Proposed Alpena budget shows $900K shortfall
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ALPENA -- Alpena is budgeting a deficit of more than $900,000 for its 2023-24 fiscal year that begins on July 1.
Raises, higher pension payments, and inflation have caused expenses to climb and the city is utilizing its fund balance to offset the difference.
The city anticipates about $11.8 million in revenues in the next fiscal year, and expenses in the ballpark of $12.7 million.
At the end of fiscal year 2022, the city had nearly $4.4 million in unassigned savings or 41.5% of general fund expenses. Clerk Anna Soik said that was a lofty amount and city officials wanted to wean it down and complete projects with a portion of it.
Soik said the newly proposed budget includes more than $8 million in capital improvement projects, which include street projects and firefighter gear among other things.
City policy requires that at least 20% of the general fund expense be held in savings. When fund balance grows well beyond that mark, the city invests the money, often in infrastructure projects or other services.
According to Soik, the fund balance is projected to shrink and be $3.9 million at the end of 2023 and about $3 million at the end of 2024.
Although there is a large number in the red, Soik said there is a good chance that the city can reduce the deficit over the course of the budget year and after quarterly adjustments are made. She said unknowns like property taxes and reimbursements for personal property could boost revenues, and narrow the gap between revenues and expenses.
"I did budget very conservedly on the tax revenue we are going to receive," she said. "Our taxable value did go up by over 7% but I don't budget like we are going to receive every single dollar. I don't want to spend money in our budget that we don't have in tax revenue."
Alpena received a little more than $1 million from the federal government's American Rescue Plan Act. Although some municipalities have used the stimulus money to shore up their budgets and reduce deficits, Soik said city officials elected not to go that route to lower the deficit.
"We have all of that money allocated for projects," she said.
A public hearing on the budget is slated for May 15 at the scheduled Alpena Municipal Council meeting and council could adopt it during its first meeting in June.