Mount Pleasant city manager, finance director anticipating $500,000 budget gap

Mount Pleasant is facing a $500,000 gap in the city’s proposed 2013 budget.

At a work session before Monday’s city commission meeting, City Manager Kathie Grinzinger and Finance Director Nancy Ridley presented the proposed $27 million budget.

Grinzinger said the proposed budget does not reduce services or staff, assumes an unchanged millage, water and sewer rates remaining the same and is being balanced using a portion of the surplus saving account. However, there is still a $500,000 gap with the rainy day fund staying at $1.7 million.

“Are we broke? Absolutely not. There’s more than enough money in the savings account to cover the gap,” Grinzinger said. “The issue is that we’ve had to close a similar gap for the last three years from money we were able to save the prior year.”

The city must begin to look at diversification of revenue sources, instead of depending on the two primary sources – state shared revenue and taxes, Grinzinger said.

In 2001, state shared revenue made up 50 percent of Mount Pleasant’s revenue, and taxpayers covered 30 percent. Today, Grinzinger said state funds make up only 24 percent of the revenue, and property tax payers are covering half.

“In spite of declining sales prices in the last few years, it appears that we will show an overall growth of one percent in value this year,” Grinzinger said. “But to make up for the $500,000 in one year, we’d need to increase our property value by $32 million. Relying on only two forms of income for the majority of the earning stream, doesn’t allow for enough balance if one or both of those revenue streams underperform.”

Grinzinger suggested commissioners might want to debate if all users of the services provided by the city should pay something.

The city has 26,000 residents and employs 30 police officers, Grinzinger said.

“As the primary commercial, educational and retail hub, thousands of additional commuters are driving on those roads every day and being protected by those same four to five police officers scheduled per shift, but only 6,000 property owners are paying the bill,” she said.

With a millage of 15.75 mills, the city is on average about 13 mills higher than the average township levy in Isabella County.

Businesses or homeowners can move to the other side of the invisible line, pay a lesser millage rate, but still take advantage of city parks, walk their dogs down the GKB trail and go to the free concerts downtown, Grinzinger said.

At the commission’s next meeting on Oct. 22, commissioners will receive the first report on the viability of an income tax for residents and workers.

“It’s entirely possible after we talk about it that we decide an income tax is not workable or preferable for Mount Pleasant. Previous commissions have decided against following the path of other Michigan university communities three other times,” Grinzinger said. “If so, it’ll be good for us to know that as soon as we possibly can because we’ll then need to spend much of 2013 deciding which services must be eliminated and or how much of the millage we’ll need to change.”

In the second half of the presentation, Ridley talked about the vision the city commission has set for itself and the city.

Ridley discussed the importance the commissioners placed on eight areas for the future of the community. A few things included in these areas are looking what businesses the city is missing, the progress at the airport, Mount Pleasant Center development, maintaining PEAK, along with various other goals.

“That’s really a lot of projects in addition to maintaining the day-to-day, so once again I think we’ve set the bar pretty high for 2013,” Ridley said.

A public hearing on the proposed budget will be held at the Nov. 12 city commission meeting.