Fraser retains proposed millage rates as finance staff warns about fund balance erosion

City Manager Levin presented the recommended millage rates at the May 4 budget workshop, explaining the city sets four millage levies (charter operating, rubbish, ALS and PA 33) and that the charter and ALS rates are subject to Headley reductions. He recommended continuing the rubbish millage at 1.4 and keeping PA 33 at 1.5 for the coming fiscal year to maintain revenue streams while funding priorities such as storm repairs.

Levin said the recommended budget would use roughly $1,000,000 of fund balance for general needs and another $1,000,000 earmarked for storm repairs, leaving about $3,000,000 unrestricted. Finance staff (Angelie) clarified that some state stabilization (LCSA) money is paid in two installments (October and May) and the May installment could materially change starting balances; because the May payment is not certain in the budget it was not fully counted in the draft.

Council members debated whether to lower PA 33. One council member urged cutting PA 33 to zero while others argued the city needs a reserve cushion and that maintaining a 25% fund-balance target helps preserve favorable borrowing conditions and provides a buffer for emergencies. Finance staff noted the 25% target is a council resolution and not a statutory requirement, and council can revisit the policy if it chooses.

No formal vote on millage rates was taken at the workshop; staff said the millage rates will appear on the May 14 agenda for formal action. Finance staff also agreed to provide five-year projections showing when the fund balance would fall below the 25% reserve target so council can evaluate timing and options.

What happens next: Millage rates will be placed on the May 14 meeting agenda for formal consideration; staff will include updated LCSA receipts if they arrive before final adoption and return five-year fund-balance projections for council review.