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 “One Town, One Team, One Family”
How was the budget put together? 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) occurred to take notes on where they wanted the department to go in the 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.
What’s the state of the City of Morenci? ► Real & Personal Property Taxable Value Year 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Taxable 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 Value Percent -- (-4.8) (-8.48) (-24.6) (-2.12) 1.71 1.01 .0027 .0076 4.19 11.34 Change Tax $489,099.39 510,000.00 Revenue $677,087.10 $664,365.81 $613,279.24 $465,400.00 $458,083.63 $464,276.85 $459,865.38 $474,000.42 560,000.00 (projected) (projected) Total $1,163,827. $1,244,822. $1,227,398. $1,099,256. $1,381,860. 1,147,045. 1,165,672.8 Revenue $976,810.20 $980,731.65 $980,656.66 $964,142.67 49 43 99 77 57 37 5 (projected) Total $1,133,499. $1,202,407. $1,371,789. $1,138,565. $1,195,360. 1,366,718. 1,160,593.8 Expenditur $909,210.32 $874,357.77 $923,178.37 $908,870.40 94 00 78 23 21 57 3 es (projected) 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
What’s the state of the City of Morenci? (Continued) ► Revenue Sharing (figures provided by www.SaveMICity.org) Year 2003 2010 2011 2012 2013 2014 2015 2016 2017 2018 Consti- $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 tutional Statuto- $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 ry Total $246,282.00 ($1,803.00 Paym- $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 of ent; suppleme- ntal) Full Number hasn’t Fundi- $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 been ng released by SaveMiCity
What’s the state of the City of Morenci? (Continued) 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.
Glossary of Municipal Finance Definitions and Understanding of Concepts 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.
Glossary of Municipal Finance Definitions and Understanding of Concepts (Continued) 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.
Total Requested Appropriations for Fiscal Year 2020 – 2021 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.
Accomplishments of Fiscal Year 2020 – 2021 Budget Proposal 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
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