2012-06-28 / Front Page

Rates rise in light of budget

Water, sewer affected by DDA budget, mill taxes

MANISTIQUE – City council members have approved the last pieces of the 2013 budget – including water and sewer rate increases effective July 1. In Monday’s meeting, city officials discussed the cause of the rate increases – the Downtown Development Authority’s inability to capture enough taxes to cover their commitments to the city.

According to City Manager Sheila Aldrich, the DDA’s dilemma is directly tied to that of the former Manistique Papers, Inc. Following their bankruptcy and reorganization as Manistique Papers, the company reevaluated their personal property, a process that resulted in a significant devaluation. The drop, from last year’s estimated $9,447,696 of personal property to their most recent calculation of $4,723,848, came as a surprise to the city and DDA, said Aldrich.

Each year, she explained, businesses submit a list of their personal property, or contents within the business, to the city. From there, the city uses their system to determine what taxes the business will have to pay on that personal property.

“Apparently, they had some glitch in that system, and they wanted the opportunity to give what they said was an accurate list,” she said. “I am guessing they had someone go through, and they probably had disposed of some stuff that they hadn’t taken off that list.”

Since Manistique Papers is within the DDA district’s boundaries, the taxes they pay on personal property go to the DDA. With this, as well as their other tax captures, the DDA funds numerous projects throughout the city, pays to light the downtown, and also contributes specific funds to the city. More recently, the DDA has been contributing $60,000 per year to the sewer fund, and had agreed to make the last two payments, or approximately $200,000, to the city’s water bond relating to the current infrastructure project. With the loss of nearly $5 million of taxable personal property, the DDA recently passed a “bare bones” budget, Aldrich said, minus these commitments.

“We had a challenge on our hands,” she said. “The loss of revenue in our DDA affected both of these funds.”

Until more tax revenue is recouped by the DDA, the organization will be cutting out any unnecessary expense in their budget, Aldrich added. In fact, she noted their recent budget included $521,000 of revenue and $519,090.91, leaving the DDA with only $1,909.09 of net revenue remaining.

“There was just nothing more that we could ask them for,” she said.

According to Aldrich, the water rate will be increased by $3.14 for the average residential and $3.75 for the average commercial customers. This equals a new water base fee of $24.09 for residential users, up from the previous base of $20.95.

On the sewer side, the average residential user will be paying $2.82 more per month, while the average commercial user will pay $3.38 more. As the result of this increase, a new sewer base fee of $19.38 will be applied to the average resident’s bill. The previous base fee was $16.56.

The water and sewer budgets passed unanimously. The rest of the 2013 fiscal year budget was passed during the city’s May 29 meeting.

In other business, council members also approved some of the final budget amendments to the city’s 2012 fiscal year budget. According to Aldrich, only a few areas caused concern while wrapping up this budget, which ends on June 30.

One of these areas was the recreation department.

“It is going to be something, I’m sure, that we’re going to be back here talking about over and over, and at some point, it’s probably going to come to the point where we, being the general fund, are going to have to contribute more to recreation,” she said. “Because you can just see it’s just harder and harder for them to make a go.”

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