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Utility rate hikes possible in Escanaba

ESCANABA — Utility customers in Escanaba could face rate hikes on their electric, water and wastewater bills beginning July 1 based on recommendations outlined in the city’s proposed budget.

Rate increases of 1.75 percent for electricity and 10 percent for both water and wastewater services are included in Escanaba’s proposed 2018-2019 budget, which council will be reviewing during work sessions scheduled for next week.

Council will be meeting Monday and Tuesday, and if needed Wednesday, to go over the proposed budget with the city manager and department heads. The public is encouraged to attend the work sessions, which begin at 9 a.m. at city hall.

Escanaba’s $31 million budget includes nearly $8 million in the general fund for the city’s day-to-day departmental operations, $3 million in street funds, and about $2 million for central dispatch, the library, the Downtown Development Authority, land development, and parking lot maintenance.

The remaining $18 million of the $31 million budget represents utility operating funds for the following departments: electric ($14.1 million); water ($2.2 million); wastewater ($1.5 million); and marina ($240,000).

According to City Manager Patrick Jordan, who drafted the proposed budget with the assistance of City Controller Melissa Becotte and department heads, Escanaba continues to operate on tight finances mainly due to decreasing state funding.

“I believe that local units of government are struggling because the state’s system for funding municipalities is broken and does not track with the economy,” Jordan stated in his overview of the upcoming budget.

“In Michigan, cities have very few resources of revenue and those sources are shrinking. In recent years, sources have failed to keep up with the current level of service, much less rising costs,” he added.

Since 2002, Escanaba has lost a total of more than $6 million in revenue shares during the 16-year period.

In addition, increasing legal expenses and tax refunds resulting from tax tribunal “dark store” litigation cases have also negatively affected the city’s budget, noted Jordan. The city has been contesting appealed assessments, which base the property value of operating businesses on a closed building.

“There are currently four commercial cases pending before the tax tribunal with an aggregate contested taxable value of $7.1 million, which equates to $122,111 of annual tax revenue at risk for the city,” he said.

Escanaba’s proposed general fund of $8 million provides “core services” to the community, representing an increase of 1.56 percent compared to the current fiscal year budget, explained Jordan. He also noted the proposed finances include $765,796 transferred from the electric utility fund, which the city has included in its annual budget since 1956.

The city manager said street funding continues to be a major concern for Escanaba where about 69 percent of the road surfaces are considered to be substandard and in need of repairs and upgrades.

Street fund expenditures proposed for 2018-2019 are $1,074,418, including day-to-day maintenance and snowplowing. More than $900,000 for six road improvement projects are planned for the upcoming year. The fund balance going into the new year is estimated at more than $2.5 million.

Additional road improvements will be discussed during next week’s budget work sessions due to council’s plan to step up road repairs. Council has been looking at various funding options including a possible millage to improve roads.

Electric, water and wastewater rate hikes are being proposed in the upcoming budget to meet departmental obligations and needs, according to the draft budget.

Planned projects for the electric department include continuing to replace electric meters in the upcoming fiscal year at a cost of $1 million, $540,000 for three trucks, and $280,000 to replace power poles. Additional projects include $150,000 in improvements at the West Side Substation, $80,000 to replace underground lines, and $80,000 to replace street lights.

Planned projects for the water department include $450,000 for a water main replacement, $220,000 to replace water meters, $200,000 for water plant improvements, and $45,000 for painting fire hydrants.

Upcoming projects for the wastewater department include $250,000 in engineering costs for plant upgrades and $527,050 to repair three sanitary sewers. A $30,000 flow study is also planned to prevent the city from having to discharge partially-treated wastewater into the bay like it was forced to do last year due to high rains.

Other expenses included in the proposed budget include the purchase of a new patrol car and the hiring of one new public safety officer. The officer position will be funded from overtime savings within the department.

Public Works is requesting $233,000 for a grader, a spray patch machine and a lawn mower.

The marina is seeking $25,000 to help pay for a dock replacement, which is also being funded by $325,000 in grants.

Following additional public hearings on the proposed budget, council is scheduled to adopt a final document on May 17. State law requires the city to adopt a balanced budget prior to the new fiscal year which begins July 1.

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Jenny Lancour, (906) 786-2021, ext. 143, jlancour@dailypress.net

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