On Wednesday evening Sturgis city commissioners adopted the budget for the fiscal year 2023-2024 in an 8-1 vote, with Commissioner Richard Bir as the lone dissenting vote.
City Manager Andrew Kuk led the budget presentation by addressing commissioners and calling the budget this year “challenging and uncertain.” Kuk said there were emergent issues right in the middle of the budget process, particularly the Sturgis Hospital bond situation, which created unanticipated expenses. “We will realize those over the next decade or so,” Kuk said. “Those of course hit the general fund and those funds supported by the general fund more than others.” He said he would go over a summary of issues discussed throughout the course of the budget work sessions, and then he would also take time to go through a few of the pertinent lines of the budget for the benefit of the public in attendance that evening.
- Estimated property tax revenue: Kuk stated there would be a 17.7% increase in ad valorem parcels impacted by not only inflationary increases in the value of properties this year, but also the commission approving an increase in the city operating millage (11.6818) for this fiscal year. “I know this was not an easy decision for the commission to make, but as we look at the fiscal impacts for this year and the next few years it was an important decision to make,” he said.
- The state marijuana tax has been transferred to the building authority. Kuk said this was a commission decision to allocate the $400,000 received for the state marijuana tax to the building authority for payment of the hospital bonds.
- Contributions to other funds: “There were a number of funds where we had decreases in our contribution,” Kuk said. “This was part of the impact of what we’re seeing as our new budget reality.” The Kirsch Municipal Airport fund, Sturges-Young Center for the Arts fund, and The Doyle fund all had a decrease equal to about $50,000 in those cases.
- Fund balance: Kuk said the city is maintaining “right around” a $3 million fund balance in this budget. “The percentage is a little bit impacted by the fact that we do have $2 million additional expenses due to parking lot projects. We expect that fund balance to be drawn down as we’re incurring the costs of the bond payments. We’ll do our best to minimize those draw-downs in the impacted areas as we look to control expenses in the general fund and associated fund,” he said.
- Street and sidewalk improvements funds: Under expenditures for this fund for fiscal year 2024 there will be sidewalk improvement programs budgeted at $100,000.
- Cemetery funds: There will be an increase in the budget for repairs and maintenance.
- The housing department fund: $62,000 has been budgeted primarily for the Sturgis Neighborhood Program and the work they do on behalf of the community for housing.
- The park capital project fund: “This is for the splashpad and parks improvements currently,” Kuk said. “The $200,000 in budget year 2024 is for the bathrooms that had been previously approved by the commission. Those aren’t coming until after the next fiscal year, so they are accounted for in the new budget.”
- Electric fund: Prior to Kuk’s budget presentation Wednesday evening, the commission had approved a 2.5% increase in the rate track for fiscal year 2023 and Kuk clarified it would begin for billings on October 1, 2023. The water department rate also increased 6.9% in fiscal year 2023.
- Downtown Development Authority (DDA): Kuk said there was a slight difference in accounting for the DDA’s part-time event coordinator in this budget. “Previously it was expressed under wages and benefits for the DDA,” he said. “That position is actually a city employee the DDA contracts for that amount, so funds for that position are being shown in this coming fiscal year under ‘promotion and events.’” Kuk said the DDA has also requested as part of this budget to look at moving that part-time position to a full-time position with an increase in wage and benefits. In order for that to take place, according to Kuk, an additional DDA property tax millage of two mills would need to be levied. “That is still an open issue that needs to come before the city commission for their approval to levy that,” he said.
- Kuk said there had been discussions in place regarding a new police-fire building, or conversion of an existing building, looking forward to 2025. “The original plan was to evaluate that in 2024, but I think it’s highly likely that we will not be doing that project, and we will be looking at some of the other elements that were budgeted for that current building – particularly a boiler replacement in 2025,” he said.
- In economic development there is approximately $1.8 million worth of improvements for the state line industrial park near the Michigan-Indiana toll road. “Those projects are going to be highly dependent on grant funding available,” Kuk said.
- In the water fund there is lead service line replacement funding budgeted each year at $250,000. In 2028 that amount is set to increase to $300,000. Kuk said this was in order to meet state requirements for line replacements.
Kuk ended his presentation by thanking the commission for all their hard work this year. “This is certainly a challenging budget year, and more challenging than most,” he said. Due to the complicated nature of the budget, Kuk said the process included extra budget work sessions, which totaled 13 hours over the course of several nights.
Vice Mayor Aaron Miller spoke first saying, “There can be a tendency to wait to reflect on a millage until when it’s come back up for vote again. We’re just a year and three months removed from voters approaching a re-up of our three mills for street repair, and I think it’s worth mentioning that voters care to see that projects are being done and that there are actual results for the money.” Miller said he was very happy to see how much road repairs are being done, and that there are actual results for the money being spent.
Bir said he would be voting no on the proposal and called it a “tax-to-spend” budget. “We’ve raised the property tax to 1.2 mills, we have no plan to save money for the hospital bond debt. Hopefully in the future we won’t have to raise taxes again for some time, but I don’t think a wait-to-see policy is the way to go. I think we should plan right now, start making some cuts, and be ready for the future,” he said.
Disagreeing with Bir, Mayor Jeff Mullins said he believed there were plenty of cuts in the budget. “We are trying to do the best we can, and throughout the year I know staff will be working very, very diligently and hard on trying to find other ways to save money,” he said. “I would have to disagree that they are not doing things in a manner to try to save money. I think that they’ve done the opposite of that and proved that to us in this whole budget process we’ve been through. I applaud them for everything they’re doing and going to be doing throughout the year the best they can with what we’ve got.” He ended by saying he did believe it was necessary to raise the operating millage, and without it the city would be out $315,000, which was desperately needed this year.
Beca Welty is a staff writer and columnist for Watershed Voice.