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2013-2014 Budget - City of Clawson

2013-2014 Budget - City of Clawson

with the State’s

with the State’s annual reduction in dollars that we are certainly entitled to receive as shared revenues. We certainly hope that Lansing will revisit this issue once they get their fiscal house in order. We do not care for the State balancing their books on the backs of local government and the middle-class families in this State. If the Governor is able to make his plan work and bring jobs to Michigan and maintain the ones we haven’t lost, then perhaps we will say that it was worth the pain. We have maintained our AA- bond rating despite all of the financial hardships facing us. We will be spending the final remaining funds in our road bond fund to fix collapsing intersections and areas that are the worst in Clawson. We will be replacing the road on North Selfridge that is the worst stretch of road remaining from our replacement and restructuring plan. We expect to complete the final stages of our State Revolving Fund (SRF) sewer repair and replacement program in the Fall of 2013. This program will repair or replace the worst sewers in the City. Much of this work was completed in 2012 and is still ongoing at the time of this budget message. Upon completion of the scheduled sewer projects the City of Clawson will have completed over $38.5 million in infrastructure and building projects over the past eight years. This includes over $6.5 million in grants that we were awarded and proud to put to good use. This adopted General Fund budget is a balanced budget without any need for operating reserve supplement for 2013-2014. The total General Fund operating revenue and expenditures are budgeted at $6,895,590. When you add capital reserve to the equation, the total budget in the General Fund is $7,071,750. Capital is budgeted at $108,000. We will also have our first debt payment for the Honeywell energy efficiency project which is $219,595. We expect to get between $85,000 and $95,000 in savings for energy efficiency and equipment maintenance savings as a result of these projects. We also have full backup generators in our Fire Station, City Hall, and Hunter Community Center. We did receive another increase in our defined benefit pension payments, but since we went with an option to extend our payments the increase was only $24,048. Our health insurance rates also increased about 7%, but we will be changing our health care plans to partially funded self-insurance plans beginning on January 1, 2014. We hope to save money and keep our coverage sustainable in the future. This will allow us to meet the PA 152 requirements for costs mandated by the State of Michigan. We will be transferring about $72,000 from the General Fund just to pay our rubbish contractor. We anticipate having a millage proposal on the ballot in November that will allow us to uncap our millage in the rubbish fund back to the 3 mills allowed by State Law. Because of the reductions in property values since 2009, we are down over $188,000 in tax revenue in the rubbish fund. We have used up the small reserve we had in the fund over the last four years just to keep the same services. We can no longer afford to pay the supplemented amount from the General Fund and this millage is necessary to continue to provide yard waste pickup and leaf pickup services. Budget Message – Page 2

We estimate that we will have about $300,000 in our Capital Reserve and the City Council has committed to maintaining our undesignated fund balance as stated in our Fund Balance Policy at 10% of the annual approved General Fund Budget. That will leave $689,560 in our Fund Balance Policy reserve. We are now recording Planning Commission Meetings and Zoning Board of Appeals Meetings and making them available for playback on our City Website through a Video on Demand feature. This allows us to be more transparent by placing our City Board functions on line. We will be taking delivery of two large dump trucks in our Motor Equipment Fund in September 2013 in order to replace trucks that are over 21 years old. The Motor Equipment Fund is strictly for the purpose of maintaining and replacing our motorized equipment as it becomes worn and used. We decided not to purchase a stump grinder due to newly studied cost-benefit concerns. We will continue to have a vendor grind the stumps for the City. I like to remind everyone from time to time that these purchases have no effect on the General Fund budget since the Motor Equipment Fund is an Internal Service Fund designated for capital equipment replacement. The table below lists the millage rates, taxable valuations, and property tax revenues generated for the last seven fiscal years. Property tax revenue includes the Downtown Development Authority captured amounts. Fiscal Year General Operating Millage Rate Taxable Valuation Property Tax Revenue 2007/2008 12.6834 $ 407,867,570 $ 5,034,000 2008/2009 12.6834 $ 408,464,640 $ 5,095,000 2009/2010 12.6834 $ 400,519,920 $ 4,992,000 2010/2011 12.6834 $ 359,873,780 $ 4,480,000 2011/2012 12.6834 $ 328,546,220 $ 4,091,600 2012/2013 15.0000 $ 309,685,340 $ 4,521,900 2013/2014 15.0000 $ 312,576,950 $ 4,620,400 As you can see from this table, property tax values have taken a significant decline since 2008-2009. The approved millage for the 2013-2014 budget year will allow us to continue providing the same level of services that we have provided through this entire downturn. Although we had two more full-time employees retire during the 2012-2013 fiscal year, we still only break even with no additions to wages or benefits from last fiscal year. With contracts now settled for 2013-2018, we did have some wage increases for the first time since 2009. With additional concessions in health care we were able to add 3% to 4% in wages. This still leaves employees at a lower wage rate than they earned 4 years ago. We are still well below our revenue level from 2008-2009, so we are continuing to be careful with our spending. The expenditures of the six (6) miscellaneous funds are summarized as follow: Budget Message – Page 3

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