The Lake Shore City Council on Monday morning, Aug. 24, considered a draft 2021 budget on its way to setting a preliminary general revenue tax levy.
The preliminary levy must be approved by Sept. 30, after which it can be reduced but not raised.
Projected budget increases for 2021 include:
$10,500 for a long-term financial and sewer rate study from Ehlers & Associates.
2% cost of living increase for employees based on a poll of surrounding communities.
6% increase for Pine River Area Sanitary District (sewer).
2.4% increase for the audit.
$1,000 increase for liability insurance.
3%-5% increase for most and 10% increase for police for workers compensation insurance.
$4,000 increase in the city’s fire contract.
$5,000 increase for roads maintenance, which includes crack sealing, chip sealing, graveling and other maintenance.
$130,000 for bond payments, which will increase to $165,000 in 2022.
Also, the council received a request for $1,025 from the Initiative Foundation.
Capital outlay and revenue are consistent with the 2020 budget, a memo from City Administrator Teri Hastings said. Salaries for the mayor and council members are not yet included as the city is polling surrounding communities for salaries and considering an increase for 2021, which would require an ordinance amendment. The council also will consider adjusting committee member pay rates.
Other items for the council to consider for the 2021 or 2022 budget are costs to codify the city code and an update to the personnel policy.
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The 2020 budget totaled $1,512,215 (19.2% higher than in 2019) with a general revenue tax levy of $1,281,278 (22.5% higher than the 2019 levy). The main reason for those increases was road repairs.
Mayor Kevin Egan said Monday that the 2021 budget should be more stable after this year’s increase that resulted from issuing bonds for road repairs.
Egan asked Hastings about the sewer rate study, and Hastings said Ehlers & Associates will gather all the financial information and do an analysis to provide a long-term look and determine what the city could be doing differently. The 2021 budget does not currently include a sewer rate increase, she said.
The proposed sewer budget shows ground is being made, she said, projecting revenue of around $138,250 and expenses of $84,448. The city wants to put money aside for capital improvements, she said.
Egan cautioned about providing subsidies in the future, asking if the city should “write off” past sewer expenses and look at it as a gift, or increase rates so people actually using the system pay for it.
Hastings said the sewer fund was in decent shape but then the city had to undertake two lift station improvements where immediate attention was needed.
“We were close to catastrophic failure, in my mind,” Hastings said, adding that the city is now capturing $27,150 annually from sewer system users that goes directly to the sewer capital fund. “We are heading in the right direction.”
The city has $73,000 in its sewer capital improvement fund from collecting that $27,000 annually, and will talk to the auditors to help determine how to proceed, Hastings said.
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Staff will take council feedback on the budget and will have another budget discussion at a meeting to be set in the second week of September.
Council member John Terwilliger was absent from Monday’s budget discussion meeting.
Nancy Vogt may be reached at 218-855-5877 or nancy.vogt@pineandlakes.com. Follow her on Facebook and on Twitter at www.twitter.com/@PEJ_Nancy.
