FY 2011/2012 Budget Narrative
Members of the Grandville City Council:
The difficult circumstances of local
government finance in the State of Michigan continue and, like most
local governments in the State, the City of Grandville once again
this year faces the significant challenge of maintaining the
services required and expected by Grandville residents and
businesses during a period when the financial resources to provide
those services are shrinking. These resources primarily include the
revenue derived from property taxes and from the State of Michigan.
On the property tax side, Grandville
property values in 2011 will experience their third straight year of
decline. On the State revenue side, the reduction has been much
more prolonged – a steady decline since 2002.
Against this backdrop, the following
financial plan for the fiscal year beginning July 1, 2011 and ending
on June 30, 2012 has been prepared. It is based on a millage rate
of 9.154 mills and covers a projected General Fund deficit of
$395,436 through use of available undesignated fund balance. The
total appropriation recommended for all funds, excluding transfers
between funds and the use of designated reserves, is $21,959,462.
The sections that follow contain an overview of select programs and
their proposed budgets:
General Fund
General Fund revenues, minus
transfers from designated reserves, are projected to total
$8,357,220 which is 3.8% less than budgeted General
Fund Revenues for the current fiscal year. Our two primary sources
of revenue are property taxes and state shared revenue (82% of all
revenue). In the past three years, the City of Grandville has
experienced a 10% decline in property tax values. In the past nine
years, the State of Michigan reduced promised shared revenue to the
City by 35%.
The General Fund provides a wide
array of city services including police, fire, district court, parks
and recreation, cemetery, general administration and others.
General Fund expenditures are budgeted at $8,752,656, not including
the budgeted capital expenditures of $61,400 using designated
reserves. This is an increase $7,296 from budgeted expenditures in
the current fiscal year. Cuts in the FY 2011-12 budget include
leaving vacant one full time Firefighter/EMS position, one full time
position reduced to part time in the Probation Department and pay
freezes along with requiring health care contributions from union
employees. (Note: Non-union employees pay was frozen and employee
health insurance premium contributions were required in the current
budget year.). The projected deficit of $395,436 (assuming full
expenditure of all General Fund line items) will be covered by
utilization of available fund balance, if necessary.
Police Department
Police Department budgeted
expenditures total $3,134,291 minus the budgeted expenditure of
reserve funds, or approximately 35.8% of total city General Fund
expenditures. There is an additional budgeted expenditure of
$61,400, for the purchase of small capital items that will be funded
by Drug Forfeiture Reserves. The Police Department provides a full
range of law enforcement services including a Detective Bureau,
narcotics enforcement and a full-time Police School Liaison Officer
jointly funded by the City and the Grandville Public School
District. Authorized departmental strength this year is 24
full-time officers and two full-time and one part-time civilian.
Fire Department
Fire
and 24 hour emergency medical response budgeted expenditures total
$913,578 or approximately 10.4% of total city General Fund
expenditures. The Fire Department has reduced its staffing level by
one full time position in this fiscal year.
Parks and Recreation
Budgeted Park and Recreation capital projects include repair and
resurfacing of tennis courts at Calvin Crest Park. Also, a small
amount was included for tree planting in City parks. An update of
the required Park & Recreation Master Plan is budgeted for $10,000.
Special Projects
The
2011-2012 budget contains funding to continue city involvement in
such programs as the Senior Neighbor Recreation Program, Grand
Valley Metropolitan Council, REGIS, Michigan Municipal League, Right
Place Program, Community Access television, the Historical
Commission and the Grandville/Jenison 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 Grandville’s street system.
Three Major Streets projects are
budgeted for this year including resurfacing of the public portion
of the Mall Ring Road from Potomac to Century Center, Rivertown
Parkway from I-196 to Wilson, and Chicago Drive from Wilson to
Canal.
Two local streets will be
reconstructed or resurfaced next fiscal year: Earle and Iris. Two
other local streets, Franklin (between Prairie and Maple) and 40th
Street (between Wilson and Mohawk) will be resurfaced in conjunction
with water main replacement projects scheduled for those locations.
Clean Water & Water
Systems
The City’s Clean Water System budget
is comprised of three departments:
·
The Clean Water System Collection Department is used
to account for operations directly related to the City of Grandville
and supported solely by City residents.
·
The Clean Water System Operations Department is the
primary operating fund for the Clean Water System and is supported
proportionally by Ottawa County users of the system.
·
Clean Water System Improvement and Extension
Department is used to fund Capital improvements, debt retirement,
interest expense, and depreciation reserves.
The
total expense budgeted for the Clean Water System Fund is
$5,865,673. The budget includes the interest on the Renovation
Bond issued last year and also includes an increase of approximately
8% from Wyoming for the sanitary sewer flow diverted to them for
treatment.
A
comprehensive utility rate study is completed annually and this
year’s study showed a need to increase the Sanitary Sewer commodity
charge from $2.74 to $2.88 per thousand gallons in order to meet our
bond covenant and pay for the additional charges from Wyoming. The
Ready-to-serve charges are recommended to remain unchanged.
The
Water system is comprised of two departments:
·
The Water Operations Department is used to account for
regular operations
·
The Water Improvement & Extension Department accounts
for long-term capital improvements, debt retirement, interest
expense and depreciation reserves.
The
total expense budgeted for the Water Fund is $2,333,042 and includes
a budgeted expenditure of $200,000 for water main construction on 40th
from Wilson to Mohawk and $70,000 on Franklin from Maple to
Prairie.
The same annual comprehensive
rate study completed for sewer rates is used to determine water
rates. The result of this year’s study showed the commodity charge
per thousand gallons needs to be increased from $1.89 to $1.99 per
thousand gallons and the Ready-to-Serve charge for the 5/8” meter
needs to be increased from $7.51 to $8.76 per quarter with larger
meters adjusted accordingly.
The commodity charge is used to pay
for the operations of the water system. The City of Grandville
purchases water from the City of Wyoming and over the last 3 years
the cost from Wyoming has increased by almost 20%. During this time
the City absorbed the increase by using additional fund balance, but
no longer has the extra to apply to operations and the cost will
need to be paid by the users of the system.
The Ready-to-Serve charges are used
to maintain the water main infrastructure in the City. The City has
been replacing and repairing the water mains as recommended. Due to
the rising cost of construction, the City needs to increase the
Ready-to-Serve charges to cover the cost.
Summary
The
Fiscal Year 2011-2012 Financial Plan for the City of Grandville is a
product of months of considerable effort by many individuals
beginning with the input and analysis of staff members at all levels
of the organization and continuing through the final decisions of a
City Council that values strategic planning and is committed to our
community’s quality of life and efficient stewardship of public
funds. Appreciation is extended to all involved in this important
process with special recognition to Finance Director Tammy Hopman
for her daily stewardship of City finances and her invaluable
analysis and leadership in the development of the FY 2011-12 budget.
Respectfully Submitted,
Kenneth D. Krombeen
City Manager
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