Budget shock waves result in sewer rate increase
by Peter Jakey, Managing Editor
If Gov. Rick Snyder?s first budget proposal in office was an ?atomic bomb,? then those must have been shock waves reverberating through the city of Onaway Monday, as the city commission reluctantly voted to raise sewer rates to reduce an anticipated general fund budget shortfall of between $61,000 and $75,000.
The city needs to adopt a budget by April 1, so the commission doesn?t have the luxury of waiting to see what the final budget numbers will be when state legislators make their proposals in the coming weeks.
Snyder?s budget proposal, announced Feb. 17, calls for a reduction of state revenue sharing not mandated by the state constitution. Under Snyder?s proposal, the city stands to lose about $43,129. Coupled with a drop in property taxes and the possible elimination of personal property taxes, it?s left the city with a deficit that needs to be closed, with little time to ponder any more decisions. A budget hearing needs to be conducted in March, before formal approval of the budget.
THE COMMISSION approved a $3 increase to sewer bills, reduced the total budgeted amount for part-time employees by $10,000 and lowered commission meeting pay by 20 percent.
?We knew there were going to be some tough choices coming ahead,? said mayor Gary Wregglesworth, opening Monday?s commission meeting. ?I threw down some thoughts to keep in our head as we go through this night. This ain?t going to be fun — it ain?t going to be a fun year.? Wregglesworth reminded fellow commissioners ?we need to attack the problem and not each other.?
Snyder is proposing to cut revenue sharing from $300 million to $200 million, and have governments compete for money by consolidating services and reduce spending. City manager Joe Hefele believes the governor and legislature would have to further define what the rules are going to be.
?I?ve asked to testify in Lansing, with a plea that if you are going to cut revenue sharing, cut it a third, if that?s what you need to do, and leave the other two-thirds alone until you come up with a plan to make every community in Michigan play by the same set of rules,? said Hefele. ?Until that is done, I think this is immensely unfair.?
Hefele said $66,063 is what is what is left to come to the city from revenue sharing. Hefele had budgeted for a loss of $9,000, but Snyder?s proposal makes it $43,129 lost in revenue sharing. With a deficit about $61,000, Hefele was looking at cuts of $50,000, which would still leave an $11,000 hole.
THE BIGGEST disagreement among board members, during the hour-long discussion on the budget, was regarding a sewer rate increase. Commissioner Bernie Schmeltzer passed out a proposal, which would increase the rate by $1.50 in 2011-12 and another $1.50 per month in 2012-13.
?I do not take these recommendations lightly, but I do believe that these are the best difficult choices that have to be made for this municipality,? said Schmeltzer. ?If the state legislature makes changes when they pass a new budget, we may be able to make some adjustments to ours.?
Commissioner Chuck Abshagen disagreed with Schmelzter?s proposal to increase rates over a two year period, and preferred to increase it $3 now. ?We can?t keep stealing money from the general fund, that?s the wrong thing to do,? said Abshagen.
?I think we have been remiss on this council, for not having kept the rate at a point where it pays for itself, but I think the time to do that is now.? Abshagen followed the comments with a motion to increase the rate $3 a month. It was seconded by commissioner Jessie Palmer.
COMMISSIONER RON Horrocks vehemently opposed the increase. ?Look at our area, we have mostly unemployed people, welfare people, we have gray hairs, who are retired, who are on a fixed budget and haven?t had a social security raise in two years, a
Palmer said voters turned down the Headlee rollback twice, ?and I think those additional funds would have helped us out.? Hefele said the general fund had been subsidizing the operation of the plant, because when all the numbers came in, it would have meant higher bills than residents had originally anticipated. He thought that would have broken a promise to voters, who approved the project at the polls.
?We were trying to keep the cost of living down and rates down, and the voters went to the polls with certain information,? said Hefele. Abshsagen, Palmer and Wregglesworth approved the $3 increase, while Horrocks and Schmeltzer voted it down. Rates have been the same since the first part of the plant went online nine years ago.