ALPENA - City of Alpena department heads and administrators are in the early stages of crafting the 2013-14 budget.
The city's budget, which runs from July 1, 2013 through June 30, 2014, is facing a serious challenge, as it is expected the revenues will fall about $800,000 lower than the expenditures. Alpena City Clerk/Treasurer Karen Hebert said because of this and other factors the city will have to use a portion of its fund balance again this year to balance the budget.
Hebert said the city should have about $2.2 million to begin the next fiscal year, but it will have to take money from the fund balance to even out the revenue and expenses. She said July 2012 the fund balance was at 30 percent or $3,095,000. She said depending how the rest of the current fiscal year plays out the fund balance could be down to 20 percent before drawing from it to balance the 2013-14 budget. Hebert said after the budget is balanced the fund balance could be as low as 10 or 12 percent. She said her numbers are conservative and believes there is a chance the fund balance can be more than 20 percent when the budget is done and more than the 12 percent after it is balanced.
"It is too early to tell where it will be right now, but I think it will come in better than 20 percent," Hebert said. "We always try to come above our estimates, so hopefully we will again this year."
There are many reasons why the expenses outweigh the revenues for 2013-14. Hebert said there is still uncertainty how much revenue sharing will be received from the state and it is still unknown how much the city will lose in personal property tax now that lawmakers have decided to do away with it. She said there also are significant increases in expenses that need to be considered.
"Next fiscal year health insurance will increase 11 percent or about $90,000 and our retirement pensions about $60,000," Hebert said. "The taxable values went down again and although not as badly. We are still losing $70,000 from our tax roll. So the cost of everything is going up, but the revenue is shrinking and there right now there really is no way to increase it."
The city also has lost out on revenue from the low interest financial institutions are paying on investments. Hebert said in years past the city could earn as much as $60,000 a year, but now it is only between $10,000 and $20,000. She said the budget concerns have made it difficult to do much needed projects in the city and if things continue as they are now, the city may have to borrow money to have needed work done.
"We have put off capital for a few years. A few years is fine, but now we need to start doing some maintenance on our parking lots, buildings, our roads and our parks," Hebert said. "We might have to finance these projects because there isn't the money in the general fund."
Hebert said the city is not in a lot of debt and the obligations it does have are not very large. She said there were some smaller loans the city took out that have been paid or almost completed so the ability to borrow money is not an issue.
The budget must be approved by July 1, but Hebert said a new city manager should be in place sometime in late March and whoever gets the job will have to make suggestions or propose changes to it before it is approved by Alpena Municipal Council. She said if nobody is hired before the budget is done amendments can be made to it after each quarter of the budget year.
Steve Schulwitz can be reached via e-mail at firstname.lastname@example.org or by phone at 358-5689.