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Alpena County faces budget shortfall

News Photo by Steve Schulwitz The Alpena County commissioners Kevin Osbourne, left, Marty Thomson, John Kozlowski, and County Administrator Mary Catherine Hannah discuss how best to address a large budget deficit during a budget workshop Tuesday. The county is considering raising taxes, cutting services, and reducing staff to help cut into the shortfall.

ALPENA — Raising taxes, cutting services, and reducing staff are a few steps the Alpena County Board of Commissioners is considering to lower a large budget shortfall.

Alpena County’s budget deficit is expected to grow to more than $1.7 million by the end of 2022 if the commissioners don’t take action to reel in expenses or make appropriate cuts, which the board has shied away from the last several years.

The county’s budget runs from Jan. 1 through Dec. 31.

The county anticipates a shortfall of about $1.1 million at the end of 2021, but Treasurer Kim Ludlow said some of that deficit could be reduced before the end of the fiscal year, but said making the entire amount up was highly unlikely.

The county could use some of its nearly $4.2 million in savings to offset the revenue shortage if the board elected to do so.

Of the savings, the county has about $507,000 reserved for things such as the replacement of roofs for county buildings, tax tribunal dispute losses, and other liabilities.

The commissioners can reallocate the reserved funds with a two-thirds vote of the board.

At its first budget workshop Tuesday, the commissioners took initial steps in crafting the 2022 budget, which is expected to be in the red by about $1.1 million by the end of this year.

It doesn’t appear at this point the commissioners want to dip into the restricted funds, but as in years past, they may utilize a portion of their unreserved savings to help cover the budget shortfall.

The county is also waiting for about $591,000 from the federal government as reimbursement for money the county spent on the construction of the new terminal at the Alpena County Regional Airport.

Although the board isn’t including it in the budget now as revenue, when the payment arrives, that will also help narrow the gap between revenues and expenses.

“Right now we don’t know when, or if, we will get it, so we can’t count on that,” Ludlow said.

They will also consider cuts and even a millage that will make up from revenue lost from the Headlee rollback.

Headlee is a state law that requires a government to limit its revenue. In some cases local governments choose to ask voters to pay taxes to make up for the lost revenue.

It is estimated the county could recoup a touch more than $700,000 if voters approved the request, which could come as early as August.

Commissioner Bob Adrian said he would like to wait a few years before making a tax increase request to residents, but added at some point it likely needs to be done.

“We might have to go to the public and say’ you have benefited from this rollback for many years and now we need that millage back,” he said.

Commissioner Don Gilmet agreed and said maybe having it on the ballot in August is the way to go, because the county’s finances likely won’t improve significantly before then.

“We can’t do things if we don’t have any money and we are rapidly getting to that point if we aren’t already there,” Gilmet said.

Before a tax increase is put before the voters though, it is likely some cuts will be needed. Commissioner Brenda Fournier said the county wouldn’t be staring at the deficit if the board had taken steps the last few years.

“We just can’t keep kicking the can down the road and that is what we continue to do,” she said. “The cuts we needed to make last year nobody else wanted to do. This year I don’t have much to say because we all know what we need to do.”

The economic conditions nationwide are also creating uncertainty, commissioner Kevin Osbourne said the price of natural gas is climbing and expected to continue to increase and gasoline for police cars and other county vehicles will also be more costly next year. He said the projected deficit could be higher when those factors are considered.

“We haven’t even discussed or considered that yet, but the price of natural gas could double and that will have a tremendous impact, especially on the sheriff’s department.”

Tuesday’s meeting is the first of about a handful of budget workshops the country will hold. The next one is slated for Tuesday at 1 p.m.

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