Ontonagon Village tries bailing out $8.6M deficit

More than a decade of financial backlogs have reached a boiling point in the village of Ontonagon.
Published: May. 31, 2022 at 8:21 PM EDT
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ONTONAGON, Mich. (WLUC) - Voters will soon face a choice in Ontonagon regarding millages that are proposed in the county and in the village.

Though, long-time Ontonagon Resident Bill Johnson is fed up. He says mismanaged payments since 2007 have put the village in debt.

“We found this thing called the Treasury Department in Michigan and we started reading the documents for Ontonagon,” said Johnson. “We were behind on everything.”

The village owes about $8.6M to MERS – Municipal Employees’ Retirement System of Michigan. The system pays pensions to employees who retire from Aspirus Ontonagon. Which, was formerly known as the Ontonagon Memorial Hospital.

“So, in ‘07, we sold the hospital to Aspirus for $1,” said William DuPont, Ontonagon’s new village manager. Dupont joined the village in January of 2021.

“As part of the deal, we kept the pension liability for approximately 134 former employees,” said DuPont.

DuPont says the funding plan to pay those pensions was never enough.

“The village council in ‘07 dropped the millage rate that year,” said DuPont. “So, it took on this huge liability and dropped the taxes [in the] same time frame.”

Now, more people are collecting pensions as they age. This increases the village’s MERS bill. Though, the village is not taking in more money.

“Every financial meeting that we went to they would give off a number, this is what’s being paid, they would approve it,” said Johnson. “But, it wasn’t getting paid.”

DuPont, a former banker, is determined to bridge the gap between Ontonagon’s debt and income. He says he’s already crunched the numbers.

“To catch up on MERS, we need, I’ll call it a half-million dollars more a year,” said DuPont. “So, if we do a two mill at the county level we’re able to afford that payment.”

DuPont says two millages have been proposed for voters on the Aug. 2 ballot.

This is a proposed millage for the village of Ontonagon. It would be paid ONLY by residents...
This is a proposed millage for the village of Ontonagon. It would be paid ONLY by residents who reside within village limits. This proposal will only be voted on by residents WITHIN village limits. This village millage would fund the MERS payments.(WLUC)

He says residents only within the village will vote on a proposal of 20 mills, only to be collected at the village level. This millage would fund the village MERS payments.

This millage is proposed countywide for Ontonagon county. It will be voted on by residents...
This millage is proposed countywide for Ontonagon county. It will be voted on by residents countywide, including the village residents. This millage would fund the village MERS payments.(WLUC)

The other millage is proposed countywide at two mills. This millage would be voted on by both village and county residents. It would also fund the village MERS payments.

DuPont hopes the countywide millage is passed.

“This could go a lot of different ways, but I think the most likely scenario is we’re sued by MERS, the company we have that pension through,” said DuPont. “MERS is going to win because we have no defense, we haven’t made the payments.”

Johnson encourages people to stay informed and active with this issue.

“Here we are at the end, they’re going thanks for finally getting the truth out,” said Johnson. “Well, we had the truth out years ago and nobody wanted to pay attention. You have to get involved, or else we’re done.”

The public is encouraged to attend the next village council meeting on June 13 at 5:00 p.m.

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