Houghton approves $18M budget; state revenue cuts projected
HOUGHTON — The Houghton City Council approved a budget of just over $18 million at its meeting Wednesday.
Health insurance costs are projected to increase by about 7%, City Manager Eric Waara said.
The city did not budget for salary increases.
With COVID-19 taking a large chunk of state spending, the city budgeted for a 20% drop in state revenue sharing. Sales tax revenue is projected to increase by 1.5%.
“A lot of these COVID-related revenue shortfalls of the state aren’t really going to manifest themselves probably until the state’s new fiscal year, which will happen in our second quarter,” Waara said. “So we’re going to hedge against that.”
Spending on the employee benefit fund increased by about 3% to balance the fund, which will be at $1,802,107. The employee benefit rate went from 77% to 80%.
The general fund budget of $3.98 billion shows a $325,000 deficit. That comes from the payment amount for the city’s 2018 State Infrastructure Bank (SIB) loan to shore up the general fund after the Father’s Day flood. The funds are in a restricted fund as cash within the general fund now, which has to be displayed as a deficit.
With the deficit, the general fund has an estimated balance of $2,429,327.
For the major street fund, the city is budgeting for a 20% decrease in Act 51 revenue from the state, which accounts for much of its funding. The fund is balanced at $1,378,700.
Tax capture is down 1% in the Tax Increment Financing Authority district, driven by the closure of the ShopKo store. The fund will run a deficit of $161,000, caused by using funds for this fiscal year as a match for a hazard mitigation grant for culvert work on Sharon Avenue.
The public improvement fund includes Federal Emergency Management Agency (FEMA) work, as well as Michigan Economic DevelopmentCorp rental rehabilitation projects in the downtown. Its budget is balanced at $2,074,510.
The parking and transit funds are balanced at $242,500 and $558,200, respectively.
The $2.027 million sewer fund budget includes a connection fee from Portage Township for its sewer system on Green Acres Road. The water fund is balanced at $1,235,100.
In the equipment fund, cash will be carried over to be leveraged with U.S. Department of Agriculture grants. The $1,236,537 budget will have a $137,000 deficit due to working off that fund balance.
The city will continue to levy 15 mills.