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Houghton projecting closer-to-normal year in budget

Garrett Neese/Daily Mining Gazette Houghton City Manager Eric Waara talks during Wednesday’s budget work session.

HOUGHTON — Revenues in Houghton during the first year of the pandemic weren’t as high as they could’ve been, but they were better than anticipated.

City Manager Eric Waara outlined a “cautiously optimistic” budget for the general, major street, local street, Tax Increment Finance Authority (TIFA) and Downtown Development Authority (DDA) funds at the city’s second budget meeting Wednesday night.

“Our overall tax base still grew in 2020-21 and the city is poised to continue to grow so long as we plan and remain agile enough to capitalize on what new opportunities have been created out there,” he said. “The budget is still conservative because there’s a lot of uncertainty about the future.”

General fund revenues are projected at $4.0239 million, up 9.9% from the current year’s budget.

Appropriations are up 9.1% to $4.3489 million.

The $325,000 deficit is the amount of the city’s State Infrastructure Bank (SIB) loan payment for the coming fiscal year. The city took out a SIB loan for repairs after the 2018 flooding.

“Fortunately, we were able to recover those dollars from FEMA, which are going to be used to make that bond payment back to the state of Michigan,” Waara said.

The general fund will have a projected fund balance of $1,349,068.

A part-time business development position will also be budgeted across the general, DDA and TIFA budgets. While the job description has not been fully fleshed out, potential roles include organizing events such as hockey tournaments and serving as a liaison with the Keweenaw Chamber of Commerce, Waara said.

The quoted health insurance cost for the city was virtually flat — actually $17 less than the previous year, Waara said.

With no salary increases last year, the city is estimating a 7% increase. All unions are still negotiating with the city.

Property tax revenue is expected to go up 3% in the coming year. The city will need more construction and home sales to grow that base further, Waara said.

Rates at the Houghton RV Park increased, with daily rates now at $50. Dee Stadium revenue is projected to be at $155,000, up from last year’s $140,000. That is expected to come from increased usage, as ice rink rates will stay the same, Waara said.

“We want that place used, and we want to make it affordable for people to use it,” Waara said.

City Center rents are projected to decrease from $130,000 to $75,000. Midwest Loan Services is moving out of the building to expand. With the trend toward working from home during the pandemic, Waara does not expect to have all the space filled.

“We’re not going to charge bargain-basement rates just to get people upstairs when they should be filling taxpayers’ office space,” Waara said.

Spending on planning will increase from $10,000 to $55,000. The city council authorized up to $9,000 for a precharrette to develop a framework that could result in a plan for the downtown, including the Lakeshore Drive parking deck.

Money from the Public Act 1666 flood expense reimbursement funds will also be used for the city’s match on the Huron Creek Culvert repair project with the Michigan Department of Transportation. That will free up TIFA funds the city had been reserving for the past two years, which will instead be put towards paving Sharon Avenue up to the top of the hill, as well as parts of some subdivisions.

Aside from major street, every fund discussed Wednesday showed a deficit. For TIFA and DDA, that signifies the balance in those funds left over from the previous year, which will be applied to projects this year.

“If there’s dollars we are projecting that are surplus from the previous year, for whatever reason — whether we didn’t do facade grants because of COVID, or we didn’t get a lot of snow, so we have money left over — we need to put those back into the community,” Waara said.

Deficit spending in those cases is recommended by the auditor as a way to easily track sources of funds, Waara said.

The local street fund will show a $400,000 deficit. That will signify the amount being put toward this year’s paving project — $300,000 from major streets and $100,000 from the fund balance in local streets resulting from the lighter winter.

Waara said he will provide more information on the paving project at the next meeting.

Future budget discussions will also include what to spend on maintenance of the parking deck. Waara previewed the discussion by presenting the council with a “worry stone” — a chunk of the aging deck he found while walking the previous day.

Coating had been put on the deck as part of an expensive series of repairs a decade ago, said Councilor Mike Needham.

“The benefit of doing that this time is even less because the underlying structure is even less willing to accept that,” he said.

The budget also does not include whatever funding the city will receive through the American Rescue Plan Act. The city has yet to receive final word on how much money it will get, or what the funds can be used for. Waara expects more information within three weeks, he said.

Additional budget hearings are scheduled for 5:30 p.m. May 5 and May 19 in the city council chambers.

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