Bay City Commission hears "Budget 101" briefing on reserves, fund structure

An unnamed city staff member presented a "Budget 101" briefing to the Bay City Commission that outlined the city's annual budget schedule, the structure of 48 separate funds, reserve policy and several specific revenue and fund figures.

The presenter summarized the process the city follows: a January memorandum to departments, line-item submissions into the New World Financials accounting system, department-by-department review meetings in March, a city manager proposed budget delivered in April and an adopted budget to be approved by the commission no later than June 30, as required by state law. "Good afternoon commissioners. Welcome to Budget 101 and hopefully this presentation will at least give you a little bit of a flavor of governmental budgeting," the staff member said.

Why it matters: the presentation clarified where the city's operating dollars originate, which funds are restricted and how the commission's reserve policy affects future spending choices — including whether to move excess general fund balance into capital projects such as streets and sidewalks.

Key points from the presentation

- Legal and policy framework: The presenter cited the city charter requirement that the city manager prepare and submit an annual budget and referenced a July 12, 2004, resolution that sets timing expectations for delivery of the proposed budget. The presenter also cited state law requiring adoption of the budget by June 30.

- Reserve policy: The commission's general-fund reserve policy requires maintaining 15–20% of the previous year's amended expenditures as a fund balance. For the coming fiscal year, the presenter said that range translates to approximately $3,800,000 to $5,100,000. The staff member illustrated how the city might target modest underspending or excess revenues in the budget process to restore reserves if the balance falls below that range.

- Fund accounting and major funds: The presenter said Bay City uses 48 separate funds, including one general fund, 12 special revenue funds (local streets, major streets, CDBG, sanitation, building department and others), several component units (DDA, Brownfield Authority, TIFA and similar entities), debt service funds, capital projects (public improvement fund), enterprise funds (electric, water, sewer, airport, marina, cemetery) and internal service funds such as the motor equipment revolving fund (MRF) and a DPW building fund created after a facility purchase and major renovation.

- Specific revenue figures reported by the presenter: property tax revenue roughly $15,000,000; state revenue sharing budgeted at about $6,500,000; charges for services about $3,600,000 (with $2,800,000 of that described as an indirect cost allocation billed to utilities and other funds); federal grants roughly $201,000; local grants $400,000; interest and rents budgeted at $180,000; and transfers in about $1,220,000. The presenter also described the electric utility's payment in lieu of taxes at roughly 6% of gross revenues.

- Restricted funds and the $5 million bridge-lease proceeds: The presenter said proceeds from a bridge lease, roughly $5,000,000, are restricted by the commission for road projects. "It's specifically designated for road improvements," the staff member said. The presenter added that the city has not dipped into that $5,000,000 and that past street and sidewalk projects were funded from state street revenues or CDBG rather than that bridge fund.

- Pensions and retiree health: The presenter described pension and retiree-health funding levels: the public safety (police and fire) pension plan was discussed as about two-thirds funded (roughly 67%); an older MERS plan for general employees was cited as approximately 97–98% funded as of 12/31/2023; and the retiree health trust was described as roughly 67% funded, up from a single-digit funded level about 10 years earlier.

Questions and follow-ups

Commissioners and members of the public pressed for details on street and sidewalk spending. A resident said they had not seen promised neighborhood street work and pressed the commission on why the bridge-lease dollars were not being spent on local streets. The city staff noted the city engineer is scheduled to present on neighborhood streets costs, including the cost of underlying water and sewer repairs that often drives total project costs, and commissioners indicated they would wait for that presentation before moving forward on any formal proposal to reallocate funds.

The presenter also walked commissioners through the organization of the budget book — a manager's letter, consolidated revenue and expenditure summaries, individual departmental budget pages, personnel schedules, debt schedules and a five-year capital outlay program — and noted the adopted budget book will include the resolution that adopts the budget.

Attendance motion

Early in the meeting a motion was introduced to excuse Commissioners Morris and Overshaugh. The transcript records the motion text but does not record a second or the motion's final outcome.

Next steps

The presenter said the proposed budget is produced in April and the adopted budget will be brought to the commission no later than June 30. The city engineer is slated to present on neighborhood streets and related utility costs at an upcoming meeting, which commissioners flagged as the appropriate forum for decisions on using restricted street-related funds.