Taxes flat, water rates up by 5% in IM budget
IRON MOUNTAIN — Water and sewer consumption rates will rise 5% under Iron Mountain’s proposed 2021-22 budget, part of a plan to hike charges incrementally to meet capital needs.
The spending plan calls for no increases in property tax rates. A public hearing is scheduled for 6 p.m. Monday at City Hall.
The city council last year approved a 10% increase in water and sewer charges, representing just a portion of the revenue needed to replace lead service lines over the next 20 years. At that time, City Manager Jordan Stanchina estimated a 30% increase would be needed to keep the utility budget on track.
A typical residential water/sewer bill for 5,000 gallons of usage in a month now is about $66. Future increases, beyond just inflationary, will be needed, Stanchina said.
In the wake of the Flint water crisis, Michigan directed communities to replace all lead service lines by 2040. Although tests have shown no alarming levels of lead locally, Iron Mountain has up to 1,800 lead “goose neck” connections that will cost an estimated $9 million to phase out.
The 2021-22 budget includes $450,000 for service line replacements, estimated at $5,000 each. About 40 new lines were installed in 2020 as part of a $1.4 million street and utility project on West C Street.
The budget sets general fund spending at $7.3 million, compared with $7.1 million allocated this year. Actual spending, however, is estimated at $7.45 million this fiscal year, matching additional revenues received mainly through federal grants, including pandemic aid.
Federal grants this fiscal year have totaled $355,000, while some other revenue sources — such as licenses, permits, fines, forfeits, interest and rents — have fallen by about $60,000.
Up to $720,000 may be available to the city over the next year under the Biden administration’s American Rescue Plan Act. But with no funds yet in hand, and only initial guidelines in place, it’s not part of the budget. The city would have through 2024 to spend the stimulus.
General fund revenues are budgeted at $7.3 million for 2021-22. That’s 2.6% higher than the current budget but 2.7% lower than the current year’s estimated actual revenues, said Heather Lieburn, chief finance officer.
The projected fund balance at the end of the next fiscal year in June 2022 is $2.87 million, which is equal to the current estimate. It is $100,000 higher than the $2.77 million fund balance reported two years ago.
Taxable property value in the city totals $248.4 million, which is 1.84% higher than a year ago.
“This is above the 1.4% that was applied as the rate of inflation for assessing purposes and is a sign that there was growth in the city beyond inflation,” Stanchina said in a memo to the council. Property taxes going to the general fund are projected at $4.33 million.
The city continues to face daunting legacy costs. Retiree health insurance is budgeted at $1.44 million, up by about $40,000. The general fund will contribute $950,000, while the water, sewer, vehicle and street funds will also be tapped. Retirees will pay about $60,000.
The city’s projected retiree health insurance and overall supplemental pension liability was $38.5 million as of June 30, 2020, Lieburn said. Although steps have been take to reduce the city’s obligations, the benefits continue to be a strain.
A five-year projection for the general fund budget shows a deficit of about $360,000 by 2026, with the fund balance dropping by about $1 million, Lieburn said. This assumes 1.5% increases in revenues each year, 1.75% increases in general expenditures and 8% annual increases in health insurance.
The proposed tax levy for the city budget is 21.2322 mills, or $21.23 per $1,000 of taxable value, the same as the current rate. This breaks down as 16.9207 mills for general operating, 1.662 mills for refuse collection, 0.4513 mills for a school liaison officer, and 3.3321 mills for police and fire pensions.
All of the millages are the same as now, except refuse collection, which rises 0.078 mills, and general operating, which falls by the same amount.
The city will continue to dedicate $400,000 toward local street paving, of which $124,204 is generated from the Dickinson County Road Commission’s county-wide levy of 0.5 mills.
The budget calls for 42 full-time city employees, the same as now but up by two from 2019-20. The additions are in the police department, where a millage was approved to fund a liaison officer, and in public works. Also, a City Hall position was shifted to police, largely for code enforcement.
The number of part-time permanent employees is listed at nine, down by four from two years ago, although the city continues to recruit additional part-time firefighters.
A copy of the proposed budget is posted on the city’s website.