Bay City officials present balanced FY 2026–27 general fund; retiree‑health costs and falling marijuana receipts reshape spending

Bay City Finance Presenter Mr. Martini told the commission on May 4 that the proposed FY 2026–27 general‑fund budget is essentially balanced and totals about $28.95 million. "It's it's truly a balanced budget," he said, adding the plan does not rely on using the general‑fund balance to close the gap.

The presentation highlighted several revenue and cost shifts shaping the budget. A GASB accounting change reclassified an electric‑department pilot payment from tax revenue to a transfer‑in, reducing the taxes line and increasing transfers. Mr. Martini also reported a significant decline in marijuana‑related license and excise receipts and said state revenue‑sharing estimates are slightly lower than last year.

The budget shows only a modest overall increase—about 0.57%—but departmental details reflect notable pressures. Salaries are up roughly 2.6% in line with collective‑bargaining steps, while fringe benefits rose mainly because of higher health‑insurance and retiree‑healthcare costs. On retiree healthcare, Martini reviewed recent actuarial updates and funding history, saying the city has prioritized prefunding but that recent healthcare cost increases have added near‑term pressure. He described the actuarial target as a roughly 14–15‑year path to full funding under the current assumptions and warned those projections depend on assumptions such as investment returns.

Mr. Martini also said the proposed budget incorporates a federal grant—about $900,000—for demolition and remediation work at Fire Station 2. He described that grant as covering demolition and soil remediation at the existing Station 2 site; later discussion at the meeting addressed how that work and future site selection interact with replacement plans.

Commissioners asked detailed questions during the presentation. Several sought visual aids (pie charts) and clarification about which dollars are grant‑funded versus ongoing local spending. The presenter promised to provide additional charts and said a street‑fund presentation, including details on a separate First Street grant, will follow on June 1.

The proposed budget moves next through the commission's scheduled hearings; Mr. Martini said he will return for utility, sanitation and special‑fund presentations on June 1 and planned remaining sessions through June 10.

Why it matters: the budget frames how Bay City will allocate limited resources for staffing, streets and public safety while managing long‑term liabilities for pensions and retiree health costs. The inclusion of a federal remediation grant for Station 2 also raises near‑term environmental and service‑continuity questions the commission and staff said they are pursuing.