ONTONAGON — How large the village of Ontonagon’s budget deficit is depends upon where one gets the numbers from. However everyone that presented the numbers at the last village council meeting agree.

Since the village has financial problems, a plan to get out of debt is required. Such a plan, titled Corrective Action Plan (CAP), was the main issue during the most recent council meeting. 

One individual wanted to get her version of those financial problems on the agenda. Her request was denied under the leadership of President Tony Smydra and Manager Joe Erickson.

Erickson discussed the general fund deficit and his plans to come into compliance with the Michigan Department of Treasury and those that may have looked to remove him from his position.

At a previous council meeting, during a closed session, the board discussed some of the deficit issues. When the meeting was reopened, Councilor Sarah Hopper moved to remove Erickson from the council. The vote failed as they found themselves in a 3-3 deadlock because Councilor Mike Mogen was not at the meeting. Erickson could not be removed.

Hopper, Smydra, and Don Chastan voted for removal. Elmer Marks, John Hamm, and Maureen Guzek voted against removal.

Erickson stated that the marina fund has a deficit of $2,188, water fund deficit from Fiscal Year 2018-19 is $27,285, public safety is $6,556, public works is $6,429, economic development and commissions is at $2,394, and the hospital retirement under Michigan Employment Retirement System (MERS) is at $50,901.

In a memorandum to the council, Erickson stated that the net deficit for the general fund is $29,263.

“The attached deficit elimination plan proposes to correct this issue,” he said. “The biggest factor associated with the general fund now and into the future is the hospital MERS contribution.”

To pay for the MERS deficit, Erickson and the Village Finance Committee CAP proposed raising taxes by 4 mills, and proposed a dedicated millage increase of 12 mills for the MERS deficit. The village, under state law can raise the taxes by 4 mills without the consent of the voters. Each mill would have revenues of $29,000, according to the plan.

The plan also calls for Ontonagon County to contribute to the MERs deficit, along with long-term care. The proposal also suggests that the county have its own millage, which according to the plan would raise over $268,000.

In the letter to the Michigan Department of Treasury, the village announced they will address eight items that the department asked them to. These included purchase of special computer software, listing village assets, the village purchasing new, and more efficient, equipment, reducing the number of bank accounts down from the current 50 accounts, filing reports on time, segregation of village duties, and having oversight of village expenditures by the council.

In a July 7, 2020, Michigan Department of Treasury letter sent to Ontonagon’s chief administrative officer (village manager), the treasury stated that village general fund deficit is $29,263; marina deficit is $134,952; water deficit is $27,285.

The treasury also found that three bank accounts previously unrecorded and unaccounted for were located. They found that the village negligent in fulfilling its responsibilities, and the council may have obligated more funds than were available.

“This is a violation of the Uniform Budgeting and Accounting Act,” stated the treasury in the letter.

That letter from the department states that the state may withhold payments to the village.

On July 9, 2020, the treasury sent another letter requesting a corrective action plan, and reported how the village exceeded expenditures over what was budgeted. 

Another issue the treasury found dealt with journal entries. The letter stated, “As a result of this condition, the village is exposed to an increased risk that misstatements or misappropriations might occur and not be detected by management in a timely manner.”

The letters from the treasury did not address the MERS issues.

While not in regards to the MERS deficit and program, the council unanimously approved contract documents for Aspirus Ontonagon to participate in the 340B program of the Public Health Services Contract. A program that commits the village to provide health care services to low income, indigent, uninsured, and underinsured individuals who are not entitled to Medicare and Medicaid benefits at no cost or very low cost for the services.

While the financial issues require a corrective action plan by the end of August, issues dealing with the village paying the contractor more then what was bid on the Pebble Beach project, the village acquiring property adjacent to the former Ontonagon School on Greenland Road by paying for the delinquent taxes, and looking at an ordinance to establish rules and regulations to control and govern use of any public park, beach, or village-controlled property. That ordinance may make it difficult for the village to get events to come to Ontonagon.