Gary Simpson, Chief Finance Officer, city of Marquette

MARQUETTE — The Marquette City Commission on Monday held the first of four meetings about the city’s proposed fiscal year 2020 budget.

City officials presented a budget without layoffs or reductions in wages or fringe benefits, but will tentatively require about $420,000 from reserves to be transferred to balance the city’s general fund based on initial discussions.

Marquette’s Chief Finance Officer Gary Simpson said the proposal was drafted by “budgeting as tightly as possible in all areas.”

“As you know, that’s the result of losing our largest taxpayer, We Energies,” Simpson said.

The deficit could have been much larger had the city not paid off its bonds for Founders Landing and the Heartwood Forest, Simpson and Marquette City Manager Mike Angeli said.

“That deficit would have been increased by at least a million dollars for this year, which would have either forced us to make cuts or spend more money out of reserves,” Angeli said.

However, this was less than the previous fiscal year’s deficit, when $537,000 was needed to balance the 2019 general fund, even though $2.1 million in department-proposed expenditures was cut from the city manager-recommended budget at the time.

The city’s fiscal year runs from Oct. 1 to Sept. 30.

The total requested general fund budget for fiscal year 2020 is tentatively about $21.96 million, an increase of around 3% from 2019’s budget of about $21.3 million, due to increases in costs from salaries and wages — some of which are related to the proposed creation of a new position — fringe benefits, services and supplies, capital outlay and transfers out.

The total general fund revenues to be collected through the 2019 fiscal year are estimated to be around $20.4 million, as opposed to $20.7 million in 2018, city budget documents state.

The $420,000 tentatively needed from city reserves, as well as increases in state revenue sharing and grants, will make up the roughly $1.5 million difference between 2019 revenues and projected 2020 expenditures.

The vast majority of the city’s revenue comes from property taxes, city officials said. The city’s largest taxpayer, We Energies, shut down operations at the Presque Isle Power Plant, causing the property tax revenue collected there to fall from $1.6 million to a projected amount of about $300,000.

“For fiscal year 2016 — and this is just the real property taxes — we were collecting just short of $9.5 million,” Simpson said. “For fiscal year 2020, it’s going to be just … over $8.7 million. So that’s a decline of $703,000, or 7.4%.”

The proposed fiscal year 2020 tax millage rate remains the same as that in 2019, 14.9225 mills, Simpson said.

City officials also discussed unfunded pension liability, which is a total of $37.5 million. Police and fire pensions are 72.6% funded, while Municipal Employees’ Retirement System pensions for city employees are 61.3% funded.

The commission also reviewed wages and fringe benefits, general fund non-departmental revenues, central administration, administrative services, and fire and police departments during the meeting.

There are a number of “unprecedented challenges,” to city finances, officials said, which include, but aren’t limited to the Presque Isle Power Plant closure, tax tribunal cases, and underfunded liabilities for fringe benefits.

Furthermore, over the past several years, the state has “initiated policies and legislation that have drastically restructured revenue sharing, greatly impairing the city’s ability to predictably plan state contributions,” budget documents state.

“The use of Statutory Revenue Sharing funding, although viewed as ‘speculative,’ has become an important revenue source to the general fund. In the past, this revenue source was only included in the budget as it was received and became an important reserve process,” the budget document states. “In FY 19, Statutory Revenue Sharing was incorporated in the budget with the hopes that in future years we can go back to the reserve process. This practice is being used again for FY 20.”

The city’s budget meetings are open to the public and provide opportunities for public comment. Meetings are held in Commission Chambers at Marquette City Hall, which is located at 300 W. Baraga Ave.

There are three more meetings scheduled to take place.

The next meeting will be at 5:15 p.m. Monday. The commission will hear from the Community Services Department, where arts and culture, public arts, promotional, community services administration, senior services, Tourist Park, Lighthouse Park, marinas and Lakeview Arena will be discussed.

The following meeting will be at 3 p.m. Wednesday. The meeting will focus on the Community Development Department, including engineering, planning and zoning, road safety, public works and utilities.

At 5:15 p.m. Aug. 28, the Peter White Public Library, Marquette Downtown Development Authority, Marquette Brownfield Redevelopment Authority and the Local Development Finance Authority will be discussed, with a budget wrap-up to be conducted.

After an overview of the entire budget, the commission will then schedule a public hearing for Sept. 9 to review and later adopt the budget.

Cecilia Brown can be reached at 906-228-2500, ext. 248. Her email address is cbrown@miningjournal.net.