No tax increases, 4 percent water/sewer increase proposed in city’s annual budget

COMMERCIAL-NEWS | ROBERT TOMLINSON
Three Rivers city commissioners discuss the city’s Fiscal Year 2024 budget during a budget hearing Tuesday.

By Robert Tomlinson
News Director

THREE RIVERS — Three Rivers residents will see no tax increases and a slight increase in water and sewer fees under a proposed budget presented to the Three Rivers City Commission Tuesday night.

The proposed Fiscal Year 2024 budget, as presented by City Clerk Leslie Wilson and Mayor Tom Lowry, calls for a total of $22,622,029 in revenues and $21,773,900 in expenditures between all of their different funds, which comes to a surplus of $848,129, which the city will cover from its fund balance to make it a balanced budget for the year.

Lowry said there will be no changes in millage rates in the city from the previous year, keeping the city’s operating millage at 12 mills, solid waste millage at 1.0 mills, city streets and sidewalks millage at 3.7 mills, ambulance millage at 2.0 mills, library millage at 1.75 mills and the Downtown Development Authority millage at 2.0 mills.

As for the bi-monthly service fees for water and sewer, they will be going up by 4 percent from last year’s rates, from $39.11 to $40.67 per residential equivalent unit (REU) for water – a $1.56 increase every two months – and from $58.80 to $61.15 per REU for sewer – a $2.35 increase every two months. Commodity fees will not change, and the 15 percent senior citizen discount will remain in place.

As for the actual funds themselves, the estimated ending fund balance for the sewer fund is projected to be $8,608,736, about a 185 percent fund balance as a percentage of budgeted appropriations, while the water fund’s estimated ending fund balance for Fiscal Year 2024 is slated to be $1,549,949, or a 96.24 percent fund balance.

Water and sewer rates, as they were last year at this time, were some of the biggest points of discussion among city commissioners during discussion at Tuesday’s meeting. Third District Commissioner Chris Abel and At-Large Commissioner Lucas Allen were ardent against raising the rates, with Abel asking where the money being saved for lead line replacement has gone to.

“We’ve raised the rates through the roof because we had to set aside money to replace the water lines that are contaminated with lead, which we’re not doing. We’ve done them when we did a capital project with the street, but other than that, we’re not doing it,” Abel said. “Where has that money gone, and why are we asking everybody to pay more? … I realize we’re not raising the actual rates for water and sewer, just the fees, but I just can’t in good conscience ask us to do another 4 percent when we’re sitting on 185 percent of the normal yearly income for sewer in our budget, and the other one’s 97 percent. I can’t ask people to do it.”

Lowry said the increases were small – the $2.35 for sewer and the $1.56 for water every two months – to which Abel interjected, “for people who are just barely making it as it is.” Lowry replied that, in his opinion, paying approximately $1.95 per month – which translates to the combined bi-monthly increase between water and sewer of $3.91 – was “affordable.”

Lowry also said the city has two options: small, gradual increases every year or a “huge” increase in rates every five or 10 years. Abel, however, replied that it was the “principle” of the matter at this point in his objection. Lowry then addressed the city’s bigger increase of water rates to $37.97 per REU from $25.40 two years ago to fund lead line replacements, saying 10 percent of that increase was set aside for water line increases.

“We’ve now had it for two years, three years, we’ve set it aside and it’s part of the fund surplus,” Lowry said. “We’re not lying to the customers, what we really said was, we’re going to be proactive because we’re worried about the health of our citizens, we’re going to be proactive with starting the project before we get all the free money from the state – I want us to be proactive, because we’re one of the few in the state that are going to do it.

“The second thing we said is, depending on how much money we get from the state, we’re going to lower the rates,” Lowry continued. “I don’t want to lower the rates now, because we have no clue when and how much the state or federal is.”

Allen questioned whether or not the city was actually being proactive with getting lead lines replaced.

“I know we talk about being proactive, to set things aside to benefit the health of the citizens, well, let’s be honest, we’re not proactive. We need to be reactive, because if that was the case, we’d be doing a lot more for the citizens and replacing a lot more than lines, focusing more on that, prioritizing putting funds from that region toward roads,” Allen said. “Putting funds aside to do something that should be in real time, as in now, that’s not being proactive. We should’ve been proactive a long time ago.”

Lowry responded to Allen’s assertion, saying there are expected to be 1,100 lead service lines in the city that need to be replaced in the city, and if the city gets a Drinking Water State Revolving Fund (DWSRF) grant from the state, which the state is expected to announce who will get those grants this fall, they would be addressing 336 lines with those funds.

“In the grant, they say every lead line replacement is going to cost $8,750. That’s almost $10 million. We don’t have that,” Lowry said. “We have set aside 10 percent of our last rate increase on the water side to start saving for lead line replacement, and we could start spending it now, but we’re only gonna get a couple dozen. Let’s wait and use it to the big effect, which could be this fall. This fall, we’ll find out from the state for this first wide distribution of monies. It’s not gonna be enough, but let’s wait a few months and know just how much we can do, and then we’ll start. Right now, we have peanuts compared to $10 million. I agree with you, I want to do it yesterday, but at least wait until we first get the grant we’re applying for.”

There were a number of other highlights from Tuesday’s meeting from many different areas of the budget. In the major streets fund, there are two road projects budgeted for the next fiscal year: a project on the Pealer Street Bridge, which includes a city match of $106,450 to the Michigan Department of Transportation, and a $295,000 project on Broadway Street from South Constantine Street to the western city limits.

In the local streets fund, there are mill and fill maintenance projects scheduled for Union Street from Third Street to South Main for $70,000, Hill Street from Douglas Avenue to Spring Street for $65,000, Pleasant Street from Fourth Street to South Main Street for $56,000, and North Andrews for $40,000.

In the Municipal Streets fund, there were minimal expenditures this year, which city officials said were in anticipation of needing future funds for street replacement for lead line replacements. The estimated ending fund balance in this particular fund is $3,119,885, approximately 1,401 percent fund balance as a percentage of budgeted appropriations, which was heavily questioned by Allen, who asked why water and sewer rates were being raised when there is so much money in the municipal streets fund balance.

Lowry said the water fund and the municipal streets funds were separate funds and cannot mix with each other, with City Manager Joe Bippus adding when they spend the municipal streets money, they also spend sewer and water money in addition, because “we want to be able to do all the work underneath the ground.”

“You can’t take this money and say we’re going to give it to water,” Bippus said.

Abel then asked why the city is saving money in the municipal streets fund when matching money for a Drinking Water State Revolving Fund (DWSRF) grant would come from the water fund, with Bippus replying that the state “only pays for a portion of the street costs for repaving” when projects such as the lead line replacement project begin, and the city “has to make up the difference.”

Lowry added that when the city does a “total street reconstruction,” the city takes money from the water fund for water lines, money from the sewer fund for sewer lines, and labor and storm water work comes from the street funds.

Roth then explained how the DWSRF works when it comes to roads, given an example by Abel of a $7 million match.

“Say you have to tear up 40 percent of the road to replace the water main and the service lines. Then, that grant, that $7 million, pays for the water lines and that pavement above it, which you only have 40 percent of your pavement done, what do you do with the other 60 percent of the street? That’s where the municipal street fund comes in and pays for that other 60 percent of the street,” Roth said. “That grant is water-related. We don’t bring street money to pay for the water-related stuff, but we use street money to pay for the rest of the street.”

Elsewhere in the budget, the ambulance service will increase their service fee rate in both the city and townships by 4.1 percent – it was pointed out during the meeting that the presentation called for township service fees to go up 4 percent; Wilson said that was a typo and it would go up 4.1 percent as well – with expenditure highlights including a 20 percent/80 percent staff split between general fund and ambulance, and a 50/50 administration split.

The city is also anticipating $200,000 in marijuana excise tax revenue, with $200,000 projected to go into the general fund, 5 percent salary increases for most non-bargaining members of staff, 2 percent to 7 percent salary increases for all union employees in accordance with labor contracts, employee insurance benefits increasing by 3.78 percent, and retirement benefits increased by 2 percent. The city is also including the addition of a new shared grant writer, a new assistant water superintendent, and the filling of a deputy police chief position, which was included in the Fiscal Year 2023 budget.

For public safety, $3,147,015 is budgeted for the year, with $2,325,582 going to police. Some budgetary highlights from that department include plans to repair sheds and the police range, purchase a new bulletproof vest and acquire new firefighter personal protective equipment sets to fully outfit current full-time staff.

Parks and Recreation’s major budgetary highlight was a project for renovating the bathroom building and putting in exercise equipment at Memory Isle Park, at a cost of $34,875.

Overall, city officials said in conclusion that the city is in “solid financial health,” with the proposed budget continuing to “invest in improving city infrastructure, maintain equipment for emergency services and improving our park system.”

A public hearing to approve the fee schedule will be held at the city commission’s next meeting on June 6, and the final budget is expected to be adopted at the commission’s June 20 meeting.

Robert Tomlinson can be reached at 279-7488 or robert@threeriversnews.com.