Grosse Pointe Farms budget retains flexibility due to pandemic unknowns

By: K. Michelle Moran | Grosse Pointe Times | Published August 11, 2020

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GROSSE POINTE FARMS — The COVID-19 pandemic has proven to be a threat to more than just physical health. Financial well-being has fallen prey to the devastating virus, as well.

In May, the Grosse Pointe Farms City Council voted in favor of a general fund budget of nearly $16.238 million for the 2020-21 fiscal year, which started July 1. That budget reflects an increase of $523,210 from the 2019-20 budget, but the city is maintaining its tax rate of 14.95 mills for the new year — 11.5 of which are for operating, 2.3666 are for rubbish and 1.0834 are for non-voted-upon debt.

But aside from two major vehicle purchases — for a new rubbish packer truck at about $64,000 and a fire pumper truck at just over $648,000 — there aren’t many large purchases or projects planned, City Manager Shane Reeside said.

“Other capital projects, we are delaying until we have a better understanding of where things are going,” Reeside said.

He said the pandemic has impacted the city both in terms of revenues and expenditures. State-shared revenues are expected to be lower, as are state Act 51 funds for roads because gas tax revenue is down, due to high unemployment and more people working from home.

“Locally, we’re seeing a reduction in fines, in program revenue (and a) reduction in parking revenue,” Reeside said.

At Pier Park, for example, some revenues are down because the community building isn’t being rented out for special events like weddings, and the cancellation of many programs has meant the loss of that revenue, as well, he said.

To some extent, the city has also been able to reduce some of its costs. Reeside said some part-time clerical employees who were furloughed during the state shutdown won’t be brought back, while other employees such as inspectors and park staff were only scheduled as needed during the shutdown. More people are venturing out only as needed, which has led to fewer residents visiting city offices, as more residents are taking advantage of expanded city services being offered through the Farms website, Reeside said.

“We have structured the budget in a way that will conserve cash flow and allow us to adjust our expenditure levels in response to changes in revenue sources,” City Controller/Treasurer Debra Peck Lichtenberg said by email. “Our goal is to continue to deliver the services that our residents value, in a way that is safe and fiscally responsible. A lot of unknowns will remain with us in the coming months.”

One bright spot is that the city had an unassigned general fund balance of $4,262,574 as of June 30. That amounts to 26.3% of the 2020-21 fiscal year budget, which is within the city’s self-imposed fund balance policy of maintaining an unassigned fund balance of 20% to 30% of the budget.

“Thanks to careful financial management through the years, the city continues to have reserves to draw on when needed and continues to provide exceptional service to the community,” Peck Lichtenberg said by email.

Reeside said the council is looking at the budget quarterly now because of the changing nature of all municipal budgets during this time.

“I think, under the circumstances, we’re faring pretty well,” Reeside said. “Essential services (have) continued uninterrupted (throughout the pandemic). Public Safety continues to operate uninterrupted. Trash continues to be picked up. Our residents have been very cooperative and understanding during this pandemic, and we appreciate that. And we’re appreciative of all of our employees.”

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