BUDGET PORT HURON MICHIGAN

Transcription

1 BUDGET PORT HURON MICHIGAN ADOPTED BY CITY COUNCIL MAY 22, 2017

2 FINAL ADOPTED BUDGET CITY OF PORT HURON FOR THE FISCAL YEAR

3 CITY OF PORT HURON BUDGET FISCAL YEAR Table of Contents Page Number 1. Schedule of Estimated Revenues General Fund Schedule of Estimated Expenditures Summary of Estimated Requirements by Class Appendix Explanation a. b. c. d. e. f. g. h. i. j. k. l. m. n. o. p. q. r. s. t. u. v. w. x. y. z. Continuing Cost Reduction Efforts General Fund Garbage and Solid Waste Street Funds Utility Funds General Fund Revenues Property Tax Administration Fee User Fees and Other Miscellaneous Revenues State Shared Revenue Income Tax Revenues Grant Revenues Work Force Reductions General Fund Expenditures Increases in Operating Costs Support For Recreation, Parks and Culture General Fund Comparison Water and Wastewater Funds Combined Sewer Overflow Project Bond Commitments Construction Subsidies Debt Subsidies Monthly Utility Billings Proposed Public Works Projects Special Revenue Funds Internal Service Funds Tax Increment Funds Appendix Individual Fund s a. b. c. d. e. f. g. h. i. j. k. General Fund Street Funds Major Streets Street Funds Local Streets Street Funds Municipal Streets Street Funds Combined Cemetery Fund Garbage and Rubbish Collection Fund Rental Certification Fund O.U.I.L. Fund Drug Law Enforcement Fund Law Enforcement Fund

4 Table of Contents Page Number l. Enhanced 911 Fund m. Community Development Block Grant Fund n. Home Program Fund o. Loan Revolving Fund p. Streetscape Maintenance Fund q. Beautification Commission Fund r. McMorran Fund s. Marina Fund t. Land Purchase Fund u. Parking Fund v. Water Fund w. Wastewater Fund x. Central Stores Fund y. Data Processing Fund z. Motor Vehicle Fund aa. Energy Performance Services Fund bb. Insurance and Fringe Benefit Fund Appendix Tax Increment Authority Fund s Tax Increment Finance Authority a. Peerless Site Tax Increment Fund Downtown Development Authority b. c. d. e. f. g. Downtown Development Authority Operating Fund Water Street DDA Tax Increment Fund Bank DDA Tax Increment Fund Harrington Hotel DDA Tax Increment Fund Edison Redevelopment DDA Tax Increment Fund Mainstreet DDA Tax Increment Fund Local Development Finance Authority h. Industrial Park Expansion Tax Increment Fund Brownfield Redevelopment Authority i. j. k. l. Southside Redevelopment Tax Increment Fund Harker Street Redevelopment Tax Increment Fund Sperry s Redevelopment Tax Increment Fund Water Street Marina Redevelopment Tax Increment Fund Appendix Governmental Funds Summary Governmental Funds Summary Appendix Projected Revenues and Expenditures Schedule of Projected Revenues Schedule of Projected Expenditures

5 Schedule of Estimated Revenues General Fund -3-

6 SCHEDULE OF ESTIMATED REVENUES GENERAL FUND Actual TAXES: Real property taxes Personal property taxes Property tax administration fee Income tax Payment in lieu of taxes Penalties and interest on taxes -4- BUSINESS LICENSES AND PERMITS: Taxi drivers Taxi cabs Demolitions C.A.T.V. Miscellaneous NONBUSINESS LICENSES AND PERMITS: Dog Building Electrical Heating Plumbing Right-of-way Miscellaneous GRANTS ,304, ,418 5,316, ,947 5,440, ,000 5,480, , ,000 6,500,000 60, ,000 13,190,000 6,431,121 66, ,830 12,991,254 6,366,498 65, ,711 12,882,375 6,200,000 65, ,000 12,570,000 1, , ,737 5, ,217 1, , ,102 5, ,577 1, , ,000 8, ,000 8, ,000 7, , ,146 69,318 67,028 32,995 5, , ,489 50,952 59,338 23,525 14,896 9, , ,000 55,000 65,000 30,000 7,000 2, , ,000 55,000 60,000 30,000 7,000 3, , , , , ,000 (Continued on next page) Increase Decrease 40, , ,000 5, ,000 5,000 1, ,000 5,000 5,000 1,000 5, ,000 5, ,500 5,500 30,000

7 SCHEDULE OF ESTIMATED REVENUES Actual STATE SHARED REVENUE: Sales and use tax - constitutional Sales and use tax - statutory Local community stabilization authority Liquor licenses -5- CHARGES FOR SERVICES: Zoning board of appeals 20th and Court pool Sanborn pool Lakeside parking Boat launch fees Recreational fees Lot splits Hydrant maintenance False alarm charges Blue Water Bridge reimbursement Summer tax collection fee County parks millage Miscellaneous FINES AND FORFEITS: Parking violations Ordinance fines INVESTMENT INCOME RENTS 2,307,540 1,074, ,385,000 1,075, ,000 30,000 3,930,000 35,472 3,417,280 2,278,547 1,079, ,453 30,768 3,744, ,930 40,986 43,695 31, ,083 1,330 58,640 1, ,000 1, ,295 58, ,902 3,180 4,029 41, ,602 36, ,565 4,080 58,280 3, ,000 1, ,279 60, ,915 3,000 5,000 40,000 95,000 33, ,000 2,000 58,280 2, ,000 1, ,000 55, ,000 3,000 4,000 30, ,000 42, ,000 4,000 58,280 2, ,000 1, ,000 60,000 1,030,000 25, , ,647 21, , ,718 20, , ,000 25, , ,000 45,592 94,421 70,000 70, , , , ,000 (Continued on next page) 2,325,000 1,075, ,000 30,000 4,060,000 Increase Decrease 60, , ,000 60,000 1,000 10,000 65,000 9,000 25,000 2,000 5,000 5, ,000 11,000 5,000 5,000 75,000 75,000 25,000

8 SCHEDULE OF ESTIMATED REVENUES Actual SALE OF ASSETS CHARGES TO OTHER FUNDS: Garbage and rubbish collection fund Marina fund Parking fund Water fund Wastewater fund Central stores fund Data processing fund Motor vehicle fund -6- Subtotal 128, ,387 12,000 15,388 Increase Decrease 3,388 93,697 28,117 12, ,635 1,053,543 11,144 62, ,941 2,077,499 95,090 24,966 11, ,976 1,127,950 11,106 64, ,073 2,148,828 98,589 22,920 12, ,939 1,133,401 11,147 68, ,109 2,195, ,947 23,715 12, ,220 1,187,300 11,228 72, ,449 2,276,890 5, ,281 53, ,633 7,340 81,242 21,050,628 21,903,974 21,177,648 21,987,278 1,026, , , , ,000 22,142,648 22,707,278 TRANSFERS FROM OTHER FUNDS: Land purchase fund TOTAL 21,050,628 21,903, , , ,000 1,026, ,500

9 Schedule of Estimated Expenditures -7-

10 SCHEDULE OF ESTIMATED EXPENDITURES Actual Increase Decrease GENERAL FUND -8- General Government: City council City manager Elections Finance and accounting Income tax Assessor Legal Clerk Personnel Purchasing Board of review Treasurer Municipal office center Promotional Public Safety: Police administration Detectives Patrol Communications Fire Public Works: Inspection Emergency management Public works administration Engineering Street lighting Blight and code enforcement 48, ,260 81, , , , , , ,443 47,177 2, , ,578 16,132 3,006,830 51, ,267 39, , , , , , ,532 50,429 2, , ,367 61, ,572 86, , , , , , ,581 55,366 2, , ,860 57, ,785 68, , , , , , ,087 58,263 2, , ,842 17,746 30,179 14,746 54,643 15,810 12,506 2, ,982 3,096,888 3,315,113 3,491, , ,708 1,256,023 5,436,231 41,716 5,210,842 12,802, ,646 1,311,916 5,533,972 39,544 5,007,555 12,759, ,987 1,362,223 6,136,253 41,640 5,088,861 13,588,964 1,020,942 1,437,239 6,448,740 40,140 5,192,755 14,139,816 60,955 75, , ,648 8, , , , ,856 1,977, ,770 4, , , , ,001 1,974, ,077 17, , , , ,916 1,918, ,468 17, , , , ,504 1,669,357 31, (Continued on next page) 3,845 13,213 21,591 1, , ,352 31,503 1,500 99,102 86,494 78,488 16, ,496

11 SCHEDULE OF ESTIMATED EXPENDITURES Actual Senior Citizens: Wastewater and water discounts -9- Recreation, Parks and Culture: Parks and forestry Boat launch ramps Recreation Rockin the rivers 20th and Court pool Sanborn pool Lighthouse park Lakeside park Palmer park recreation center McMorran complex Library Museum Other Functions: Planning Blue Water Bridge economic study Telephone service Contingencies Insurance, health and safety Taxes written off Demolitions Subtotal 2,063 2, ,056 1,056 2,000 2,000 2,000 2,000 Increase Decrease 1,049,273 7, ,587 38,201 66, ,086 2,047 13, , ,000 8,000 65,174 2,418,991 1,197,508 7, ,871 49,031 70, ,306 9,251 65, , ,000 8,000 61,717 2,459,874 1,189,623 12, ,310 38,131 71, ,001 6,753 75, ,290 55,000 8,000 93,939 2,428,271 1,200,123 12, ,911 43,491 73, ,119 26, , , ,954 8,000 74,920 2,814, ,151 55,000 8, ,232 90,000 10,592 88,179 6,673 31, , , ,000 12,340 40,000 93,990 15,000 50, ,639 7,712 61,545 7,379 58, , , ,000 12,383 40,000 93,990 15,000 50, ,970 7, ,519,590 20,687,532 21,757,668 22,629,978 1,200, ,567 (Continued on next page) 10, ,601 5,360 1,607 7,118 19,640 47,688 5, , ,476 19,019 24,937 43

12 SCHEDULE OF ESTIMATED EXPENDITURES Actual Public Improvements: Parks and recreation projects MOC capital Other public improvement Subtotal Transfer to Other Funds: Beautification commission fund Insurance and fringe benefit fund TOTAL GENERAL FUND ,848 88,532 5, , ,781 66, ,887 1,014,203 20,734,549 21,701,735 3, , ,300 27, ,000 24, ,680 67,000 Increase 39,320 Decrease -10-7,000 74,000 39, ,000 17, ,000 22,139,348 22,703,978 1,240, ,567 3,300 3,300 3,300 3,300 3,300 3,300 21,037,849 21,705,035 22,142,648 22,707,278 1,240, ,567 3,427,870 1,556,715 2,087,913 7,072,498 4,194,846 2,427,460 2,473,295 9,095,601 5,557,292 2,286,216 3,349,006 11,192,514 5,155,624 2,715,876 2,634,816 10,506, ,883 1,728, ,969 1,334 33,617 2,578 1, , , , ,445 1,748, ,713 18,285 32,179 11, , , , ,780 1,865, ,253 34,000 56,000 5,000 25,000 1,431,560 60, ,167 1,100, ,741 1,948, ,263 41,000 57,000 3,245 30,000 1,621,596 SPECIAL REVENUE FUNDS Street funds: Major streets Local streets Municipal streets Cemetery fund Garbage and rubbish collection fund Rental certification fund OUIL fund Drug law enforcement fund Law enforcement fund Enhanced 911 fund Community development block grant fund Neighborhood rehabilitation fund Home program fund Loan revolving fund (Continued on next page) 356, , , , , ,190 1,115,858 58,961 83, ,010 7,000 1,000 1,755 5, ,036 60, , ,000

13 SCHEDULE OF ESTIMATED EXPENDITURES Actual Streetscape maintenance fund Beautification commission fund TOTAL SPECIAL REVENUE FUNDS 44,340 7, ,482 4,358 50,000 7,300 50,000 7,300 Increase Decrease 10,547,951 13,451,093 17,283,117 16,096, , , , , ,437 8,294 1,438,123 1,441,954 3,831 2,135,055 ENTERPRISE FUNDS Marina fund McMorran -11- Land purchase fund 308, ,463 3,519,123 1,040,000 2,479,123 Parking fund 113, , , , ,087 2,177,503 1,023, , ,342 3,852,906 1,390,234 9,215,800 1,970,624 1,033, , ,664 4,109,036 1,618,622 9,517,488 2,606,850 1,130, , ,699 4,004,600 1,180,000 9,907,523 3,115,670 1,190, , ,773 4,078, ,000 9,798, ,820 60,236 20,440 4,550,136 1,787, ,700 52,802 7,240,449 2,649,528 16,309,783 4,752,610 1,871, ,190 58,623 7,798,973 1,536,462 16,044,019 5,873,077 2,775, , ,246 7,399, ,000 16,979,260 6,342,546 2,827, ,935 69,296 7,443, ,000 16,905, ,469 51, , , ,874 26,100,398 26,551,474 32,958,486 29,567,414 1,239,938 4,631,010 Water Fund: Treatment plant Distribution Customer accounting Meter reading Debt service Capital outlay Wastewater Fund: Treatment plant Collection, general Collection system no. 1 Collection system no. 2 Collection system no. 3 Debt service Capital outlay TOTAL ENTERPRISE FUNDS (Continued on next page) 31,926 73, , , , ,950 44,000

14 SCHEDULE OF ESTIMATED EXPENDITURES Actual Increase Decrease INTERNAL SERVICE FUNDS Central stores fund Data processing fund Motor vehicle fund Energy performance services fund Insurance and fringe benefit fund TOTAL INTERNAL SERVICE FUNDS 89, ,143 1,698, ,928 11,864,518 97, ,113 1,807, ,932 11,452, , ,074 2,391, ,000 12,200, , ,647 2,900, ,000 12,850,000 17,049, , ,878 10, ,000 14,626,853 14,305,765 15,807, , , ,651 92, , ,483 8,338 1, ,928 50, , , , ,000 96, , ,760 9,842 90, , ,000 9,000 90, ,000 69, ,000 88,000 69, ,000 15,000 90, , , , ,919 27, ,538 30, ,000 29,000 1, ,000 29,000 58, ,000 57, ,000 2,363,350 1,701, ,000 1,241,291 TAX INCREMENT FUNDS -12- Industrial park tax increment fund Paper company tax increment fund Krafft-Holland tax increment fund Peerless site tax increment fund Downtown development authority operating fund Water street tax increment fund Bank tax increment fund Harrington Hotel tax increment fund Edison redevelopment tax increment fund Mainstreet tax increment fund Industrial park expansion tax increment fund Brownfield redevelopment tax increment fund: Southside redevelopment Harker Street redevelopment Sperry's redevelopment Water Street Marina redevelopment TOTAL TAX INCREMENT FUNDS TOTAL ALL FUNDS 279,107 66, ,839 3,391,156 75,704,207 2,891,432 78,904,799 90,555, ,000 87,121,111 2,000 87,350 11,000 6,000 6, , ,000 3,000 4,984, ,350 8,418,982

15 Summary of Estimated Requirements by Class -13-

16 SCHEDULE OF ESTIMATED REQUIREMENTS BY BUDGET CLASSES GENERAL FUND -14- General Government: City council City manager Elections Finance and accounting Income tax Assessor Legal Clerk Personnel Purchasing Board of review Treasurer Municipal office center Public Safety: Police administration Detectives Patrol Communications Fire Public Works: Inspection Emergency management Public works administration Engineering Street lighting Blight Supplies and Materials Personal Services 11, ,394 52, , , , , ,470 49,327 1, , ,088 2,356,769 1,400 1,050 5,100 6,800 25,736 9, ,520 2, ,580 28, ,790 4,677,370 12,551, , , ,502 15, , ,646 10,950 28,613 93, ,424 1,295,869 5,787,969 Total Recurring Expenses Contractual Services 44,085 21,341 11,117 99,319 58,194 63, ,850 34,305 36,017 8, , ,141 1,035,118 57, ,785 68, , , , , , ,087 58,263 2, , ,842 3,485,356 Capital Outlay Total 6,000 6,000 57, ,785 68, , , , , , ,087 58,263 2, , ,842 3,491, , , , , ,981 40, ,340 1,236,369 1,020,942 1,437,239 6,448,740 40,140 5,192,755 14,139,816 1,020,942 1,437,239 6,448,740 40,140 5,192,755 14,139,816 1, ,650 7,000 6,950 21, ,459 16,747 6,590 66, ,289 54, , ,468 17, , , , ,504 1,669, ,468 17, , , , ,504 1,669,357 (Continued on next page)

17 SCHEDULE OF ESTIMATED REQUIREMENTS BY BUDGET CLASSES Supplies and Materials Personal Services Senior Citizens: Wastewater and water discounts -15- Recreation, Parks and Culture: Parks and forestry Boat launch ramps Recreation Rockin the rivers 20th and Court pool Sanborn pool Lighthouse park Lakeside park Palmer park recreation center McMorran complex Library Museum Other Functions: Planning Blue Water Bridge economic development plan Telephone service Contingencies Insurance, health and safety Taxes written off Demolitions 743,212 4, , ,836 82,478 18,043 45, ,685 70,778 2,050 65,770 3,350 9,965 17,605 4,800 20,655 3,584 2,000 2,000 1,192,123 12, ,911 43,491 73, ,119 26, , , ,954 8,000 74,920 2,751,810 1,000 5,790 19, ,000 11,340 40,000 64,500 15,000 49, , , ,000 12,340 40,000 93,990 15,000 50, , ,884 4,579,031 22,560, ,209 2,900 1,000 17,310,063 2,000 2, ,133 6, ,678 39,211 26,279 32,036 3,550 57,206 43, ,954 8,000 73,464 1,094,046 1, , ,809 Subtotal 456 1,458,207 28,600 Total Recurring Expenses Contractual Services 890 (Continued on next page) Capital Outlay Total 8,000 55,000 63,000 2,000 2,000 1,200,123 12, ,911 43,491 73, ,119 26, , , ,954 8,000 74,920 2,814, , ,000 12,340 40,000 93,990 15,000 50, ,639 69,000 22,629,978

18 SCHEDULE OF ESTIMATED REQUIREMENTS BY BUDGET CLASSES Supplies and Materials Personal Services Public Improvements: Parks and recreation projects MOC Capital Other public improvements Subtotal 17,310, ,884 Transfer to Other Funds: Beautification commission fund TOTAL GENERAL FUND Total Recurring Expenses Contractual Services Capital Outlay 4,579,031 22,560,978 3,300 3,300 3,300 3,300 67,000 Total 67,000 7,000 74,000 7,000 74, ,000 22,703,978 3,300 3, ,310, ,884 4,582,331 22,564, ,000 22,707,278 1,062, ,733 45,781 1,797, , ,789 6, ,033 1,112, ,854 2,582,969 4,065,492 2,413,124 1,183,376 2,634,816 6,231,316 2,742,500 1,532,500 5,155,624 2,715,876 2,634,816 10,506, ,331 89, ,708 26,326 7,032 6,700 5,500 10,000 3, ,084 1,852,460 46,855 5,500 7, ,741 1,948, ,263 11,000 17,000 3,245 55, ,650 1, ,596 35,225 SPECIAL REVENUE FUNDS Street funds: Major streets Local streets Municipal streets Cemetery fund Garbage and rubbish collection fund Rental certification fund OUIL fund Drug law enforcement fund Law enforcement fund Enhanced 911 fund Community development block grant fund Home program fund Loan revolving fund 128,146 34,125 (Continued on next page) 4,275,000 30,000 40,000 30,000 1,478, , , ,741 1,948, ,263 41,000 57,000 3,245 30,000 1,621, , ,000

19 SCHEDULE OF ESTIMATED REQUIREMENTS BY BUDGET CLASSES Supplies and Materials Personal Services Streetscape maintenance fund Beautification commission fund TOTAL SPECIAL REVENUE FUNDS 5, ,500 Total Recurring Expenses Contractual Services 37, ,000 7,300 Capital Outlay 7,000 Total 50,000 7,300 2,771, ,526 6,159,971 9,365,657 6,730,500 16,096, ,373 34, ,381 1,386,954 55,000 1,441,954 8,120 2, , ,437 1,015,000 1,015,000 ENTERPRISE FUNDS McMorran fund Marina fund Land purchase fund -17- Parking fund Water Fund: Treatment plant Distribution Customer accounting Meter reading Debt service Wastewater Fund: Treatment plant Collection, general Collection system no. 1 Collection system no. 2 Collection system no. 3 Debt service TOTAL ENTERPRISE FUNDS 247,437 25,000 1,040,000 40,394 9,010 84, ,227 1,039, , , , , ,569 74,305 50,588 2,151, ,951 1,102, , , ,722 4,078,000 5,915,048 2,312,720 1,177, , ,477 4,078,000 8,467,394 2,357, , , ,146 10,500 6,000 3,241, ,434 6,051,546 2,305, ,935 69,296 7,443,000 15,922, , ,585 9,534 10,582 3,174,374 1,307, ,901 52,714 7,443,000 12,010, , ,585 6,342,546 2,827, ,935 69,296 7,613,000 16,905,303 6,161,292 1,118,145 19,894,293 27,173,730 2,393,684 29,567,414 (Continued on next page) 134, ,950 12,853 75, ,000 1,331,099 3,115,670 1,190, , ,773 4,518,000 9,798,493

20 SCHEDULE OF ESTIMATED REQUIREMENTS BY BUDGET CLASSES Supplies and Materials Personal Services Total Recurring Expenses Contractual Services Capital Outlay Total INTERNAL SERVICE FUNDS Central stores fund Data processing fund Motor vehicle fund Energy performance services fund Insurance and fringe benefit fund TOTAL INTERNAL SERVICE FUNDS 16, , ,310 35,600 70, ,468 12,309,000 1,000 65, , , , , , ,981 1,684, ,000 12,850,000 5,300 83,666 1,215, , ,647 2,900, ,000 12,850,000 13,400, ,768 1,816,474 15,744,681 1,304,581 17,049,262 88,000 61, ,000 12,000 10, ,000 7, ,000 88,000 61, ,000 12,000 10, ,000 7, ,000 7,150 5,000 3,000 80,000 5, ,000 20,000 88,000 69, ,000 15,000 90, , , , ,000 29,000 58, , ,000 29,000 58, ,000 1,405,850 1,405,850 TAX INCREMENT FUNDS -18- Peerless site tax increment fund Downtown development authority operating fund Water street tax increment fund Bank tax increment fund Harrington Hotel tax increment fund Edison redevelopment tax increment fund Mainstreet tax increment fund Industrial park expansion tax increment fund Brownfield redevelopment tax increment funds: Southside redevelopment Harker Street redevelopment Sperry's redevelopment Water Street Marina redevelopment TOTAL TAX INCREMENT FUNDS TOTAL ALL FUNDS 39,642,954 2,752,323 33,858,919 76,254, ,000 29,000 58, , ,150 10,866,915 1,701,000 87,121,111

21 Appendix - Explanation -19-

22 City of Port Huron 100 McMorran Boulevard Port Huron, MI BUDGET OVERVIEW A. Continuing Cost Reduction Efforts The City of Port Huron, like virtually all local governments in Michigan, continues to struggle with declining revenues and cost pressures outside the government s control. As discussed beginning on page 29, the City has reduced its employee count by over twentyseven percent since Total revenues have fallen since their peak in , particularly due to declines in property values and state cuts of revenue sharing beginning in Residential property values have fallen by 32% since the year and taxable values have fallen by 29%. As a result, property taxes paid by City residents and landlords have decreased by over 23% during the past nine years. Overall values, including industrial and commercial properties, have fallen by 30% and taxable values have fallen by 28.2%. The City s efforts to reduce overall costs of operations while minimizing the resultant service reductions has resulted in the elimination of a net total of eighty-nine positions since This is explained in more detail beginning on page 29. Initial General Fund revenue and expenditure estimates and requests for the fiscal year ending June 30, 2018 projected that expenditures would exceed revenues by over 1.75 million. As a result of the adjustments discussed below, the gap has been eliminated. B. General Fund The General Fund budget reflects expected modest increases in property tax revenue, income tax revenues and state shared revenue. As part of an effort to reduce expenses, each budget activity has been carefully scrutinized and changes have been implemented where appropriate. In order to assure rating agencies and bond holders that costs will continue to be controlled, the City Council adopted both a Debt Management Policy and a Fund Balance Policy during January, The Debt Management Policy outlines the principles, guidelines and restrictions for incurring debt and payment of debt services. The Fund Balance Policy states the City s intention to manage the fund balance in its governmental funds in a manner consistent with Governmental Accounting Standards Board Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions. The Fund Balance Policy also stated the City Council s intent to manage the General Fund s activities in such a manner that over time the Fund Balance of the General Fund would move toward 25%. As of June 30, 2017, based on the proposed budget the percentage is expected to be 21.2% General Fund revenues have been relatively flat since the year ended June 30, 2000, increasing at less than the rate of inflation over that period. Overall, General Fund revenues before transfers are expected to increase by less than 810,000 in Property and income taxes and state revenue sharing are expected to generate million in General Fund revenue for the year ending June 30, This is 250,000 less than those three revenue items generated sixteen years ago, during the year ended June 30, Maritime Capital of the Great Lakes

23 The General Fund provides for a variety of governmental services, including public safety (police and fire services); parks, recreation and culture; public works; planning and inspection and general governmental services. The revenue declines discussed above have required that costs be reduced and, as a result, services have been reduced. Revenue constrictions have impacted the City s ability to fund capital projects and many repair or rehabilitation projects within the General Fund continue to be postponed. It is important to remember that there is some uncertainty to all of the revenue projections as the direction of the economy is unclear. This will necessitate close review of revenues throughout the year to determine if additional cuts will be necessary. In summary, the General Fund budget, as proposed, continues, but does not expand, most government services. The proposed General Fund budget is predicated on current expected income tax revenues and the assumption that the City will qualify for the full amount of State shared revenues based upon current State estimates. It may need further review by Council during the upcoming year to either increase revenues or reduce services. C. Garbage and Solid Waste Historically, the funds for garbage and solid waste removal have been provided by a property tax levied for that specific purpose. For the fiscal year ended June 30, 2009, this millage provided over 2.1 million in annual revenue. These funds provided for not only weekly garbage and recycling services, but also provided for public area pickup in the City s various parks, beaches and parkways, a brush and branch pickup program and twice monthly street sweeping during the warmer months. Over the past nine years, due to the significant decline in real estate values, property tax revenues have decreased from a high of 2.13 million for the fiscal year ended June 30, 2009 to an expected 1.53 million for the fiscal year ending June 30, Because there were prior accumulated funds dedicated for rubbish and solid waste purposes, services had been continued at prior levels up to June 30, The budget made several adjustments to past procedures as a result of declining revenues and the expenditure of the accumulated funds. Street sweeping services were moved to the Major and Local Streets funds and were reduced to a once per month service. Brush and branch pickup were moved to the General Fund s Parks and Forestry activity as of May, 2013 and will continue for a four week period in the spring and again in the fall. A nominal pick-up fee has been instituted in order to make the program more sustainable. During February, 2013, the City Council approved a five-year contract with a new service provider which maintains service through June 30, It was anticipated that the changes discussed above would provide sufficient revenue to continue current services until at least June 30, However, property tax values did not recover as quickly as anticipated. Therefore, it was necessary to supplement property tax revenue during the year ending June 30, 2016 in order to maintain the financial integrity of the fund. revenues were modified to include a 25 annual fee per residence for bulk leaf and yard waste pick up and recycling. This fee, which is assessed on parcels containing a residential dwelling, raises an additional 230,000 to fund current operations. -21-

24 D. Street Funds Cities in Michigan receive state shared gas and weight taxes to partially offset the costs of maintaining and rebuilding major and local streets. These revenues have generally been sufficient for maintenance needs, but not for construction or major repairs. In November 2015, the Michigan Legislature enacted and the Governor signed into law a series of new road funding laws which will increase vehicle registration fees and gas taxes for all Michigan residents. This resulted in a substantial increase in the City s state shared revenue for the Street funds. This additional revenue will help mitigate the effect of the increase in fringe benefit rate due to the substantial increase in unfunded liabilities. The proposed budget will continue maintenance and preventative maintenance programs at levels somewhat reduced from prior years. Reductions in personnel in prior years will allow annual operating expenses to continue to be more closely aligned with the expected revenues. As discussed above, street sweeping activities are now accounted for in the streets funds. The street construction millage, which was renewed for ten years in November, 2013, will provide approximately 11.0 million for construction and street improvements for the ten-year period ending June 30, The street construction millage is an integral component of streets funding. This millage will allow the major rehabilitation of the City s streets to continue, when coupled with federal grants, state grants and the use of accumulated funds. E. Utility Funds The City s two utility funds, the Water Fund and the Wastewater Fund, are budgeted to receive operating revenues of approximately 23.0 million. The two funds cost of operating, debt service, departmental capital costs and other capital costs funded from operations are expected to be approximately 26.1 million, a deficit of 3.1 million. In order to provide sufficient funds to offset this deficit, the budget proposes the use of water and wastewater accumulated balances and continues the supportive transfers from other City Funds. In addition, the budget includes a 5.7% rate increase in combined water and wastewater rates. This increase has been included in the projected revenues discussed above. Water and wastewater usage through the most recent four years has declined somewhat. F. General Fund Revenues Over the past seventeen years General Fund revenues have grown at less than the rate of inflation. This has occurred while many commodities purchased by the City including gasoline, asphalt and natural gas have increased dramatically. -22-

25 The following chart indicates the various General Fund revenue sources for and the proposed relative percentage supplied by each. Proposed General Fund Revenues Rents & other Grants Licenses & 2.6% 0.6% Permits 3.2% Transfers 3.2% Property Tax 29.5% Charges for Services 4.5% Charges to other funds 10.0% State Shared Revenue 17.9% Income Tax 28.6% The City Council has the authority to levy a property tax as authorized by City Charter and citizen voted millages as follows: City Charter Annual Operations Refuse Collection Municipal Streets Capital Outlay Blue Water Transportation Authority - Total mills mills mills.6203 mills mills The taxable valuation of all property within the City, as compiled by the City Assessor and revised by the Board of Review, is as follows: Assessment roll: Real property Personal property Special Acts assessment rolls: Industrial facilities roll: New facilities, real property New facilities, personal property Neighborhood enterprise zone, real property Obsolete property rehabilitation, real property 523,588,714 58,240,500 2,732,336 10,857, ,899 4,541, ,931,

26 Taxable valuation has increased by 1.2% overall. Real property values increased by 2.2%, and personal property values decreased by 6.5%. State equalized valuation (SEV) has increased by 3.6% overall. Real property values increased by 4.9%, while personal property values decreased by 6.5%. Pursuant to legislation approved by voters in the August 2014 statewide election, the State of Michigan has phased out the personal property tax on industrial property. This will have a significant effect on the City of Port Huron s future finances. Also, beginning with the budget year, companies having taxable value less than 40,000 were dropped from the tax rolls. The State has pledged to provide full reimbursement for lost personal property tax revenue. State projections for the budget year includes 630,000 in the General Fund, 100,000 in the Garbage and Rubbish Collection Fund and 70,000 in the Municipal Streets Fund. This revenue is described as State Shared Revenue Local Community Stabilization Authority. Proposal A, which was approved by the voters on March 15, 1994, increased the state sales and use tax as a means to reduce the reliance on local property taxes for school financing. The property tax portion of this proposal limits individual assessment increases to the rate of inflation (0.9% for 2017), or 5%, whichever is less. Beginning in 1994, taxable value replaced state equalized value as the basis for calculating property taxes. The taxable value for 2017 is the lower of the 2017 state equalized value or the 2016 taxable value adjusted by the rate of inflation for the period. When properties are sold, the limitation period no longer applies and taxable value will increase to one half true cash value (approximately one half market value). Taxable value can also increase or decrease due to physical changes in individual parcels. The Headlee amendment to the State constitution requires a millage rollback if assessed value, excluding new construction, increases by more than the inflation rate. It currently appears that the City will be subject to a Headlee rollback and that City millage rates will be reduced as shown below: General Fund Streets Fund Garbage and Rubbish Collection Fund 2017 Millage Rates Millage Rates For 2017 and 2016, taxable value was lower than the state equalized value (SEV), resulting in property being taxed at an average of 89.8% and 92.0% of equalized value, as shown below: Equalized Value Taxable Value Difference 669,272, ,931,671 68,340, ,939, ,091,289 51,848,511

27 Although real estate values appear to be trending in a positive fashion, the effects of Proposal A and the Headlee Amendment will continue to limit potential increases in property tax revenue. It is essential that property tax limitations be considered and reviewed on an ongoing basis. This proposed budget anticipates General Fund property tax revenue of 6.12 million based on a net uncaptured taxable value of 546,000,000 at the proposed millage rate of mills. G. Property Tax Administration Fee Included in the General Fund there is proposed a new revenue item, the property tax administration fee. This fee is an additional one percent charge added to each property tax bill and is expected to provide 285,000 annually. State law allows property tax collecting units like the City to assess a local property tax administration fee. It is defined as a fee to offset costs incurred by a collecting unit in assessing property values, in collecting the property tax levies, and in the review and appeal process. Currently, approximately 75 percent of the other local units in St. Clair County assess such a fee. As discussed in this budget message, residential property values have fallen by 32% since the year. Taxable values have fallen by 29% during the same period. Even with the addition of the administrative fee, residential property owners (both residents and landlords) still maintain a significant reduction in overall property taxes during the most recent nine year period. Because of the effects of Proposal A and the Headlee Amendment, it will be decades before the City s property tax revenue returns to the former levels. H. User Fees and Other Miscellaneous Revenues The proposed General Fund budget anticipates approximately 2.3 million in revenue from user fees and other revenues. User fee rates are reviewed annually and adjusted as necessary. Following is a list of the City s various categories of user fees and the projected amounts of revenue generated by each for Source Licenses and Permits: Cable television Building permits Other Anticipated Revenue 355, ,000 25, ,000 Charges for Services: Recreation fees Blue Water Bridge reimbursement County parks millage Other , , , ,000 1,030,000

28 Source Fines and Forfeits: Parking violations Ordinance fines Anticipated Revenue 25, , ,000 70, ,000 15,388 Investment Income Rents MOC and other Sale of Assets 2,335,388 Program fees for recreation activities are based upon the direct program costs for nonresidents with resident fees set at 50% of the calculated amount. Further, the recreation department continues to work with local foundations to generate increased grant revenues for both programs and projects. I. State Shared Revenue On March 21, 2011, Governor Rick Snyder presented a special message on community development and local government reforms. As part of that message, he announced the new Economic Vitality Incentive Program (EVIP), which replaced statutory revenue sharing, but at approximately 66% of prior levels. The state revenue sharing program distributes sales tax collected by the State of Michigan to local governments as unrestricted revenues. Previous funding of the program consisted of the following dedicated tax revenues: Constitutional - 15% of the 4% gross collections of the state sales tax Statutory % of the 4% gross collections of the state sales tax Distributions of constitutional revenue sharing are based on population. As a result, estimated revenue for has been based on the 2010 census. The formula for statutory distributions formerly included factors such as taxable value per capita, local unit type, population and a tax rate yield equalization factor. The initial EVIP program implemented by the State had three key aspects as follows: 1. Accountability and Transparency 2. Consolidation of Services Plan 3. Unfunded Accrued Liability Plan During 2014 the State of Michigan established the City, Village and Township Revenue Sharing (CVTRS) program (a simplified version of the EVIP). Each eligible local unit must meet all of the requirements of Accountability and Transparency in order to receive the full CVTRS payments. A Consolidation of Services Plan and an Unfunded Accrued Liability Plan are not required under the CVTRS program. The City has successfully met the criteria to receive the CVTRS payments and management believes the City will continue to qualify for these payments in the future. The budget has been prepared based on that assumption and also assumes the State of Michigan will continue to fund the CVTRS program at their estimated levels. -26-

29 An important difference between the two types of shared revenues is that, with constitutional revenue sharing, the percentage of receipts that must be shared with local units of government is fixed by the state constitution, while the percentage for the CVTRS (formerly EVIP/statutory revenue sharing) is set by the state legislature. In recent years, when the state s budget crisis has become more acute, increasing amounts of those funds have been diverted to balance the state s budget and away from providing local government services. This trend is illustrated by the following table. Amounts distributed under both methods also fluctuate as economic conditions impact the amount of sales tax collected by merchants and remitted to the state treasury. The following table shows the breakdown of the constitutional and statutory portions of the City s state revenue sharing since fiscal year Fiscal Year Constitutional Statutory/EVIP/CVTRS Total ,152,842 2,986,778 5,139, ,119,531 2,780,554 4,900, ,125,773 2,338,763 4,464, ,120,819 2,175,381 4,296, ,153,181 1,977,814 4,130, ,204,657 1,867,450 4,072, ,209,897 1,824,514 4,034, ,206,481 1,693,247 3,899, ,166,678 1,847,544 4,014, ,025,303 1,355,698 3,381, ,017,768 1,315,279 3,333, ,179,039 1,177,448 3,356, ,197, ,357 3,185, ,250,734 1,039,589 3,290, ,307,540 1,074,268 3,381, ,278,547 1,079,599 3,358,146 * ,385,000 1,075,000 3,460,000 * ,325,000 1,075,000 3,400,000 * ed amount -27-

30 Since fiscal year , economic conditions in the State have resulted in the City receiving less actual and projected state shared revenue (constitutional and statutory portion of state revenue sharing only) as illustrated in the following table: Year Amount of State Shared Revenue (SSR) % Difference SSR as % of General Fund Expenditures ,139, % 25.3% ,900, , % 23.5% ,464, , % 22.4% ,296, , % 21.4% ,130,995 1,008, % 19.1% ,072,107 1,067, % 18.1% ,034,411 1,105, % 17.6% ,899,728 1,239, % 15.5% ,014,222 1,125, % 17.5% ,381,001 1,758, % 15.3% ,333,047 1,806, % 15.3% ,356,487 1,783, % 15.9% ,185,463 1,954, % 15.5% ,290,323 1,849, % 15.6% ,381,808 1,757, % 16.1% ,358,146 1,781, % 15.5% * ,460,000 1,679, % 15.6% * ,400,000 1,739, % 15.0% Difference * ed amount Due to conservative budget estimates for State revenue sharing, the City has not experienced any mid-year reductions in municipal services. However, the table above demonstrates that in the proposed budget, the City anticipates receiving approximately 1.7 million less from this important revenue source than it received in This loss of State shared revenue is equal to 3.1 mills of property tax, based on the City s 2017 taxable value. -28-

31 J. Income Tax Revenues City income tax revenues have been estimated at 6.5 million, slightly higher than the current year s budgeted amount. Over the past nine years income tax revenues have increased modestly as hiring by private employers has outpaced reductions in employment for public employers. Projected income tax revenues are the equivalent of 11.9 mills of property tax. K. Grant Revenues The budget includes expected grant revenue of 25,000 for various parks and recreation grants. Grant revenue also includes 100,000 from the State of Michigan for economic development related to the Blue Water Bridge Plaza project. L. Work Force Reductions In order to reduce expenses as a result of the State revenue sharing, property tax and income tax reductions and to provide funds to subsidize utility rates, the City has reduced its work force. Since July 1, 2002, a net of 89 full-time positions have been eliminated. Sixteen of the eliminated positions were division heads or supervisors, including 13 since Although the budget presented for the fiscal year ended June 30, 2018 adds nine fulltime positions, these are in critical areas with independent funding sources. Five of the positions are in the McMorran Fund. This fund was taken over by the City when SMG ceased operational management last year. These five employees are now considered City personnel. This arrangement has allowed McMorran Place to provide enhanced entertainment opportunities for Port Huron residents. These positions are funded by rental charges and other fees charged by McMorran Place. Three of the full-time positions were added for additional Rental Inspectors in the Rental Certification Fund. This is discussed in more detail later in this budget presentation, in section X, Special Revenue Funds. These positions will be funded by an increase in the Rental Certification fee. The final full-time position added was for a police officer. The County added an additional officer from the Port Huron Police Department because of the recently enacted increase in the County s Drug Task Force millage. This increased the number of Port Huron officers serving on the County s Drug Task Force from one to two. In order to keep the number of officers serving the City from decreasing, it was necessary to add one additional officer. Since the County Drug Task Force now covers the entire cost of two officers instead of one, there is no additional cost to the City. -29-

32 Since 2002, the number of budgeted full-time City employees has been reduced by over 27% as illustrated in the graph below showing positions at each year end: Number of Full-time Employees M. General Fund Expenditures The proposed budget generally continues current services and does not provide for any new General Fund programs. Proposed operating expenses for the fiscal year ending June 30, 2018 are approximately 900,000 higher than comparable budgeted operating expenses for the proposed budget for , an increase of 4.2 percent. This was primarily caused by the substantial increase in the fringe benefit rate needed because of the growth of unfunded pension and OPEB liabilities. Capital outlay is proposed to decrease by 307,680 to 74,000 compared to the adopted budget. The capital outlay budget of 74,000 has been proposed in order to provide for necessary improvements and maintenance to governmental facilities and equipment used to provide services. Projected capital outlay includes the following: Parks and Recreation Other Public Improvements 67,000 7,000 74,000 Capital items include the purchase of voting equipment as required by law as well as various capital items in Parks and Recreation. -30-

33 The illustration below depicts the major categories of General Fund expenditures for and the relative percentage of each: Proposed General Fund Expenditures Other Functions & Transfers 2.3% Code Enforcement 1.5% Capital Outlay 0.3% Engineering & Street Lighting 5.8% Recreation, Parks & Culture 12.4% Police 39.4% General Government 15.4% Fire 22.9% After charging other funds for their cost of administrative expenses and receiving MOC rent, net general government expenses are actually only 3.7 % of General Fund expenditures. Proposed expenditures of the General Fund, detailed herein, may be further summarized as follows: Personal services Supplies and materials Contractual services Total Operating Expenses 17,310, ,884 4,579,031 22,560,978 Transfer 3,300 Capital outlay: Departmental Parks and recreation projects MOC capital Available for other public improvements Total -31-6, ,000 7,000 22,707,278

34 N. Increases in Operating Costs Comparisons for each operating activity, with previous years, are summarized in schedules made part of this report. Two components of the City s operating costs have increased significantly over the past several years. Through policy changes and contract negotiations, the City has taken action to slow the increases and to try to reduce costs. Pension Costs Full-time City employees are members of the Municipal Employees Retirement System of Michigan (MERS). Employer contribution percentages to this defined benefit plan for the upcoming fiscal year are expected to increase significantly. Future increases are expected to be substantial, because of the results of an experience study MERS recently completed. Results of the study were released during the summer of The main assumption and method changes were: o The mortality table was adjusted to reflect longer lifetimes. o The assumed annual rate of investment return, net of all expenses, was lowered from 8% to 7.75%. o The asset smoothing was changed from 10 to 5 years. o The amortization period was moved to a fixed period amortization for the December 31, 2014 annual valuations. Full-time employees, other than public safety, hired after July 1, 2008, will be covered by a MERS hybrid pension plan, which is expected to reduce long-term costs substantially. Full-time public safety employees hired after July 1, 2014 will also be covered by the MERS hybrid pension plan. All employees hired prior to July 1, 2008, have had employee pension contributions increased by a cumulative 8% of their wages effective July 1, The City s annual required contribution (ARC) to MERS during the last two fiscal years, ended June 30, 2016, and 2015, was 3,716,779 and 3,709,560, respectively. In addition, the City paid 500,000 in excess of the ARC during the year ended June 30, During the year ended June 30, 2015, the City was required to change its method of accounting for pensions. One of the changes requires the calculation of the actual pension expense, irregardless of payments made to MERS. The City s recognized pension expense for the years ended June 30, 2016 and 2015, was 9,367,075 and 5,345,845, respectively. Healthcare Insurance Premiums The City of Port Huron provides health insurance to full time employees and eligible retirees. The proposed budget anticipates the cost for existing employees will remain relatively steady as negotiations with all of our unions have resulted in an emphasis on preventative care, cost sharing and reduced employer costs. The City has moved to a self-insured program with higher deductibles and copays. Cost results to date have been favorable. The proposed costs are summarized as follows: Active Employee Health Costs Retired Employee Health Costs Total -32-2,525,000 3,000,000 5,525,000