Council holds workshop to review proposed $5.1 million budget
Tecumseh City Council members held a special session Monday evening, March 24 for a workshop to review the proposed $5.1 million budget for 2014-15 for the city. Tecumseh City Manager Kevin Welch walked the council members through the budget and its anticipated challenges, and then city department heads each spent a little time going over their areas of responsibility.
The general fund budget consists of anticipated revenues and expenditures of $5.1 million and an expected end of year fund balance of $1.3 million.
Following the meeting, Welch said he pointed out to the council members that while a small revenue increase is projected for future years, there is still a significant risk of the loss of personal property tax and the uncertainty of a replacement program.
“There will be a statewide election in November to determine whether the state will go forward with its elimination process of personal property,” Welch said. “We’re told that 100 percent would be replaced, but frankly we don’t believe it. The proof is in the pudding.” He added that $35,000 in revenues would be lost this year, funding that the city will “never see again.”
“Personal property makes up $300,000-$350,000 of our total tax revenue,” he said. “The plan is to phase it out over a period of time, but it’s kind of hard to predict how much is going to be gone every year. But over the next 10 years we could lose $335,000 which would be a huge hit.”
Welch also pointed out some concerns that the council members would likely need to be prepared to address in the coming years. He said local and major highway funds would have limited capacity to address the road conditions the city will face. Only one grant project is currently in the application process and that’s for Burt Street.
Welch said that he included an additional $60,000 in the current and next fiscal year to help address some of the street conditions, particularly those that have worsened as a result of the harsh winter this year.
“As most people know our roads took a horrible beating this year,” Welch said. “We’re looking at some roads we thought we’d get another five years out of like North Union, but it’s much worse than we thought. It’s pretty hard to repair those from our budgets. It would take a half-million dollars to do it right.” He pointed out that state officials are talking about different proposals to fund roads, but local municipalities aren’t confident they will see much of the funding.
Another area of concern is that the Tecumseh Center for the Arts (TCA) is now relying on the use of the prior year’s investment income from the Endowment Fund. He said if projections hold true, those funds will run out in late 2016. The General Fund has contributed $65,000 annually to the TCA, but this would have to increase to sustain its current level and may not be able to support the TCA with other projects like roads demanding attention.
“I believe we need to make some decisions about the TCA funding and its future this year,” Welch told the council members. He said that the city would likely be initiating some conversations with other community groups soon to explore potential collaboration on a long-term financial model.
Welch also noted that city staff have been adjusting to a reduction in the workforce three or four years ago, getting the job done by being creative.
“We’re starting to see an increase in service activity that’s required of us, and we haven’t added anybody,” he said. “The question will be how will we fund future positions that might be needed?”
At the meeting, Tecumseh Police Chief Troy Stern made a request for an additional police officer. Welch said there has been no action on the request, but it’s something council members may be considering in the future. “Council has to consider every department’s request. For instance if we added a police officer, we’d have to take the money from somewhere else to balance the budget.”
Overall, Welch cautiously suggests that Tecumseh is in a relatively good situation compared with other communities, since there are no predicted layoffs at this time or a cutting of services.
“Our budget is always a challenge because we can’t fund everything that we need to fund,” he said. “There’s always a long list of projects — some we need to do like roads and building improvements that just can’t wait. That’s been the challenge for the past seven or eight years and things have gotten a little bit better, but not as progressively as the need is.”
A recommended budget is scheduled to be submitted to Council on April 21, with a public hearing and possible passage on Monday, May 5. The final day for the council to adopt a city budget is Monday, May 12.