Houghton discusses next year’s spending plan
HOUGHTON — The proposed Houghton general fund budget will have $3.7 million in spending, a more than 5 percent increase over the current fiscal year’s amended budget, City Manager Eric Waara told the council Wednesday.
The budget also has a 2.85 percent increase in revenue over the previous year, creating a $80,735 difference that will be taken out of the city’s equity fund.
After the previous budget meeting’s discussion over how and whether the city should send down some of the equity fund, City Manager Eric Waara gave the council an overview of the fund balance over the past 25 years.
From a low of $143,730 in 1991, the fund balance started growing steadily at the start of former City Manager Scott MacInnes’s tenure in the late 1990s, crossing the $1 million mark in 2000.
“When I got here, the city was in a very good cash position,” Waara said. “Thus far, in the last three years, I have tried to maintain, but I mentioned at the budget hearing last spring that we are not a savings account, and we are certainly looking at ways in the future at not having so much cash around and doing good things for the people that pay taxes here.”
As of April 10, the fund stood at $6,709,297. Of that, about $1,733,048 would be available for spending, Waara said. Reserve funds account for $2,217,414, while the amount needed for three-month operating expenses, a traditional rule of thumb for fund equity — is $2,758,835.
The break-even employee benefit rate is at 80 percent for the current fiscal year. The city is looking at dropping from its current 84 percent to 77 percent.
Dropping below Michigan Department of Transportation’s rate, currently at 76.77 percent, would potentially cause MDOT to reduce the rate at which it pays the city in the future, Waara said.
“At some point in the future, if we drop it down and come back up again to get closer to an even keel, it’ll actually be costing us money, for transit and the reimbursements to MDOT,” he said.
Councilman John Sullivan argued the amount should be reduced, saying the costs to the city in reimbursements would be less than the savings in other funds.
Waara said falling below that amount would prevent the city from getting a clean audit.