Fiscal Year 2020 2021 Proposed Budget Provided to the Morenci City - - PowerPoint PPT Presentation
Fiscal Year 2020 2021 Proposed Budget Provided to the Morenci City Council on April 20, 2020 Forwarded from the Finance, Legal, Personnel, & Economic Development Committee to the City Council for Approval on April 28, 2020
Provided to the Morenci City Council on April 20, 2020 Forwarded from the Finance, Legal, Personnel, & Economic Development Committee to the City Council for Approval on April 28, 2020 “One Town, One Team, One Family”
The City Charter states that each City Officer, in this case each Department Head, shall submit an itemized list of expenditures for the next fiscal year that is under his departments control by the third Monday in April to the City Clerk (ordinance states second Monday in April). To achieve this, meetings between myself and each City Officer (Fire Chief, EMS Director, and Police Chief)
next year and to put together a capital improvement list.
The City Charter also states that the City Clerk shall prepare a complete itemized budget for the next fiscal year to the City Council by the first Monday in May, which was done on April 20, 2020.
Finance, Legal, Personnel, & Economic Development Committee met on April 28, 2020 to vet the proposed Fiscal Year 2020 – 2021 Budget and to offer alternative recommendations, if recommendations were warranted. The committee recommended approval of the budget without the rate increase for sewer per thousand gallons.
► Real & Personal Property Taxable Value
Year 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Taxable Value
57,155,463 54,405,291 49,789,098 37,533,209 36,736,619 37,366,191 37,809,801 37,911,714 38,199,316 39,869,173 44,551,505
Percent Change
(-8.48) (-24.6) (-2.12) 1.71 1.01 .0027 .0076 4.19 11.34
Tax Revenue
$677,087.10 $664,365.81 $613,279.24 $465,400.00 $458,083.63 $464,276.85 $459,865.38 $474,000.42 $489,099.39 (projected) 510,000.00 (projected) 560,000.00
Total Revenue
$1,244,822. 43 $1,227,398. 99 $1,099,256. 77 $976,810.20 $980,731.65 $980,656.66 $964,142.67 $1,381,860. 57 $1,163,827. 49 (projected) 1,147,045. 37 1,165,672.8 5
Total Expenditur es
$1,202,407. 00 $1,371,789. 78 $1,138,565. 23 $909,210.32 $874,357.77 $923,178.37 $908,870.40 $1,195,360. 21 $1,133,499. 94 (projected) 1,366,718. 57 1,160,593.8 3
Fund Balance
$306,414.43 $162,023.21 $122,714.54 $190,314.42 $296,688.30 $354,166.59 $408,953.27 $595,453.63 $797,911.69 $434,379.18 $439,379.18
► Revenue Sharing (figures provided by www.SaveMICity.org)
Year 2003 2010 2011 2012 2013 2014 2015 2016 2017 2018 Consti- tutional
$159,857.00 $152,323.00 $149,772.00 $159,417.00 $162,718.00 $166,534.00 $169,150.00 $168,986.00 $178,727.00 183,447.00
Statuto- ry
$154,544.00 $77,737.00 $80,288.00 $52,734.00 $56,499.00 $59,223.00 $61,023.00 $61,023.00 $61,032.00 $61,032.00
Total Paym- ent;
$314,401.00 $230,060.00 $230,060.00 $212,151.00 $219,217.00 $225,757.00 $230,182.00 $230,009.00 $239,759.00 $246,282.00 ($1,803.00
suppleme- ntal)
Full Fundi- ng
$325,619.00 $310,272.70 $305,076.47 $324,722.75 $331,446.68 $339,219.64 $344,548.28 $344,214.22 $384,661.00 Number hasn’t been released by SaveMiCity
The City of Morenci has, like most municipalities around the state, been suffering from an increase in expenditures and a decrease in revenues. Why has this been happening? A number of factors attribute to this: ► Proposal A and Headlee Rollback ► Proposal A (otherwise known as the Michigan Education Finance Amendment) – Approved in 1994. The amendment has two (2) key provisions that limits the taxable growth. (Walcott, E. [2016, July 25] “A Refresher on Proposal A and Local Property Taxes,” Michigan State University Extension Office) ► “Growth on taxable value of individual parcels of property is limited to the lesser of inflation or five (5) percent” ► “When property was sold / transferred, taxable value is reset to equal state equalized value, which equals half to he property’s cash value” (this process is called “uncapping”) ► Headlee Rollback – A mechanism that rollbacks the millage assessed by the community if the total taxable property value for the community increases by more than the inflation rate. This occurs each year in Morenci where our mills levied (15.00 mills) for general operations is rollback to 12.8459 mills levied. Act was approved in 1978 by Michigan voters.
Before moving into the actual dollar amounts associated with the budget, an understanding of municipal finance definitions and understanding of concepts needs to occur. The following are important municipal finance definitions:
Act 51 Funding – Act 51 Funding is derived from gas and weight taxes in the State of Michigan. Act 51 was passed into law in 1951 and codified in Article IX, Section 9, of the Michigan Constitution of 1963, which states that Act 51 Funding is the following: "All specific taxes . . . imposed directly or indirectly on fuels sold or used to propel motor vehicles upon highways. . . or on registered motor vehicles . . . shall, after payment of necessary collection expenses, be used exclusively for transportation purposes. . .“ Act 51 Funding is proportionally split between different municipalities in the State of Michigan.
Budget – An estimate of expected income and expenses for a given period of time.
Cash – Money that is on hand for certain projects and expenses.
Enterprise Fund – An Enterprise Fund is a fund that is financed and operated similarly to a private business enterprise where goods or services are provided to the public and the cost is recovered by service charges. Our Water / Sewer Fund is an Enterprise Fund.
General Fund – Fund used for general operations and activities of the City. Property taxes and revenue sharing make up the majority of the revenue for the General Fund.
Major & Local Streets Funds – Major & Local Streets Funds are for construction and routine maintenance of municipal streets. The difference between what is a Major and Local Street is street capacity and usage. These streets are classified by the Michigan Department of Transportation (MDOT). Construction cannot occur on municipal streets without matching funds from the municipal, per Act 51. The only type of road maintenance that we legally can do without matching funds is routine maintenance.
Property Taxes – A levy on property that the owner is required to pay to the municipality. In Morenci, we levy 15 mills, but due to the Headlee Roll Back, which rolls back the mills due to annual growth on existing property being greater than the rate of inflation, we only realize 12.8459 mills of revenue from property taxes.
Revenue Sharing – State Revenue Sharing is a distribution of sales tax collected by the State of Michigan to local governments, village, townships, and cities. These types of distributions started occurring in 1971 when the State Legislature passed the State Revenue Sharing Act, Public Act 140 of 1971. This took the assessment of sales tax away from local jurisdictions and uniformly placed it into the hands of the State of Michigan.
Special Assessment – A special assessment is a unique charge assessed against real estate parcels for certain public projects. Our EMS generates a majority of its funding from a special assessment.
For Fiscal Year 2020 – 2021, we are requesting that the City Council appropriate
$2,794,149.87 to provide for City Services – $1,160,593.83 for the General Fund and a combined $1,628,477.02 for other City Funds.
Revenue is estimated at $2,872,149.87 – General Fund Revenue of $1,165,672.85; other
City revenue is at $1,706,477.02.
Excess of expenditures in General Fund of $5,079.02; excess of expenditures in all other
funds of $78,000.00 for a total of $83,079.02 of excess expenditures.
Continued professional development offerings for City administration staff, DPW,
EMS, Fire Department, and Police Department
Continued operations at operational level Purchase of four (4) sets of turnout gear Summer Recreation Program (in coordination with Morenci Area Schools) Continuation of brush and leaf collection Water and Sewer Projects
Rate Increase
Many projects still need to occur, include:
Lagoon liners and lift station at the cost of $6,000,000.00
Change from Chlorine Gas to Liquid Chlorine and rebuild room at the cost of $20,000.00
Painting of the inside and outside of the Water Treatment Plant – cost around $60,000.00 unless DPW, depending on staffing, does the project then the cost is around $10,000.00
Building a laboratory at the Water Treatment Plant at a cost of $10,000.00
Lead line replacement at a cost of $25,000.00 – lead line inventory must be done, which constitutes the hiring
Rebuild of a 21 inch sanitary interceptor line (corner of Orchard Street and Stephenson Street) and the rebuild
Transfer switch and rebuilding of an electrical panel at the Water Treatment Plant for the cost of $10,000.00
Future projects – meter changeout to cellular read at a cost of $300,000.00 to $350,000.00; lead line replacement anywhere from $25,000.00 to $50,000.00 a year
What’s been done?
Electrical Upgrades & Generator Work: It was found that the generator hadn’t been serviced in close to a decade and that a lot of the electrical work between the Water Treatment Plant and the Lift Station had been decayed to the point that it was unsafe. Cost of $27,187.30.
Roof: An immediate danger was the state of the roof. A new roof was put on the Water Treatment Plant in the amount of $16,095.00.
Fencing: It was identified that our assets at the Water Treatment Plant and Lift Station needed to be better protected from outside intrusion. Fencing was recommended. The cost of the fencing was $21,000.00.
Locks and Doors at Water Treatment Plant: Many issues were found with the locks and the ability of the doors and locks at the Water Treatment Plant to work. $1,100.00 was the cost to have a locksmith work on the locks and doors to make them functionable.
SCADA and Telemetry: It was found that alarms had been disabled at the Water Treatment Plant and Lift Station and probably hadn’t worked in close to a decade. To prevent major cataphoric things from
Total cost was $57,820.00.
Lift Station Secondary Pump Installation: It was recognized by MRWA that a professional was needed to install the new lift station pump as the sanitary lines in the Lift Station for the pump had been abandoned for close to a decade due to the secondary pump not being in the Lift Station. T.H. Eifert was hired to install a secondary pump and retrofit the pump to fit the now settled abandoned sanitary lines. Cost of $5,720.00.
Secondary pump cost was $11.165.00.
Heater at Water Treatment Plant: It was found that a heater at the Water Treatment Plant did not work. A new heater was purchased and installed. Cost of $2,200.00.
Engineering: Engineering for a new Lift Station and the rebuilding of the lagoons was started in January. Total expended so far on design engineering and application to the USDA for a loan is $16,425.81. EGLE informed us that the lagoon liners were shot due to past maintenance techniques in December of 2019. The lagoon liners are 5.5 million to replace. The need for a Lift Station makes this a total project cost of 6 million dollars. EGLE has verbally said that the new lagoon liners need put in by end of summer 2021.
Chlorine Injection Room: The Chlorine Injection Room was in bad condition and was not functionable to adequately inject chlorine into the water system, which is required by EGLE, as we are a chlorinated water system. The cost to temporarily fix was $2,161.47. Additional work is required of the Chlorine Injection Room at a cost of $20,000.00, which includes transferring over to the injection of chlorine liquid, as opposed to chlorine gas, and ensuring that the room is safe.
Operator Costs: MRWA charges $85.00 an hour to operate the City of Morenci’s Water and Sanitary System. Total expended, so far, is $34,115.49 on the contract.
Bypass Pump for Lift Station: After the Lift Station failed in the fall of 2019, a bypass pump was purchased in the amount of $56,350.32. This pump provides a bypass in the event of a failure at the Lift Station, and it will also serve as the bypass pump when a new Lift Station is built.
Laboratory Equipment: It was found that the former Water Operator was operating with laboratory equipment that was deemed invalid many years ago. Laboratory equipment was purchased to begin the setup of a laboratory in the amount of $2,857.55. Future laboratory costs include up to $10,000.00 to properly outfit the laboratory.
Inventory of Water & Sewer Supplies: We had a tremendous lack of water and sewer supplies, such as fittings, items to repair outstanding issues, and water
Identification of Poor Sanitary Lines & Lift Station Cleaning: We had a company come in and do a Lift Station Cleaning. They also did an industrial inspection of two large sanitary lines to identify issues. They found a collapsed line at the end
a collapsed line on East Street South. Total cost was $4,025.00.
Future costs include $70,000.00 in projected work to fix the collapsed lines.
Total expended out of built up fund balances through the years out of the Water and Sewer Fund so far is $265,282.99
Water & Sewer Rate History Based on research, we have found that the City of Morenci’s water and sewer rate history is as follows: Willingness to Serve Charge for Water Quarterly Willingness to Serve Charge: $22.87 This charge hasn’t been charged since 1992 or before then. Sanitary Improvement Charge In 1992, a Sanitary Improvement Charge-like charge of a flat fee of $11.50 a quarter and another based strictly on usage to pay off of debt of 83 cents per thousand gallons of sewage for debt retirement. Those charges came off of utility bills in 2012.
Sewer Rate Per Thousand Gallons 2019 – 2020: $3.47 2018 – 2019: $3.37 2017 – 2018: $3.37 2016 – 2017: $3.37 2015 – 2016: $3.37 2014 – 2015: $3.37 2013 – 2014: $3.37 2012 – 2013: $3.37 2011 – 2012: $3.37 2010 – 2011: $2.37 2009 – 2010: $2.29 2008 – 2009: $2.47 2007 – 2008: $2.65 2006 – 2007: $2.65 2005 – 2006: $2.65
Water Rate Per Thousand Gallons 2019 – 2020: $2.47 2018 – 2019: $2.40 2017 – 2018: $2.40 2016 – 2017: $2.40 2015 – 2016: $2.40 2014 – 2015: $2.40 2013 – 2014: $2.40 2012 – 2013: $1.76 2011 – 2012: $1.76 2010 – 2011: $1.76 2009 – 2010: $1.76 2008 – 2009: $1.76 2007 – 2008: $1.76 2006 – 2007: $1.76 2005 – 2006: $1.76
Water and Sewer Rates Monthly: Total WTS charge: $21.49 a month Total WTS Charge could also be: $13.02 a month (currently $22.87 a quarter) Total WTS Charge could also be: $19.81 a month Sanitary Capital Improvement: $16.72 (NEW CHARGE) Refuse rate: $5.41 a month (propose to raise to $6.00 a month) Water rate: $4.07 per 1,000 gallons (currently $2.47 per 1,000 gallons) Sewer rate: $3.47 per 1,000 gallons (currently $3.47 per 1,000 gallons)
Usage in Month Cost for Month Cost for Month Cost for Month Cost for Month Difference Difference Difference Old Rate New Rate New Rate New Rate (WTS Charge at $21.49) (WTS Charge at $19.81) (WTS Charge at $13.02) ($21.49 WTS charge) ($19.81 WTS charge) ($13.02 WTS charge) 1,000 $18.91 $51.75 $50.07 $43.28 $32.84 $31.16 $24.37 2,000 $24.85 $59.29 $57.61 $50.82 $34.44 $32.76 $25.97 3,000 $30.79 $66.83 $65.15 $58.36 $36.04 $34.36 $27.57 4,000 $36.73 $74.37 $72.69 $65.90 $37.64 $35.96 $29.17 5,000 $42.67 $81.91 $80.23 $73.44 $39.24 $37.56 $30.77 6,000 $48.61 $89.45 $87.77 $80.98 $40.84 $39.16 $32.37 7,000 $54.55 $96.99 $95.31 $88.52 $42.44 $40.76 $33.97 8,000 $60.49 $104.53 $102.85 $96.06 $44.04 $42.36 $35.57 9,000 $66.43 $112.07 $110.39 $103.60 $45.64 $43.96 $37.17 10,000 $72.37 $119.61 $117.93 $111.14 $47.24 $45.56 $38.77 11,000 $78.31 $127.15 $125.47 $118.69 $48.84 $47.16 $40.38 12,000 $84.25 $134.69 $133.01 $126.22 $50.44 $48.76 $41.97 13,000 $90.19 $142.23 $140.55 $133.76 $52.04 $50.36 $43.57 14,000 $96.13 $149.77 $148.09 $141.30 $53.64 $51.96 $45.17
The City of Morenci has, like most municipalities around the state, many challenges moving forward. A list of challenges are below: ► Infrastructure ► Municipal Finance ► Water / Sewer Rates & Water / Sewer Revenue