Statement on 01-24-22 City Commission Work Session on Structural Budget Deficit & Finding New Revenue

Note: This statement was originally shared by Mayor Pro Tem Cody Mayer on his Facebook page on Wednesday, Jan. 26. I was planning on writing my own post about the fiscal challenges faced by the City of Marquette and the recent discussions about raising new revenue, but Mayor Pro Tem Mayer’s post precisely reflects my own thoughts on this issue. I am sharing his statement on this website as my own, while giving him full credit. I would only reiterate that the current budget (FY 2022) that the City Commission approved last fall included significant spending cuts, stopping just short of reductions in the level of City services, and then only with a significant transfer from our dwindling reserve fund. We are looking at a deficit of ~$1.5-2 million for FY 2023. The choice we now face is between: 1) raising taxes in some form until new revenue starts coming in from the various Brownfield developments around town in the next decade or so, or 2) major cuts to City services (road maintenance, public safety, parks and recreation facilities, etc.) that will also hit residents hard. Nobody wants a tax increase, but I do not believe that most City residents would prefer the draconian cuts that are the only alternative.

To the residents of Marquette,

The Marquette City Commission recently held a public work session on our challenging financial situation, and it focused heavily on the revenue side of the equation. The honest truth is that we have already cut all the “fat” we could from the current City budget, but we are still projecting a deficit this year, and the severity of this deficit is projected to increase over the next several years. So, we had to have a brutally hard conversation. The City of Marquette hasn’t increased our property tax millage rate in over a decade, but the cost of doing “business as usual” has increased substantially in that time. We spent most of this work session discussing other possible options, and there just aren’t any good ones. With the cost of virtually everything increasing, revenue going down due to the Presque Isle Power Plant closure, Michigan Tax Tribunal appeals (“dark store” tax loophole), and other factors, and state laws preventing many other solutions like local lodging or sales taxes, our options are very limited.

I want to provide some numbers as well in the interest of being as transparent as possible. A City Operating Millage increase of 1.0 mil would cost the average homeowner an additional $85 yearly/ $7.08 monthly, and the max increase of roughly 2.67 mils would translate into $226 yearly/ $18.83 monthly for the average homeowner. The max increase of $18.83 monthly may not “seem like a lot” to some, but it certainly is a lot when you factor in utility rates increasing, the cost of living going up, and the fact that many Marquette homeowners have limited incomes. Some alternatives, such as a City income tax, are also on the table, and we are still considering all of our limited options.

I don’t want to blame previous City Commissions for kicking the can down the road either – it’s unproductive and doesn’t solve the current problem before us. Obviously, I didn’t anticipate facing this issue 14 months after being elected, but this is just the reality that my colleagues and I must accept. The roots of the City’s financial problems may lie in the past, but the current City Commission bears full responsibility for solving those problems.

I know that some of you may want us to cut spending instead of raising taxes, but ask yourself this: What department’s budget would you slash? What City services and infrastructure do you think we could live without? Our parks? Our roads? Police and fire? Snow removal? At the end of the day, cutting City services isn’t a viable answer.

This was just a work session – we will have further public discussions and public forums on this topic, whether that be virtually or in-person (hard to know these days), and all City residents will have an opportunity to be heard. All I ask is for everyone to stay engaged, stay informed, and give us time to make the best decision possible. I will do my best to keep everyone informed.