The Sturgis City Commission met Monday evening for a special work session dedicated to a draft budget review of Fiscal Year (FY) 2023-2024. City Manager Andrew Kuk kicked off the meeting by explaining this would be the first draft of the budget, and said he expected there to be lots of questions and potential changes before the final draft is presented to the commission in a more formal capacity.
The total revenue and transfers for 2023 in the general fund are $13,177,852, total expenditures and transfers are $13,122,900, and the change in net position comes to $54,952. “We’re showing in the general fund a positive net income, so that’s more revenue than expenditures,” Kuk explained, “and there is no decrease in fund balance. So, while you can have a balanced budget without having more revenue than expenses, that’s not what we’re showing with this budget.”
Kuk said the budget also showed the transfer of the State Marijuana Tax dollars to the Capital Reserve, as well as the millage rate reflected at the maximum levy. “That’s the levy that we were authorized to advertise for as part of achieving those first two assumptions — the balanced budget without decreasing fund balance, and also that transfer of the marijuana money,” he said.
Laying out the groundwork for how the budget work session would go for the evening, Kuk said discussions would begin with going through each group of funds in the budget, finishing with street funds. “There’s definitely going to be some upcoming projects to discuss with those,” he said.
Following street funds, Kuk said the next topic would be the debt summary, which would naturally tie into the Sturgis Building Authority. “Then we will get into our general fund revenue, and the estimated property tax revenues,” he said. “Next, we will discuss a few general fund expenditures, and then start in on funds that are associated with the general fund by way of transfers out.” The next topics would be the ambulance fund, capital reserve, and then a discussion regarding other special revenue funds.
Kuk said anything that wasn’t accomplished in the evening’s meeting would be tackled at the next work session on June 21. “On the 21st we will start with the motor vehicle discussion, then we will do the utility rate discussion, which will lead us right into electric, wastewater, and water funds. Following that, we will go over the fee schedule and the Downtown Development Authority.”
City Controller Holly Keyser spoke next, explaining the draft of the employee benefit fund. According to Keyser, all the different funds and varying departments are charged for their benefit costs as a process through payroll. “What happens is, they all get charged based on their employees and what kinds of insurance they have,” she said. “And then those monies are deposited into this fund. Then the actual expenditures for claims are recorded in this Employee Benefit fund.” Keyser said the City of Sturgis charges all the different funds, collects the money, and then pays other actual expenses.
A fund balance of the capital project fund, which Keyser explained is a governmental fund, was also provided. “We use the capital project fund when we’re doing a big project that’s going to have a lot of pieces to it, and we want to keep track of it all in one place,” she said. “So, for the last few years we’ve used the fund to keep track of the splash pad and park improvements. This just has our estimated cost for this year.” The estimated total fund balance for 2023 is $201,867.
Keyser added that the street repair fund was primarily used prior to having the dedicated street millage. “When we did the dedicated street millage we really wanted to keep track of that separately because we wanted to show the tax payers exactly how street tax money is spent,” she said.
Before the street millage passed, Keyser said the street repair fund was where money was transferred in from the capital reserve or general fund to fund the projects. “Right now we have no budget total and no street repair balance because we’ve been kind of winding it down,” she said. “This last year we had to do a budget amendment to actually approve a budget because a project wasn’t complete. We were going to close this fund out last year, but we didn’t.”
Major and local street funds are categorized as “special revenue funds,” meaning they are restricted in how the monies can be used. “The major streets fund is primarily funded from Act 51, which is the gas tax we get from the State of Michigan,” Keyser said. “We also have a contract with the Michigan Department of Transportation and we do some work on their highway that runs right through town, so they reimburse us for that.” The major and local street funds have also been used for mill and resurfacing projects, as well as storm sewer cleaning projects.
In a debt summary for the fiscal year’s end on September 30, 2023, Keyser led with describing the Sturgis Building Authority Bonds, which includes Sturgis Hospital bonds. The outstanding balance at year’s end for those hospital bonds are $6.3 million. The Brownfield Redevelopment Authority’s outstanding balance is $1.3 million with annual payments of $109,139, no interest. There are two different bonds associated with the ambulance fund, one being an installment purchase agreement with a local bank for two new ambulances, which has an outstanding balance of $537,411. The second bond is an internal loan for a used bus and equipment with an outstanding balance of $55,743.
Moving on next to a discussion on general fund revenue, Kuk said he understood this specific fund would be a big topic. There will be a public hearing at the June 14 city commission meeting, and Kuk said the commission would have the ability to schedule another public hearing for the June 28 meeting if needed. “It’s by no means a final decision point on Wednesday,” he said, “but it is a decision point, and it will of course shape how we look at the rest of the budget going forward.” Keyser said property taxes are budgeted at the full millage in the present draft budget, and the estimated revenue in 2023 for property taxes are $2.6 million. The overall estimated general fund revenue for 2023 is $10,899,176.
In general fund expenditures, the city commission had an estimated expenditure of $49,990, with $53,030 budgeted for 2024. Keyser explained these costs are associated with anticipated upcoming conferences, and the estimated cost fluctuates depending on the location of the conference. Similarly, City Clerk Kenneth Rhodes said expenditures related to elections fluctuates depending on how many are held in a particular year.
The city manager’s office estimated expenditures for 2023 were $328,470, and budgeted at $335,540 for 2024. “That city manager office expenditure is budgeted with part of a full assistant city manager salary,” Kuk explained. “I’m keeping that in the budget [as is] to eventually take on whoever I bring in as assistant.”
A second work session to review the draft budget will be held June 21 at Sturgis City Hall (130 N. Nottawa St.) and will begin at 5 p.m.
Beca Welty is a staff writer and columnist for Watershed Voice.
