On Monday, the 2019-20 budget was introduced to the Alpena Municipal Council. The budget projects a deficit of about $280,000 on about $10.6 million in spending.

The city’s fiscal year runs from July 1 through June 30 and the city is able to run a budget deficit because it has enough money in its fund balance, which is similar to a savings account, to cover the shortfall.

City Manager Greg Sundin said the current fiscal year began with an estimated deficit of $248,000, but the way revenues panned out and prudent spending by staff and council whittled that number down closer to zero.

He said that, although the 2019-20 deficit is slightly larger, he believes the same can done again.

“Based on this past year’s experience, I think such a deficit is manageable and, with continued diligence by all the departments, and without a catastrophic event like the one at North Riverside Park a couple year ago, I am cautiously optimistic that we will be able to contain or perhaps reduce the annual deficit over the course of the year,” Sundin said.

An unexpected collapse of the boardwalk at North Riverside Park, which wasn’t covered by the city’s insurance so the city had to utilize fund balance to pay the cost of repairs which were about $230,000.

The budget projects the city will spend about $10.6 million, with about $10.3 million in revenues and reserves in fund balance should be about $2.5 million at the end end of June, but could shrink to roughly $2.2 million if no ground is made up on the projected 2019-20 deficit.

Sundin said two of the most costly things in the budget are payments for retirees’ pensions and health care. This fiscal year, the city paid $847,999 toward pensions. That amount will climb to $942,781 this coming fiscal year.

For health care, the city’s allocation into the system will go up from $277,023 this fiscal year to $329,669. According to Sundin’s budget report, the city is only about 20% funded in its health care for retirees, meaning that if all benefits expected to be earned were claimed today, the city could only pay for one out of every five retirees. Sundin hopes the city can be up to the state’s benchmark of 40% by 2025.

“The city’s goal is the stabilization of both our pension and health care funds over the long haul,” the city manager said. “This will require diligence on the part of management and a team effort from employee groups to make sure these plans are sustainable into the future.”

A series of raises will be implemented this budget year. Most of the city administration received 2% increases in pay. The city has a tiered salary system that takes longevity and other factors into account.

The budget says Sundin will also receive a 2% bump in pay, as written into his contract. He will earn $100,859, but he is retiring in December and a new manager will take over before the end of the year . City Attorney Bill Pfeifer will also have his compensation increased to $61,814. Clerk/Treasurer Anna Soik took a step up on the pay scale and will earn $75,822.

Mayor Matt Waligora and the other council members will also get raises. Waligora will have a base salary of $8,000 and the others $6,000.

The city’s compensation committee, which consists of private and public community leaders, have given the five members of the Municipal Council $500 increases. The committee only meets twice a year and determines what the council wages should be.

The proposed budget will be available for the public to examine at the clerk’s office and will be available at the city’s website.

A public hearing will be held for the budget at 6 p.m. May 20 at City Hall before council votes on whether or not to adopt it.

Steve Schulwitz can be reached at 989-358-5689 at sschulwitz@thealpenanews.com. Follow him on Twitter @ss_alpeanews.com.