Water and sewer rates up slightly in IM budget
IRON MOUNTAIN — Iron Mountain’s proposed 2019-20 budget would hold the tax levy steady but does include small increases in water and sewer rates.
The city council will have a public hearing on the 2019-20 fiscal year budget at 6 p.m. today at City Hall.
The proposed water consumption charges would increase by 1% and sewer rates by 2% to help cover operational and maintenance costs and build funds for capital improvements, said Jordan Stanchina, city manager.
Overall, the budget sets general fund spending at $6.97 million, an increase of $154,470 or 2.26% The city’s taxable value is expected to go up 2.34%, climbing to about $238.6 million. The increase is slightly below the inflation rate of 2.4 percent applied for assessing purposes, mainly because of settlements in Michigan Tax Tribunal appeals, Stanchina said.
“In the last two years, approximately $14.5 million of taxable value was lost, which results in an approximately $250,000 loss of revenue for the general fund,” he said in a memo to the council.
A drop in health insurance rates helped the city this past year, with costs declining by 2.4% for active employees and 6.96% for retirees.
“The actual decrease resulted in a positive swing of $162,951 from the initially budgeted 8% increase,” Stanchina noted.
Still, health insurance remains a huge obligation, with retiree premiums totaling $1.34 million in the upcoming budget, said Heather Lieburn, chief finance officer. Of this, the general fund will pay $909,255, while the city’s water, sewer, vehicle and street funds also must be tapped.
Beginning in 2009, the city took steps to eliminate retiree health insurance as a benefit. Also, current employees contribute 20 percent toward their health insurance. Nonetheless, an actuarial study pegs the total unfunded benefit cost at nearly $42 million.
In response to state requirements, the city is creating a trust fund to help narrow the gap.
The budget anticipates four retirements, with payouts estimated at $105,000. These include Director of Police and Fire Services Ed Mattson, a police lieutenant, a fire captain and the deputy clerk-treasurer. Because of the payouts, the general fund shows a deficit of $45,072, Stanchina said.
“Four retirements in any one fiscal year is not common and not projected to happen again within the next five years,” he explained. “With the normal one or two retirements per year, the budget would be balanced.”
To accommodate the deficit spending, the city’s general fund balance is expected to dip from $2.62 million to $2.58 million.
Some other highlights of the 12-month budget, which takes effect July 1:
— The overall city levy remains at 20.7809 mills. This includes a city government rate of 17.4488 mills and a police and fire pension millage of 3.3321 mills, both the same as now. As part of the city levy, the refuse collection rate will rise to 1.546 mills, an increase of 0.012 mills. The operating millage will be cut by the same amount to keep the overall total the same.
— Public safety, which includes the police and fire departments, is budgeted at just more than $3 million, which is 43.6 percent of general fund spending.
— The total number of city employees is projected at 41 full-time and 13 permanent part-time. Full-time employees include 17 in public works, 11 in the police department, seven in the fire department and six in administration.
— Local street resurfacing and reconstruction is budgeted at $400,000, the same as this year. Plans for local paving will be made later in the fiscal year.
— Based on the latest actuarial report, the Municipal Employees Retirement System plan is 38% percent funded but is expected to be 60% funded by 2033.
— For now, the city will await the outcome of legal challenges to the state’s revised lead and copper rules. If allowed to take effect in 2021, the new rules will require future replacement of at least 2,000 water service lines at the city’s expense, requiring significant rate increases, Stanchina said.
— The Downtown Development Authority will continue with two part-time employees who help organize Brew Fest, Italian Fest and Oktoberfest fundraisers and assist with downtown beautification and promotional events. Dedicated property tax revenues from the DDA district are about $45,000.