IRON MOUNTAIN — Water and sewer usage charges will rise 5% while property tax rates will stay flat under Iron Mountain’s proposed 2022-23 fiscal year budget.

A hearing on the spending plan will take place at 6 p.m. today at City Hall, during the regular city council meeting.

The proposed general fund budget totals $7.82 million, an increase of $313,500, or 4.2%. The city’s total taxable value is budgeted at $264.2 million, an increase of $15.8 million, or 6.35%.

“This is above the 3.3% that was applied as the rate of inflation for assessing purposes and is a sign that there was growth in the city beyond inflation,” City Manager Jordan Stanchina said in a memo to the council.

The increase in water and sewer rates follows a 2018 state order to replace all lead service lines by 2040. Iron Mountain has up to 1,800 lead “goose neck” connections that will have to be replaced at a rough cost of $9 million, even though its water has tested safe.

Two years ago it was estimated a 30% increase above current rates would be required to generate the needed revenue, Stanchina said. The proposed usage fee increase of 5% follows a similar 5% climb in 2021-22 and a 10% hike for both usage rates and fixed charges in 2020-21.

The new rates will result in a bimonthly increase of $3.34 on 1,000 cubic feet, or 7,480 gallons, of water usage, Stanchina said.

The proposed street budget provides $400,000 for local paving, although no schedule has been announced. This spending includes $133,000 generated from a county-wide millage of 0.5 mills for road maintenance.

“The last few budgets involved concerns regarding the impact of the COVID-19 pandemic,” Stanchina said. “This year’s budget has transitioned to a greater concern on rising prices and lack of contractors to perform work.”

It is hoped some paving can be done in conjunction with water line projects. So far, 72 lead lines have been replaced but this will be a challenging year due to material shortages, Stanchina said.

The city will see only a 0.44% increase in health insurance rates, but the overall expense remains daunting. The cost of health insurance to the general fund is nearly $1.28 million, or 18.4% of the fund’s expenditures.

Active employees are $428,127 of the cost and contribute $68,210 while retirees represent $972,372 of the cost and contribute $56,147.

The city began phasing out retiree health for new employees in 2009. The legacy cost, however, is an estimated $45 million obligation that must be partially pre-funded. In recent years, the city has set aside $139,000 annually for a dedicated fund. Due to changes in state requirements, that contribution will now rise to $240,000.

Equipment will also be a major item. The budget includes $765,600 to purchase a squad car and replace a dump truck, backhoe and air compressor, among other needs.

The proposed general fund millage rate, including trash collection, is 17.4488 mills, or $17.45 per $1,000 of taxable value, the same as now. The police and fire pension millage will remain at 3.3321 mills, or $3.33 per $1,000 of taxable value. A voter-approved millage for a school liaison officer will see a fractional decline to 0.4456 mills, or 45 cents per $1,000 taxable value, about 10 cents below the maximum allowed.

The total millage rate is 21.2265 mills, or $21.23 per $1,000 of taxable value, a decline of 0.03%.

State revenue sharing is estimated at $927,267 in 2023, a 4% increase from this year, but about the same as in 2020. Property taxes are expected to generate $5.16 million for the general fund, which is an increase of $287,000, or 5.9%.

The budget calls for 41 full-time employees, the same as this year, except for one less full-time firefighter. The breakdown is 14 in public works, 13 in the police department, six in the fire department, five in administration, two office clerks and a police clerk. There are eight permanent part-time workers — six in the fire department and two in the Downtown Development Authority.

The city estimates a fund balance of $2.9 million for the next fiscal year, which begins July 1. Chief Finance Office Heather Lieburn offered a five-year projection for the general fund that assumes health insurance increases of 6% each year accompanied by 2% increases in tax revenues and spending. It shows a general fund budget deficit of about $100,000 by 2027-28, but with an unreserved fund balance of $3.1 million.

Apart from other funds, the city has decisions to make on American Rescue Plan spending. With $765,022 in ARP funds available, $137,320 will be spent this year for a conversion to LED street lights. Local governments have until the end of 2026 to fully use the federal aid.