City looks to reduce money spent from rainy day fund

By: Kristyne E. Demske | St. Clair Shores Sentinel | Published May 4, 2016

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ST. CLAIR SHORES — “This is the toughest budget I’ve seen in my 16 years.”

So began two nights of budget hearings in front of City Council, in which Mayor Kip Walby said the city needs to hold the line on spending in an effort to reduce the amount of money needed to balance the budget from the rainy day fund. 

The initial proposed budget from the city administrators showed a total millage levy of 21.2475 mills, which would bring in $29,630,814. But with budgeted total revenues at $31.4 million for the general fund and budgeted expenditures of $36.7 million, if the money was spent as budgeted it would take the $13.6 general fund balance — the so-called rainy day fund — down to $8.3 million by June 30, 2017.

Finance Director Doug Haag said that, because of the Headlee Amendment and Proposal A, the city is restricted to a millage increase not to exceed 5 percent or the rate of inflation, whichever is lower. 

He said they set the millage rate knowing the fact that they can “always lower the millage rate, but we can’t increase” if the Headlee rollback numbers come back higher than they are projecting. The taxable value of properties in the city increased from the 2016 fiscal year to 2017 by 1.7 percent, but revenue will only be up by 0.7 percent because of the rollbacks and caps, Councilman John Caron pointed out.

The city originally levied 8 mills for its operating millage, agreed City Manager Michael Smith, but it’s now at 6.22 mills because of the rollbacks, down from 6.28 last year.

Some of the higher rates of expenditures in departments throughout the city came from health insurance increases, the raising of the minimum wage, and a greater number of capital requests throughout the city for projects that have been put off for years because of difficult budgets.

“Everyone who comes up here (has) good intentions. They have issues, they want things fixed and they need things fixed,” Walby said. “I’m just concerned about what we spend.”

Smith said every department was presenting proposals filled with “needs.”

“The question wasn’t, ‘Do we need it?’ It was, ‘Do we need it more than something else?’” he said. 

At the end of the hearings, Caron pointed out that City Council had found ways to cut nearly $1 million out of the budget through reductions in capital spending.

“It’s progress,” he said. 

“The municipal finance model is just broken,” Smith said. “When you’ve got revenue being capped at something lower, it’s broke.”

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