Traverse City budget talk coming

May 10—TRAVERSE CITY — Spending proposals for Traverse City's upcoming fiscal year include new hires and the start of a long list of needed or recommended infrastructure projects.

But it's hardly the finish, and city Municipal Utilities Director Art Krueger said major projects are typically planned out years in advance and can take more than one to wrap.

This year is no exception, and as the city eyes possible multi-million-dollar repairs or replacements for its water and sewer systems, the proposed budget would end a one-year reprieve on rate increases for both. It also includes a handful of hires for various departments, on top of the usual seasonal recruitment for parks and recreation.

Commissioners will hear more about the city-wide spending proposal at their study session Monday.

A 3-percent increase would bring the bill for city ratepayers up to $16 for the first 600 cubic feet of water for users with a five-eights inch to three-fourths inch service line — the average residence — and $44 for the same amount of sewage. The largest users, with six- to 12-inch service lines, would pay $309 for the same amount of water, up from $300.

Municipal water customers in the handful of townships that connect to Traverse City's system could see an increase as well, up to $23 for the first 600 cubic feet for most residential users, documents show. Sewer customers past city limits would pay $65 for the same amount.

City Manager Marty Colburn said it's a necessary increase after the pandemic-related pause on raising water and sewer rates, especially as the city continues to grow.

"Enterprise funds are not unlike your gas bill or electric bill," he said. "It takes real people to string those lines and purchase and generate electricity or water. These are real services that are provided 24 hours a day, seven days a week.

Those increases reflect a reality of neglected infrastructure city leaders grapple with routinely, Mayor Jim Carruthers said. He acknowledged the difficulty they cause for people with tight budgets, and how that impact hits them differently in a city with a broad mix of incomes.

"When the state doesn't share as much of revenue sharing and when grants are dwindling and when you're relying on competitive grants from all over the state and country, we've got cities from all over the state that are fighting for some of the same funding, so it's very difficult to get these projects done," he said.

They come as city leaders eye a growing list of potential fixes at the Traverse City Regional Wastewater Treatment Plant and another for a sewer main sitting on a Boardman River wall foundation that has been undercut by water. Recommended fixes at the Traverse City Regional Wastewater Treatment Plant could surpass $14 million while the river wall may cost $2.4 million, with the totals of both depending on which project alternatives the city ultimately picks.

Krueger said the recommended increases doesn't reflect either total, as both are still in the planning phase and not yet in the budget. But they're necessary nonetheless.

"It's just one of those things where we need to have a financial basis to do what we need to do to maintain and operate the system adequately," he said.

Commissioners are set to talk about one possible funding route for the wastewater plant projects Monday — a Clean Water State Revolving Fund loan. Krueger said the loan application is due June 1, and commissioners could vote on it May 17.

Commissioner Tim Werner said he'll have questions about a few other projects and where — or if — they are included in the budget, like those needed to keep rainwater and groundwater out of leaky sewer pipes and access holes.

City taxpayers likely will see a small drop in the millage rate for their summer tax bill, city Assessor Polly Cairns said. Michigan's Headlee Amendment will push down the operating millage rate for the first time. The pace of development and other growth in the city's tax base is expected to trigger that statutory limit, capping the operating millage at 12.0954 mills from 12.2747.

The numbers aren't final and won't be until equalization directors complete their reports to the state in June, Cairns said.

Still, that operating millage is expected to bring in $12,166,767 for 2021, a 4.85-percent increase, documents show. That's out of a proposed $19,771,600 general operating fund budget.

That total doesn't include enterprise funds like a proposed $7,693,400 in revenue and $7,394,000 in operating expenses and debt payments for wastewater disposal, and $5,253,100 in revenue and $3,467,100 in operating expenses for water, documents show. Nor does it include separate budgets for the city Downtown Development Authority, two tax increment finance districts and Traverse City Light & Power.

Colburn said the city budget includes a handful of recommended hires that are strategically placed to help the city tackle projects and goals on several fronts. One is an engineering assistant to help with a large number of infrastructure projects, and another is a communications director to help meet the public's demand for more information from the city.

Werner said he likes the idea, although a previously suggested job description seemed too broad. He also agreed with other suggested hires — the list includes an administrative assistant for the city fire chief and manager for Hickory Hills.

"I see them as thoughtful, they're proactive and I think it's great," he said.

Carruthers said he's still considering the proposals and isn't sure yet if they're the right way to spend money in light of so many other priorities.

"Most budgets are, we don't have enough money to fund the needs that we have laid out," he said, adding it'll be up to the commission to prioritize.

Colburn said the budget also includes an idea he and city Police Chief Jeff O'Brien are developing: a citizens advisory committee on community policing, one aimed at trust-building between police and underrepresented people in Traverse City.

City commissioners got the proposed budget shortly before their May 3 meeting, with the document appearing on the city's website mid-day May 4. Colburn said it has been the longstanding practice that city commissioners get a first look at the budget. He said he would consider releasing the proposed budget to commissioners and the public simultaneously in 2022.

City Treasurer and Finance Director Kelli Martin said the city won't have hard copies of the budget proposal in Traverse Area District Library or the Governmental Center over pandemic concerns, but people can request one to be printed on demand. In future years she aims to include the proposed budget in the meeting packet that's released ahead of the meeting where it's first introduced.