2003 / 2004
Members of the Grandville City Council:
These are challenging times for local governments in the State of
Michigan. The State’s strained revenue situation has resulted in
significant impacts to cities, villages and townships. And
projections are that such impacts will continue into the next fiscal
year.
Most significant are cuts in the State’s statutory revenue
sharing payments to local government. This important funding source
for municipalities has been repeatedly targeted creating serious
revenue impacts for local units across the state. We are now facing
our second round of such cuts in just the short time since the City
Council approved the city’s budget for the current fiscal year last
May.
Municipal budgets have also been strained by actions of the
federal government. Unfunded mandates related to water and
wastewater systems (such as new NPDES regulations) and local
government accounting (such as new GASB 34 regulations) have
required sizeable and unavoidable expenditures by cities.
Compounding this is a weak period in the national economy
reducing interest rates earned by city investments at the same time
that fund balances have shrunk reducing the amount of funds
available for investment.
The combined effect of these circumstances is a significant
strain on city budgets. Unfortunately, many communities have been
forced to respond to this challenge with budget cuts that negatively
impact the services delivered to local residents and businesses.
Grandville, however, is fortunate in that we have been temporarily
able to absorb, to a limited extent, this strain without the
necessity of cutting services to the community. The following
recommended financial plan for the fiscal year beginning July 1,
2003 and ending on June 30, 2004 maintains all of the existing
levels of service provided by the city but introduces no new or
expanded service levels and authorizes no increase in staff
positions.
The total appropriation recommended for all funds for the 2003-04
fiscal year, excluding General Fund transfers to other funds, is
$19,105,054. The plan, as presented, continues the same General Fund
operating millage rate of 7.2990 mills per $1,000 of taxable
valuation. The City was able to continue this low millage rate by
reducing its target fund balance from 25% to 20% and then utilizing
$1,287,534 of excess fund balance. It should be noted, however, that
maintaining a target fund balance of less than 20% is not
recommended and the general fund millage rate will have to be
carefully considered for the subsequent 2004-05 fiscal year.
A second noteworthy feature of this proposed financial plan is
the establishment for the first time of a local millage dedicated
solely to long-term funding of the major and local street system.
The city’s past practice has been to supplement State Act 51 street
funds with transfers from the General Fund to finance our annual
street capital improvement program. Again, a tight revenue picture
has squeezed the city’s ability to provide adequate investment in
keeping the city’s streets in acceptable condition.
An engineering study was undertaken to identify the condition of
the city’s road network and the expected amount of street
expenditures that will be required over the next 20 years. This
financial plan includes a new levy of 1.1550 mills in the initial
year ($5.96 per month for the average $130,000 home in Grandville)
to be utilized only for streets. This rate will be analyzed and
considered in each subsequent year to insure it is adequate to
maintain the street network in an acceptable condition. In addition,
Grandville will continue to aggressively pursue grant funding for
street improvements when eligible.
The total city millage rate levied for Fiscal Year 2003-04
including the new street levy will be 8.4540 mills. This rate is
still lower than the city millage rate levied prior to the year 2000
when a millage decrease was implemented. In fact, the proposed total
city millage rate is lower than all city millage rates levied from
1975 through 1999.
There are no proposed increases to water and sewer rates for the
fiscal year.
The sections that follow contain an overview of select programs
and their proposed budgets:
General Fund
General Fund revenues are projected to total $8,186,453 for the
2003-2004 fiscal year. The majority of general fund revenue comes
from property taxes (55.6%) and federal and state shared revenues
(23.9%).
The General Fund provides a wide array of city services including
police, fire, District Court, parks and recreation, cemetery,
general administration and others. Fiscal Year 2003-2004 General
Fund expenditures are planned to exceed revenues as the City
completes its planned expenditure of the fund’s excess cash surplus
in order to avoid a millage increase this fiscal year.
Police Department
The Police Department has seen steady growth of both its budget
and staffing levels over the past several years. Calls for service
have leveled off and there are no proposed budget increases beyond
the inflationary impacts. The city continues to take advantage of
federal grant programs whenever possible and departmental strength
continues at 29 full-time officers and six civilians.
Fire Department
The City’s Fire Department not only provides fire services, but
also continues emergency medical response 24 hours per day, 365 days
per year. New equipment includes the purchase of a rescue boat to
enhance emergency preparedness. The City’s favorable ISO insurance
rating continues, providing all city residents with lower insurance
premiums.
Parks and Recreation
Significant Park and Recreation activity is reflected in the
budget. The City’s match for an approved DNR grant to extend the
Kent Trails through Grandville along the Grand River to Ottawa
County is included. This project is scheduled for construction
beginning this summer.
Special Projects
The 2003-2004 budget contains funding to continue city
involvement in such programs as the Grand Valley Metropolitan
Council, REGIS, Michigan Municipal League, Right Place Program,
Public Access TV, and the Grandville Chamber of Commerce.
Major and Local Streets
Primary activity in the Major and Local Street Funds continues to
emphasize the improvements necessary to maintain the integrity of
our street system. The most significant projects are the
reconstruction of portions of Wilson Ave, Ivanrest Ave, Prairie St,
and Kenowa Ave. Eight local streets will be reconstructed including
portions of Osage, Cheyenne, Arapaho, Shoshone, Chanute, Oskaloosa,
Shady Oaks, and Crowfoot.
Wastewater
Our Wastewater budget comprises three Funds:
The Wastewater Collection System Fund is used to account for
operations directly related to the City of Grandville and
supported solely by City residents.
The Wastewater Operations Fund is the primary operating fund
for the Wastewater system and is supported proportionally by
Ottawa County users of the system. The plant has recently
completed an extensive maintenance and renovation program prior to
re-licensing. The total budget for this fund is $2,604,661.
Wastewater rates will remain stable this year.
Capital improvements for the Wastewater System. Debt
retirement, interest expense, and depreciation reserves are
budgeted for in this fund. An engineering study is anticipated to
determine adequacy of fund reserves in light of future capacity
needs. Future rates will be adjusted based on this study. The
current budget for this fund is $1,075,367.
Water
The Water system is comprised of two funds. The Water Fund is the
operating fund for the system with a budget of $1,100,205. The Water
Improvement & Extension Fund accounts for long-term Capital
improvements, debt retirement, interest expense and depreciation
reserves. This fund has a budget of $791,573. Water is purchased
from the City of
Wyoming. The system has experienced wholesale rate increases from
Wyoming for each of the last five years. Last year a 5% rate
increase was necessary, however, rates will be able to remain stable
this year.
General Debt Service Fund
The Debt Service Fund provides for the payment of the Library
Building bonds and interest. A General Fund transfer of $265,000
will be necessary to provide for these payments.
Summary
The Fiscal Year 2003-2004 Financial Plan for the City of
Grandville reflects the result of strategic planning and the City
Council’s commitment to quality of life and efficient stewardship of
public funds.
The development of the financial plan is a team effort that
requires a great deal of time and work by many persons. I would like
to thank the City Council for their hard work and decision-making in
this year’s budget process, the city staff for the many hours of
preparation and planning they have invested in this document and, in
particular, Treasurer/Finance Director Tom Guinther for his
professional budget leadership and expertise.
Respectfully Submitted,
Kenneth D. Krombeen
City Manager
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