Marysville plans for half-mill property tax increase next year

It’s been close to two decades since Marysville last raised its millage rate, but property owners are slated to see a slight half-mill uptick in taxes next year to be passed with the city’s 2024-25 budget.

It’s a maneuver that, officials said, will help save off some major cost cuts, particularly in public safety, as the city manages the weight of its massive pension debt to retirees and asks labor groups to close its pension system to new employees.

Currently, the city levies 16.11 mills, which it hasn’t raised since 2006. City Council is able to raise that to 20 mills without going to a public vote. For now, however, City Manager Randy Fernandez said they’re adding a 0.5 mills produce another $235,000 with an earmark for public safety in the general fund.

The next city budget takes effect July 1. The half-mill increase means about $50 a year to the owner of a home with a taxable value aroudn $200,000.

“The other option would be to probably go for a much higher amount, probably 2 mills,” Fernandez said Wednesday. “The city has talked about the last couple years asking (voters) for 2 mills to support police and fire, but if that would not pass, then there would have to be cuts to that department. So, in lieu of costs to that department and keeping things where they are, the council decided to raise a half mill.”

The administrators are in contract negotiations with employees in the city’s fire division, as well as its department of public works. The police contract doesn’t come up until next year.

City Council members have touched on the issue in budget talks earlier this year, and more than half of a regular meeting posted for May 13 were spent in closed session over contract negotiations.

The budget itself includes roughly $12.5 million in general funds and $25 million overall. It didn’t raise water rates but accommodates a new five-year trash contract with slight annual cost increases.

And with close to $27 million owed in pension debt, the city has annually budgeted siphoning off a chunk from its fund balance, which officials refer to as the “rainy day” fund in budget talks, often at over $1 million the last couple of years.

And that’s something, Fernandez said, they know isn’t sustainable long-term. It’s a balance typically over $8 million.

“Fortunately, we are able to during the year cut some costs, find some grants to pay ourselves back,” Fernandez said on Wednesday. Earlier this month, he cited awaiting a personal property reimbursement check from the state that’d mean they wouldn’t have to use the rainy-day funds budgeted for this year by June 30. “So, normally, we break even at the end of the year to maintain the fund balance that we have, which is over 80%.”

The city is under a corrective action plan to address its pension debt, and Fernandez cited changes to the city’s health care fund in the past that have kept that side of liabilities well funded.

While they work out agreements with labor group, Fernandez said they’re also cognizant they have to negotiate to ensure they’re a “good place of employment that offers good wages and good benefits, and hopefully, a good 401K plan going forward” in attracting new staff.

City budget items and council agendas are posted online at https://www.cityofmarysvillemi.com/index.php.

Contact Jackie Smith at (810) 989-6270 or jssmith@gannett.com.

This article originally appeared on Port Huron Times Herald: Marysville plans for half-mill property tax increase next year