In response to a recent News-Dispatch article about the city budget shortfalls, I felt the need to write this to inform the public and be a voice of reason from the City Council.

There’s been inflammatory rhetoric stating, in my opinion, the city is in financial ruin. I agree we can always look for ways to be more efficient with city finances, but I feel this can be fixed with a few changes to some procedures. No, this is not a great situation, but these issues can and will be be fixed moving forward.

Regarding the $3.6 million shortfall reported by the News-Dispatch, there are explanations I feel the public needs to be aware of. There was no stealing, fraud or any embezzlement. It was simply overestimating the expected revenues which produced cash shortfalls. Departments did not overspend expenditures set forth by the City Council- and mayor-approved budgets.

The first $1.6 million transfer in December from the Riverboat and CEDIT (County Economic Development Income Tax) funds into the general fund was needed because of the overestimating of tax dollars coming into the city, and not departments spending over what was actually budgeted for the 2019 year.

The other $1,798,000 transferred from the Riverboat and CEDIT funds in January 2020 are broken down as follows.

Fund 2002 Aviation Operating – $55,000: Due to lower than normal revenues generated from fuel sales, the aviation operation budget suffered a cash shortfall. It was not due to over-spending. In fact, this budget was so tight regarding budgeting expenses, there was no money elsewhere to be transferred to cover the shortage in fuel sales. Thus, the city needed to make a transfer to keep this fund from finishing 2019 in the red.

Fund 4002 Cumulative Capital Development – $143,000: During 2019, there was a purchase of a pumper truck in the amount of $800,000. This purchase expended a huge amount of funds at one time. After this large purchase, there was poor forecasting on the anticipated revenues to cover the expenditures.

Fund 5004 MC Employee Medical Trust Fund – $600,000: This fund was budgeted too closely to past actual expenditures. When the expenditures increase at any point in any year, the reserves in the fund are expended. This account started 2019 in the red due to rises in spending due to the city covering more catastrophic illnesses than usual. Now, with the current transfer, this will make the account solvent, and provide a cushion to absorb any unforeseen expenditures.

Fund 7002 Police Pension – $600,000; and Fund 7003 Fire Pension – $400,000: In 2008, the state passed a law where these accounts no longer received property taxes, and there were other miscellaneous expenses that were no longer reimbursed by the state. The city did not make the adjustments in 2008 to account for this lack of revenue, and over time the reserves in these funds were eaten away. Eventually these accounts ended up in the red. These transfers, along with taking into account the changes in state funding, will make these accounts solvent again and provide some reserves going forward.

Finally, I am giving this report to tell the public this is not an ideal situation, but it is not the doom and gloom that has been allowed to get out into the public. As I stated before, there was no stealing, fraud or embezzlement. There was not overspending of the council- and mayor-approved budgets, but rather an overestimation of revenues coming into the city coffers.

The city is already making the proper adjustments, and I want everyone in the public to know this is a very fixable situation, and this city will continue to move forward in the future.

Bryant Dabney, MBA, is the 1st Ward representative to the Michigan City Common Council.

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