In a tense 5—4 vote Wednesday evening, Sturgis City Commissioners voted to raise the 2023 millage rate to 11.6818, which is the maximum allowed by the State of Michigan without a vote of the electorate.

The commission also unanimously voted to set the rate for the Streets/Sidewalks Improvement Millage at 3.0 mills, which was renewed by voters in 2022. In addition to the millage rates, a 1% tax administration fee has been scheduled to be collected on all City tax bills this year, which is authorized and recommended by the State to allow communities to recover the costs of tax collection.

City Clerk Kenneth Rhodes kicked off discussions by saying it was “prudent” to always publish the possibility of using the highest rate allowed by Michigan law in a public notice in order to have flexibility on future decisions. “At this point, given what you have heard on the budget and what you think is best, this is the public hearing to discuss whether or not to raise the the millage rate, leave it at the 10.4623, or do a different number. You can do anything 11.6818 or less,” he said. “We have new expenses that we have not had to pay in the past. We have potential expenses that may be a burden on the budget. That is why staff has presented a budget with a use of the full millage.”

Commissioner Brandon Kinsey had a few questions for Rhodes regarding the decision that evening, beginning with asking for clarification on the 1% administration fee to recover the cost of the tax collection. “We send out tax bills twice a year, and we have staff that collects tax bills,” Rhodes said. “I can tell you that the cost of collection is probably greater than what we collect in the admin fee, but Michigan state law allows for 1% of the taxes to go toward tax collection itself. It’s not something that’s required, but I certainly would recommend it.” 

Kinsey next asked, “What’s the absolute latest we can make a decision on this?” Rhodes said tax bills need to be to the printer by July 10, and there would also need to be time for a public hearing if a decision was not made that evening. “I would strongly recommend that we do it tonight,” he said. 

“I don’t know if there’s a need to really pause any longer on making a decision on this,” Mayor Jeff Mullins said. “We had our budget work sessions, and we learned a lot during those hours and hours of those two nights. I think by now most minds should be made up on what direction they want to go.” Mullins went on to say he was not sure being given any additional time to decide would be beneficial. “I know the hospital is weighing heavily on our minds, but we’re truthfully not going to know anything about that until after the fact.” City Manager Andrew Kuk agreed with Mullins saying, “I don’t know that there’ll be much that we would learn in the next 10 days (regarding the Sturgis Hospital) that would materially impact at least the next two years of budget.”

Speaking out against raising the millage rate were Commissioner Richard Bir and Commissioner Frank Perez. Bir said he could not support a higher millage rate at this time considering the “financial straits” the city was going to be experiencing for picking up the bond issue with Sturgis Hospital. “I would suggest that we keep it at the 10.4623,” he said.

Perez said he agreed with Bir and he understood there was much uncertainty regarding the future of the hospital. “But if something were to happen to the hospital in the next 30, 60 days that at least gives us the full 10 or 12 months to figure out how we’re going to do this,” he said. “I just don’t think increasing the millage now only to turn around and increase it again next year is justifiable.”

Mullins responded, “We can either go further into debt without raising it, or help ourselves out knowing what’s ahead of us — and we all know what’s ahead of us. We can either plan to do it now, or we can plan to do it later. I would be in favor of raising it to the max at this point in time, and not belaboring the inevitable. I think that’s the prudent thing to do, and I think it’s a wise thing to do.”

Offering his own insight on the decision, Vice Mayor Aaron Miller said, “We’re talking about slipping down into the miry pit, from a budget standpoint. We’re looking at the precipice of a budget pit — a really, really bad one from a municipal standpoint. I don’t see how it’s responsible to stare at the edge of the pit and say ‘We’re not going to raise it this year, let’s see how far we slide down for a bit, and then we’ll decide how to raise it.’ I don’t think that’s responsible.”

When Mullins asked for questions or comments from those in attendance before closing the public hearing, City Engineer Barry Cox took the floor and addressed commissioners: “We have a confluence of events going on right here, and moving the millage rate at this point would afford you more time to get to a solution without getting that fund balance to a situation that could be problematic. The fund balance doesn’t come back —it takes time to build one. Looking to do something between what you’ve normally done and what you have as a maximum might be appropriate because everything is going to take a hit to cover these expenses. I’m in favor of increasing it to something beyond what we had last year.”

With discussions coming to a close, Commissioner Robert Hile made a motion for the commission to set the millage rate to the maximum allowed, with Commissioner Marvin Smith requesting a roll call vote. Smith, Perez, and Bir voted “no,” and when the vote came to Commissioner Linda Harrington, she took a moment to explain her decision. “I’ve been agonizing over this for the past week because it seems like we’ve got the cart before the horse in terms of having to deal with the budget.”

Harrington said she appreciated Cox speaking as he did because it helped her understand how some city departments are experiencing big hits in their budget, as opposed to what was given to other places, and how she now understood it was the only way to properly balance the budget. With that, Harrington was clearly overcome with emotion as she said, “I feel like I should apologize to certain people, but I’m going to have to say yes.”

The final dissenting vote came from Commissioner Emmanuel Nieves, with Mullins closing out the roll call vote and voting “yes.” The motion carried 5—4, and the millage rate was set to 11.6818. The commission next voted unanimously to set the 2023 Streets/Sidewalks Improvement Millage at 3.0 mills.

Beca Welty is a staff writer and columnist for Watershed Voice.