Budget deficit is smaller than planned
ALPENA – When Alpena Municipal Council was preparing its 2014-15 budget, early projections pointed to a deficit of about $535,135 and the money would need to be taken from the fund balance in order to balance the budget. As the process moved forward and saving from last year were tabulated and projected revenues increased, the deficit dwindled to only $44,201.
At Monday’s council meeting Clerk/Treasurer Karen Hebert said at the end of last year’s fiscal year the departments managed to end the fiscal year well under their budgets, and as a result it helped to decrease the deficit. She said a slight increase in the tax roll and state aid also helped to narrow the gap between projected revenues and expenses for the new budget year.
“Every single department came in under budget last year and we have nine or 10 departments, so that was big because all of those savings added up for us,” Hebert said. “Revenue sharing was about $5,000 more than projected, our revenue from ambulance services and our property taxes also came in above, so combined it made up a large portion of the projected deficit.”
The projected fund balance at the beginning of 2013-14 fiscal year was $3,131,728 and is estimated to be about $3,087,527, or 34 percent of the general fund, to begin this budget year. Hebert said the city is always conservative while planning the budget and often the deficit is smaller once all the numbers are tabulated. She said because the deficit was smaller than originally believed the fund balance will be stronger and the money could be used to cover for a loss of personal property tax and paying down long term retiree obligations and other improvement projects.
“We wanted the fund balance high because of the unknown of the personal property tax and to see if Prop 1 passes in August,” Hebert said. “We have our retirement fund which is now below 90 percent funded, so we need to keep paying that down. We have post-retirement health care, which is not funded. It is pay as you go and we only have about a half million put away and our liability for it is about $4.5 million, so we are going to increase that a little. We will also be able to do a little more capital.”
Hebert said the days of being able to balance a budget without using money from the fund balance or making cuts are over, at least for the foreseeable future. She said revenue streams are still scarce and not generating the amount of money they once did. Hebert said the low interest rates have led to a greatly reduced amount of money made off of it funds and investments. She said she believes things are getting a little bit better, as is evidence by the increase in the tax roll.
“We’re not seeing the property values going down like we did before, so we are hoping it will become steady and then start to go up again,” Hebert said. “Our state revenue is actually going to go up slightly so that will help. At least we’re seeing some trends that tell me we’re not seeing significant decreases.”