Bay City manager presents balanced FY2026–27 general fund budget, flags lower state and marijuana revenues and Station 2 remediation

Fiscal Services Director Martini presented the Bay City Commission with the proposed FY2026–27 general fund budget, saying the plan totals $28,949,003 — a 0.57% increase from the prior year — and does not rely on fund balance to balance operations. "It's truly a balanced budget," Martini said as he opened the presentation.

Martini told commissioners the change was partly accounting-driven: a GASB reclassification moved an electric-department administrative payment from 'tax' into 'transfer in,' lowering the tax line and increasing transfers. He said the city expects a small decrease in state-shared revenue this coming year, a decline not seen in over a decade. Martini also reported a sharp decline in marijuana excise receipts, noting collections moved from roughly $948,561 in 2024 to about $432,136 in 2026; the budget conservatively includes $150,000 to cover an ongoing drop‑in center obligation, with any excess earmarked for roads.

On the expenditure side Martini pointed to modest overall spending growth: salaries are budgeted about 2.6% higher (to reflect collective‑bargaining increases) and most departments show small personnel changes. Fringe benefits rose notably because of higher health‑insurance costs and an actuarial increase in retiree‑healthcare funding after a June/July 2025 valuation; Martini said retiree‑healthcare liabilities rose even as investments and prefunding improved, and that the city aims to amortize the liability within actuarial assumptions (roughly a 14–15 year target under current assumptions).

The budget also includes federal grant dollars. Martini highlighted roughly $900,000 shown in the general fund that represents a federal grant to fund demolition and remediation at Station Number 2; he stressed that the demolition allocation is grant‑funded rather than a new ongoing operating cost. Later in the meeting staff elaborated on a related cleanup grant (discussed as approximately $1,000,000) that is intended to remove contaminated soil and replace it with clean fill and pavement at the Station 2 site.

Commissioners asked for additional visual aids and clarifications; Martini said auditors typically provide pie charts but he could include them in future distributions. Commissioners also pressed for clarity on the $1.6 million figure referenced by one commissioner; Martini said parts of that amount were related to street revenue reimbursement for the Lafayette Bridal project and that the specific allocations in play had shifted and were closer to $1.9 million at the time of discussion.

Martini walked the commission through department‑level changes: most department staffing levels remain stable; some departments show small increases in IT service charges or printing; the mayor’s budget eliminated a city‑paid cell phone; the clerk and elections budgets rise sharply in percentage terms because of state‑mandated election equipment replacement and the cyclical election schedule. Martini noted the city budgeted conservatively for an equipment replacement requirement estimated at about $15,000 per precinct if state funding does not cover the cost.

On parks, several large projects that had appeared in last year’s budget (including the previously anticipated "Dream Field" donation) were removed from the general fund and will appear in the public improvement fund or are to be funded by other sources. Transfers out overall dropped about 14% because of reallocated items, including an elimination of the transfer to the cemetery fund and adjusted allocations for street funds tied to marijuana excise taxes.

Martini closed by reiterating that the document represents a negotiated proposal between departments and the city manager and that the next budget presentations (utilities, sanitation, and special funds) will continue the review. He will present utilities and sanitation on the following dates and plans to return June 1 to cover special funds. "We've come up with what is best for the city," Martini said, and commissioners thanked him for the presentation and his years of service.

The commission did not take a final vote on the budget at this meeting; the presentation will continue in subsequent sessions where commissioners requested additional detail on visuals and selected line items.