Rochester Hills City Council on Monday, September 24, voted unanimously to approve the city's $168.1 million budget for fiscal year 2019, which includes spending down a portion of the city's fund balance for capital improvement projects.
While the budget calls for greater expenditures than projected revenues for the fiscal year, which runs from January to the end of December, the city still maintains a structural surplus, meaning that recurring revenues exceed ongoing expenditures by about $9.3 million in 2019.
The city's overall proposed expenditures in 2019 are proposed at $168.1 million, with revenues totaling $149.4 million. The shortfalls will bring the city's fund balance down from about $68.1 million to $57.3 million in 2019, with the city's general fund balance down about $11.3 million, or about 80 percent of overall annual operating expenditures. The reduction is part of the city's recently adopted fund balance policy, in which any funding in excess of 80 percent are to be transferred out to the city's capital improvement fund.
City council in June approved an updated fund balance policy that requires the city maintain 70 to 80 percent of annual operating expenditures in the city's general fund; 20 to 25 percent of expenditures in the local street fund, fire operating fund, special police fund, pathway maintained fund and green space fund; and at least 25 percent of annual operating expenditures in the city's major road fund, tree fund and water resources fund. Fund balances in excess of 80 percent of expenditures in the general fund must be transferred to the city's capital improvement fund.
Rochester Hills Mayor Bryan K. Barnett said the city's financial status includes zero unfunded pension liability, with the budget maintaining a 10.4605 millage rate for the fourth consecutive year, one of the lowest in Oakland County.
The approved millage rate of 10.4605 accounts for about a quarter of the city's overall revenues. The millage rates, which were unanimously approved by council, include a 2.4959 millage for the city's general gund; .3444 mills for the local street fund I; .4718 mills for local street fund II; .2886 for local street fund III; 2.7 mills for the fire fund; 1.1742 for the special police fund I; 1.2725 for the special police fund II; .1803 millage for the pathway millage; .1893 mills for RARA's operating millage; .2334 mills for the OPC millage; .0971 for the OPC transportation millage; and .7602 for the library operating millage. The total rate also includes a .0394 mill chapter 20 drain debt millage and a .2134 mill OPC building debt millage.
Expenditures for 2019 are up about 14.6 percent from 2018, with the majority of increases set aside for capital improvements, which account for about $28 million, or 17 percent of the overall budget. The largest expenditures include personnel costs ($30.6 million), professional services ($29.2 million), which includes contracted police services; and commodity charges ($22.5 million), such as water and sewer treatment purchases.
The budget also calls for one additional full-time staff member, bringing total staffing to 225 full-time employees, the highest since 2010. The new position will add an assistant foreman to the Department of Public Services.
Anticipated revenue for 2019 were estimated at $149.4 million, up about 14.1 percent from 2018. The majority of the increase is related to internal transfers to align fund balances with the new fund balance policy. Additional revenue includes $57 million in service charges; $34.3 million from taxes; $18.7 million from fund balances; $14.6 million from state, federal and other sources; and about $5.3 million from investment earnings, fines and other revenue.
In addition to the city's budget, council on September 24 unanimously approved annual budgets for the Rochester-Avon Recreation Authority (RARA), and the Older Person's Commission (OPC).
The $2.5 million RARA budget, which was previously approved by the city of Rochester and Oakland Township, calls for raising the fund balance at the authority to 25.7 percent of operating expenditures, or about $620,000, by 2021 while implementing wage increases, as prescribed by a recent compensation study.
The OPC's $4.26 million budget represents a .73-percent increase from 2018, or about $30,800. The budget also includes a use of fund balance policy which limits the use of fund balance to one-time needs and requires the OPC to maintain a fund balance of at least 25 percent of expenditures.