TECUMSEH — Tecumseh City Council unanimously passed Monday its proposed fiscal year 2020-2021 budget and millage rate, incorporating cuts that were required in light of expected revenue declines as a result of the coronavirus pandemic.

Prior to voting to approve the budget, the council held a mandatory public hearing. While council members attended the meeting in person — sitting at least six feet apart from each other — there were no audience members. The meeting was broadcast to residents using GoToMeeting.

There were no comments from citizens or council members — in person or remotely — about the budget and the public hearing ended after four minutes.

In his introduction, city manager Dan Swallow pointed to a few minor changes to the budget since it was presented to the council April 20.

“… The transfers out from the general fund is increased slightly. Why is that? Some of the funds were a little low in fund balance and with some uncertain revenue sources for the coming fiscal year, I'm proposing we ... transfer a little bit from the general fund to those other funds,” Swallow told the council. “For example, Brownfield Authority, which is doing some work in the old Tecumseh Products site, we want to make sure that there's funding available if we need it for there, even though the revenue generated in that fund may not be there immediately. 

“So that was one minor change as example of why that 'transfers out' went up a little bit. Of course, that increases the overall total general fund expenditures slightly in the budget.”

The total city expenditures are expected to be $6,114,042 — out of which $1,195,254 are transfers out of fund balance. Meanwhile, total revenues are expected to be $5,834,676. Altogether, the city expects to be in the red by approximately $279,366, which it will need to take out of its fund balance to balance the budget, something Swallow wrote was unsustainable for the long term.

Department budget line items had been cut by 20% and 10%, but Swallow wrote in the budget description that it’s likely that city revenues may decline further and more expenditures will need to be cut. These adjustments would be made through budget amendments throughout the year.

“Constitutional state shared revenue, water and sewer fees, building/trade permit fees, TCA (Tecumseh Center for the Arts) ticket sales, and parks and recreation program revenues will be the first revenue sources to be impacted, followed later by potential declines in property taxes. It is really too early in the crisis to fully evaluate the impacts,” Swallow wrote.

Expected 20% cut line items included the constitutional state shared revenue, which was cut by $149,695; building and trade permit fees by $32,000; TCA ticket sales and rentals by $29,200; and parks and recreation programs by $31,720. Water and sewer and Act 51 gas tax revenue projections were cut by 10%.

“The city manager is currently working with the department heads to reduce expenditures to minimize the draw down in fund balances,” Swallow wrote. “The goal is to make very strategic cuts which will have minimal impacts on city services and to retain staff to the maximum extent practical. Therefore, this budget will need to be amended further throughout the fiscal year as we know more about the COVID-19 crisis impacts.”

Another change from the budget’s original presentation was the adjustment in the city’s millage rate, which is used to generate the annual tax bill for residents and has to be adopted at the same time as the budget.

Swallow said that according to the latest calculations by city assessor Amanda Lacelle, there will be a small rollback because of the Headlee Amendment.

The Headlee Amendment to the state constitution requires cities to reduce — or roll back — its millage rates if overall city revenues grow faster than the rate of inflation.

“So even tough it’s kind of a unique time, the taxable values were already set at the end of 2019. And so based on that, we would have a small rollback,” Swallow said.

The proposed rate is 14.2701 mills to be levied on real and personal property in Tecumseh — about a tenth of a mill less than the previous year.

“So a little bit smaller tax bill, not much, but a little bit smaller tax bill for our taxpayers as we go into this next fiscal year,” he said.

The budget and millage was put on the floor for a vote by council member Ron Wimple and supported by council member Gary Naugle.

“As I have said in the past, this will definitely be a moving budget for the next year,” Mayor Jack Baker said during the budget discussion. “But I have complete faith in not only the administration, but in my fellow council members, that we will make the right, the difficult and correct decisions that need to be made as we go through this next fiscal year.”

The new budget goes into effect on July 1 and can be found in its entirety on the city’s website, www.mytecumseh.org.