected, she added. However, revenue declined in other areas, including revenue from the 41-A District Court, such as court fines, she said.

In addition, the amendment includes spending for a diversity and inclusion consultant, election work from last November’s election, and public safety workers’ hazard pay, though some of this has been covered by grants. Among other things, there was around $2.1 million in noted spending for renovating city buildings, she said.

“The net result of these changes is a use of fund balance reserves of just over $750,000,” Varney said. “This is significantly less than the planned use of fund balance in the original budget that was $2.6 million.”

Varney said the city had almost $30 million at the end of the 2020 fiscal year — more than expected — and it expects this fiscal year to bring that down to around $29.2 million, which amounts to around 26% of spending. Varney said the city considers a fund balance of 20%-30% of expenditures to be good, and at least 25% to be even better.

Councilman Michael Radtke favored the amendment and expressed his excitement about a diversity coordinator. He noted that the news is better than what he originally anticipated back when the pandemic began.

“Partly, that’s offsetting money from Lansing, but I also think it’s smart decisions we made right here in Sterling Heights,” he said.

Mayor Michael Taylor praised city administrators for nimbly adapting their budget work around the pandemic crisis.

“This year, that game plan was thrown completely out the window, and I think (it’s) just an incredible testament to the work done by our administration, our finance and budget team, and really to every department head and every department for figuring out ways to continue providing the highest-level  services possible to all of our residents,” Taylor said.

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