We are at an exciting time of the year when the city council finalized a process that began with visualizing and planning for the next fiscal year’s budget. Sure, with the economic factors being as they are the city council’s task seemed formidable but it was within its grasp to maintain a certain level of services as we strive to move forward in an uncertain Michigan future.

The city council recently passed a budget that has a deficit of $259,561. We have a fund balance (savings account) that allows us to provide services near the status quo yet simultaneously it does force us to examine areas where we must step back from normal expectations of services. There will be slight reductions in services but we will be just fine for fiscal year 2010–2011.

I want to stress that we have a healthy fund balance that is to be used for emergencies and financial hardships. As you know we are in a financial hardship right now but another year of deficit spending will not adversely affect the financial health of the city at this time or the next year. City Treasurer Rogers and I have studied our fund balances of the past 14 years and what we found was the following:

• The average fund balance percentage from 1996–1997 to 2004–2005 (the year before Delphi announced their bankruptcy) was 35.14%.

• From 2005–2006 to 2009–2010 the average fund balance has been 67.53%. This percentage is close to double of what we previously thought was a healthy fund balance.

The city has never had a policy of what exactly our fund balance should be or at what percentage we should draw it down to cover deficits in a budget. What I can confidently state is that our fund balance was grown by reducing capital expenditures, postponing road projects, and not filling vacancies in the administrative and DPW staff. We froze wages for a couple of years and reduced numerous administrative expenses in a desire to better prepare for a financial hardship whereby important city services would not be eliminated in a panic.

We have a financial reserve that allows us to cover deficits for a limited period of time. We should use this limited time and the next fiscal year to evaluate where we want to be in Fiscal Year 2011–2012 and continue to have budget workshops. These budget workshops will lay out a logical plan that takes in the big picture of where we want to be and what we want to be as a community in the next five or more years.

In the forthcoming months there will be much written and discussed about future city budgets and what city services might have to be reduced or even eliminated. Much that gets discussed will not happen; but some will. The city for the short-term has prepared for these difficult times and that is why drastic cuts in services are not proposed at this time. But the challenge is not over. We will keep you informed.