In a new proposed budget for 2019-20, Traverse City staff are recommending adding new firefighter and police positions, increasing residents’ water and sewer rates, and exploring ways to address future funding challenges, including street improvements and Parks and Recreation projects.

City Manager Marty Colburn provided commissioners with a copy of the draft budget this week ahead of a May 13 commission study session and May 20 public hearing. Both of those meetings will provide opportunities for the board to debate the budget, and for the public to provide input. Traverse City’s charter requires commissioners to adopt an approved budget no later than June 3.

Colburn is proposing a balanced general fund budget of just over $18 million, with an ending fund balance of $3.9 million. A handful of new city staff positions are proposed during the next year, including a full-time police officer and a full-time firefighter. After city commissioners heard complaints this week about drunken behavior near downtown bars, Colburn said his budget contained possible solutions to that issue – notably, an enhanced police presence downtown. The city and Downtown Development Authority (DDA) are proposing to team up and share expenses for a full-time community police officer who would be dedicated to downtown Traverse City – a three-year contract that would cost $105,000 annually. The DDA would pay $50,000 of that cost each year, while the city would pay $55,000.

Meanwhile, the third shift of the Traverse City Fire Department “has been operating short-staffed over most of the last decade,” according to Colburn, culminating in “significant overtime when we have staff off for training, personal time, or in between recruiting when retirement occurs.” Colburn is proposing adding a full-time firefighter, a position he suggests could significantly pay for itself since it would reduce overtime costs by $50,000 annually. The budget also calls for adding one seasonal Department of Public Services employee to help with snow removal.

City Treasurer Bill Twietmeyer is also recommending the city raise its water and sewer rates. It would mark the second consecutive year water rates increased and the third consecutive year sewer rates increased, though rates remained flat for several years prior to that. Twietmeyer says the increases are necessary to keep up with water main, transmission, and wastewater and water treatment plant projects, adding that the city may need to issue bonds in the coming years to cover even more expensive upgrades on the horizon. The increases equate to $1 on the base rate for water and $2 on the base rate for sewer. According to the city treasurer’s estimates, the increase would mean the average residential customer using 1,200 cubic feet of water would see their monthly water charge increase from $24.80 to $26.40, while sewer charges would increase from $67.60 to $70.80.

According to Colburn, the city is experiencing a few key areas of increasing revenue, notably rising property taxes and fees collected from medical marijuana permits. The latter caused the city’s business license and permit revenues to skyrocket unexpectedly this year; while the city budgeted $19,900 in revenues for 2018-19, it's projected to actually take in $396,800. That figure likely represents a one-time spike, owing to the number of medical marijuana applications the city received this spring. While in future years the city will still collect a $5,000 annual renewal fee from medical marijuana license holders, it won’t have this year’s glut of lottery applications, with revenues projected to drop back down to $92,800 for 2019-20.

Even with those influxes of revenue, Colburn says decreasing state funding and increasing city infrastructure demands present budgetary challenges. His budget hints at frustration with the state’s funding commitment to Michigan communities, noting that while at one time state revenue-sharing made up over 16 percent of Traverse City’s budget, that number now falls under nine percent. The state has also restructured corporate taxes and is phasing out personal property taxes, Colburn says. “With the reduction of state-shared revenues and limited access to other state funding sources, maintaining (our) services and investment into capital projects continues to be a significant challenge…it has become evident that the state of Michigan has chosen to limit its continued investment and commitment to local municipalities,” Colburn wrote in his budget.

But the city manager suggests areas where commissioners can get creative with funding, adding that “an optimist recognizes an opportunity in every challenge.” As examples, Colburn says he is looking to dedicate some available funds from a bonded citywide sidewalk project to replace trees cleared for those sidewalk upgrades, since there is a “direct correlation” between the two projects. With growing operations and maintenance costs for Parks and Recreation due to the multi-million dollar expansion of Hickory Hills and planned completion of the Boardman Lake Loop, among other projects, Colburn says he is directing staff to look for new opportunities to increase department resources, such as updating the Hickory Hills business plan and renewing the Brown Bridge Trust Parks Improvement Fund. Elsewhere, the city is working on “the possibility of (creating) a stormwater ordinance and utility to ensure that we have the means to protect one of the most critical natural resources that is available not just to us, but also to the state and nation, the Great Lakes,” Colburn says.

According to the city manager, street improvements will be one of the biggest needs on the city’s horizon. “The most notable shortcoming of infrastructure needs is the growing maintenance needs of our streets…the streets needing significant repair, inclusive of reconstruction, is hampered with not enough funding. They continue to deteriorate faster than we can replace them, and are not garnering the attention necessary to maintain an appropriate transportation network within the city.” Colburn says despite the uphill battle, the city “continues to invest” in its streets, using funds from a millage increase last year to help pay for Eighth Street’s reconstruction this year and potential other projects in future years. While the state is coming up short in other areas, Colburn says Michigan leaders have indicated funding could be available to Traverse City and other communities to help with road improvements going forward.

In the meantime, city commissioners will need to make decisions this spring that will not only "continue to maintain services and operations of the city,” Colburn says, “but also to allow the infrastructure investments to help meet the visionary elements of the city.”