News File Photo A man approaches City Hall in this March 2020 file photo.

ALPENA — Alpena city government’s proposed budget for the 2022-23 fiscal year shows a $608,000 shortfall as city officials included the cost of several capital improvement projects.

In Alpena, the police and fire departments, parks, and local streets will see significant investment in the next year or so.

Cities are required to pass balanced budgets and cover shortfalls — gaps between revenue and expenses — from cash savings. Alpena had about $3.9 million in savings at the end of June 2021.

The city’s budget runs from July 1 to June 30 and the proposed budget has predicted revenues of $11,317,582 and expenses of $11,925,944.

City Clerk/Treasurer Anna Soik said the city’s savings have grown to more than what policy dictates, so that money will be invested into infrastructure. Policy says the city’s fund balance can’t go lower than 10% of general fund expenses or higher than 20%.

The city ended last fiscal year with enough money in the bank to cover 38% of its expenses.

Soik said the savings used next fiscal year will shrink the amount in savings to about $3.2 million, or an estimated 26% of general fund expenses, which still leaves a nice reserve.

“We were being conservative because of the questions surrounding the loss of personal property tax and most recently the COVID-19 pandemic,” Soik said. “We figured we didn’t want the fund balance to go any higher, and there were capital projects we had out on the back burner and now it is time to get back to business and get them done.”

A few of the noteworthy projects include funding for restrooms at Bay View Park, a redesign of Culligan Plaza, new police cars, and many water, sewer, and street projects.

Soik said she is unsure if the city will invest similarly during the 2023-24 budget cycle, because the city will lose revenue from its property taxes because of what’s known as a Headlee rollback.

The state’s Headlee Amendment requires a local unit of government to reduce its property tax rate when annual growth on existing property values exceeds the rate of inflation.

Soik said property owners in the city have paid 16.1066 mills — or about $805 a year for the owner of a $100,000 house — for years, but the rollback will reduce that to 16.0373 mills, or about $801 a year for the owner of a $100,000 house.

The city can ask residents to keep the tax rate the same through a ballot proposal.

“I hope we will be able to keep doing the (capital improvement) projects, but it will all come down to the revenue,” Soik said.

The city will host a public hearing on the proposed 2022-23 budget at the Alpena Municipal Council’s next meeting, slated for 6 p.m. Monday.

The council likely won’t adopt the budget then, Soik said, as the city wants to allow residents a chance to ask questions, share concerns, or offer suggestions.

“We want to give people a chance to comment and not just limit it to one public hearing,” she said. “I would expect council could adopt it at its first meeting in June.”