By Rob Peterson
The Schoolcraft Village Council set 2021 goals at a March meeting, following a discussion at a special meeting in February where two overriding themes were creation of a sanitary sewer committee and strategizing for economic development and revitalization.
The council also indicated its intention to continue working on goals it had set in 2020, which include encouraging economic development and reviewing all possible revenue generating options. Revenue generation may include asking voters for a Headlee override.
The 1978 Headlee Amendment to the Michigan constitution requires a local government to reduce its millage rate to prevent total valuation of all property in the community from rising faster than the rate of inflation. A Headlee override asks voters to increase a millage to previous limits authorized by charter, state law or previously voter-approved limits.
The amendment did not limit how quickly tax revenues must be reduced when property values decrease, as they did during the recession. As property values rebounded, another constitutional amendment restricted Schoolcraft from increasing taxable value to keep up with market prices.
Schoolcraft may look at three choices: find a way to grow tax revenue through new development; grow tax revenue through a Headlee override; or cut services.
In recent years, the Village has been able to stave off all three options because of an unusually large fund balance, which today is nearly 100% of a typical year’s revenues. To balance its budget for the 2021-22 fiscal year, the council approved dipping into this balance by $106,000.
Related to this discussion, Finance Director Tammi Youngs noted that the Village does not have a fund balance policy. She presented a draft policy to the council that was based on her research of federal standards as well as policies in similar municipalities in Michigan.
A fund balance policy is not an exact science and must be based on a number of factors. “Because we are a smaller community, we are more susceptible to swings in revenue and expense,” Youngs said.
Based on her recommendation, the council approved a policy that will set its fund balance to 40% of expected annual revenues. With that policy, the council has roughly four years of excess cash before it will need to make major adjustments to revenue or expenses.
Council members discussed whether they could increase revenues by investing their fund balance rather than keeping it in cash. Youngs replied that there are restrictions on how a municipality can invest, adding that “The goal is to keep everything safe; to keep the money we have and not lose it.”
The current year budget, as well as budgets going back to 2016, are available on the Village’s website.
In other action, the council increased water rates by 3% for the third year. Council member Mike Rochholz asked if the Village has set aside enough for capital improvements in the water system. Village Manager Cheri Lutz responded that staff will review the needs for capital improvements and include them in any rate increase recommendations next year.
Village staff and the council had decided to step up enforcement of ordinances which create safety issues, and the pushback from residents has caused the council to create an ad-hoc committee to review regulatory ordinances.
The Fourth of July celebration has been officially postponed until 2022. After discussions with those who plan the event, it was determined that there is too much work and expense that must take place now with no guarantee that the event will happen.
The council also postponed the usual July 4 community-wide garage sales.
By Rob Peterson