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Politics & Government

Fenton's Proposed 2012 Budget Includes No Water, Sewer Rate Increases

Services to remain the same overall, with additional contributions from DDA, LDFA.

According to its proposed budget, Fenton will continue taking revenue hits in the 2012 fiscal year, which begins July 1, but residents won't feel it in their water and sewer, garbage or tax bills.

Water and sewer rate increases two years ago helped stabilize the water and sewer funds. City Manager Lynn Markland said these funds are OK now and there is no need for a rate change. The rate increases from two years ago are paying for new water main installation for the Adelaide Street/North Road project (along with grant funding), and the city has seen some water usage increases that are helping the water fund. Usage increased around 1 percent in January, 2 percent in February and 3 percent in March, with a drop again in April.

In addition, no lagoon cleaning is planned at the city's water plant in the 2012 fiscal year, which would be a significant expense.

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Fenton's garbage fund also is stable, thanks to resolving an overcharge issue with the previous contractor and inking a contract with a new firm that is offering a lower price.

Markland recommends that city council maintain the current millage rate of 10.6226 for the 2012 fiscal year, from July 1, 2011 to June 30, 2012. The city's charter states Fenton can levy 13 mills, but this amount has been reduced by Headlee rollbacks and Proposal A.

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At some point, Markland believes a Headlee override, which would require a vote of the people, is necessary to bring the city to sustainability due to losses in property tax values. He is having the city assessor prepare a study to provide Fenton with a better picture of what has taken place, with the decline of property taxes and the impact on property owners, he stated in his letter to council. Some Fenton homeowners' taxes have been reduced by nearly 30 percent during the last few years. The study is important to the long-term financial sustainability of Fenton, Markland believes.

Fenton has not looked at a time frame for a possible Headlee override of its millage rate, he said, and council has taken no action on it. It is part of his budget message to council at this point.

The city will lose about $453,000 in property tax revenue this year, and around $20,000 in state revenue sharing dollars, totaling approximately $492,000 in lost revenue. In addition, Fenton's five-year budget forecasts, from its financial consultant Stauder Barch, have shown Fenton will eventually become insolvent if it continues as it has, Markland said. This is despite many reductions in expenditures during the last three years, cutting more than $1.2 million. The cuts are from an annual budget of around $6 million, and it represents cutting the cost of doing business by approximately 20 percent during the last three years.

Services in Fenton will remain the same overall in 2012, with revenue losses offset by an additional $70,000 from the Downtown Development Authority (DDA) and $22,000 from the Local Development Finance Authority (LDFA) budgets, making $600,000 in revenue sharing/service payments to the city's general fund from the DDA and LDFA.

Total revenue for Fenton for 2012 is estimated at $4.92 million, with a projected $4.92 million in expenses. This is approximately 7 percent less than the 2011 budget. Moreover, 16.3 percent of the $4.92 million 2012 general fund revenues — around $805,450 — will be transferred from the general fund to other funds.
Other recommendations for the 2012 fiscal year include the layoffs of two full-time Department of Public Works (DPW) employees, who each earn a salary of around $40,000, he said. This could occur in July and, with other reductions, would be enough to balance the city's budget.

Most city employees have had a pay freeze since 2008, with others' salaries frozen since 2009, he said. In addition, in the current year's budget, most employees are paying 20 percent of their health care premiums. Police department overtime is reduced by $70,000, and the fire department's budget reduction is $33,000. Administrators expect the city to end fiscal year 2011 with a small, $10,000-$16,000 surplus.

Despite the squeeze on the 2012 proposed budget, it includes $6.05 million in projects, with an estimated $1,998,932 in grant funding helping out. Projects include resurfacing of North LeRoy Street ($1.6 million), completing the Adelaide Street/North Road water main project ($3.2 million), resurfacing Walnut Street ($229,694), finishing the Congestion Mitigation and Air Quality Program (CMAQ) on Owen Road ($723,030) and replacing old 911 emergency dispatch equipment ($300,000, DDA funding).

City council is scheduled to hold a public hearing on the proposed 2012 budget at its Monday, May 9 meeting, which begins at 7:30 p.m. at . Council could make its decision on the proposed budget then, Markland said. It has until Monday, May 16 to approve the budget. 

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