UPDATE: Marquette addresses budget deficit, utility increase as new fiscal year begins

The city will have to cut into its $8 million reserve fund to cover the deficit.
Published: Sep. 25, 2023 at 9:23 PM EDT|Updated: Oct. 19, 2023 at 9:17 AM EDT
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MARQUETTE, Mich. (WLUC) - The City of Marquette is looking to address its budget deficit. The city’s new budget just took effect this month after city commissioners approved the final budget in September. The city will operate at a $631,190 deficit.

“Our revenue stream has really started to diminish. It was negatively impacted when we had some tax-based changes. We are slowly rebuilding and growing our tax base, which is long-term. What this does mean, though, is we will be spending down some of our reserves,” said Karen Kovacs, Marquette City manager.

The city will have to cut into its $8 million reserve fund to cover the deficit. Kovacs said spending reserve money will not become dire until the reserve fund reaches $4 million. The city is still looking for long-term solutions to fix the problem.

“We will be exploring the services we are providing and how we are spending our funding,” Kovacs said. “We need to look at if there are resources or services that we no longer utilize efficiently. We could find a different way to meet those services or cut back a little bit here or there.”

Kovacs said one issue the city has to consider is that half of its properties are non-taxable.

“Those are entities and organizations that add a lot of value to our community,” Kovacs said. “When you look at having to provide the services to all of our properties and residents, we are only providing it on only 50% tax base. That is a very rare instance in a lot of communities and makes it very challenging to have our largest revenue source be property taxes.

Separate from the budget, residents in Marquette will also see their water, sewer, stormwater, and solid waste utilities increase.

For an average homeowner, that jump will cost a total of $7.34 more per month. Kovacs said this increase comes after a 10-year utility rate study. The reason for the hike is to build the reserve funds for future utility projects.

“We do have maps and charts that show us where our oldest infrastructure is and making sure we address those before it becomes an issue,” Kovacs said.

Kovacs said the deficit in the city’s budget does not impact your utilities. She said your utilities are part of a separate fund.

Last published: Sep 26, 2023 9:18:41 PM

The Marquette City Commission unanimously approved its fiscal year 2024 budget at Monday’s meeting.

Marquette City Manager Karen Kovacs said Marquette will be at a $631,190 loss in 2024.

In addition to the new city budget, Kovacs said Marquette will raise its utility rates by about $7.34 per month for the average user next year. Kovacs explained this raise in the utility rate is due to a rate study that is separate from the city budget.

Until the city balances its budget, Kovacs said Marquette will have to use its general fund balance to pay for unexpected costs. The city’s 2024 budget lists its general fund balance as $8,242,686, with $6,888,869 not assigned to a specific use.

Kovacs added that while the city is operating at a loss now, Marquette’s budget plans to be back on track soon.

“If everything holds steady and is consistent, and we all know it doesn’t, we’re looking at a 5-7 year time frame to have things kind of stabilize,” Kovacs said.

She continued, “We do have things we are exploring, we are always looking at the services we do provide and looking at keeping costs down.”

Kovacs also explained that in 2024, the city plans to do heavy maintenance on some roads that are in rough shape.

Kovacs noted that this will hold the roads over until Marquette can afford to fully restore them once it effectively balances its budget.