Howell City Council Approves New Budget Stabilization Fund
July 6, 2021
By Jessica Mathews/News@whmi.com
The Howell City Council has adopted a resolution to create a new budget stabilization fund.
The new budget stabilization fund can be used to cover a general fund deficit or prevent a reduction in the level of public services or in the number of employees at any time when revenues are not collected in an amount sufficient to cover budgeted expenses. The fund can also be used to cover expenses arising because of a natural disaster such as a flood, fire or tornado. If, however, federal or state funds are received to offset the expenditure, only the balance can be appropriated from this fund.
The money in the stabilization fund cannot be used for the acquisition, construction, or alteration of a facility as part of a general capital improvements program.
Once money is transferred, it can only be used for the specific approved purposes and any changes need a super-majority vote. Council can choose the level of funding for the stabilization prior to adoption, which was discussed at a recent meeting.
The City is receiving $530,000 in state revenue sharing funds from the state, which Mayor Nick Proctor reminded they do not include in the budget at all and only count the revenues they’re positive the City will receive. Once money is actually received from the state, then Council decides what to do with it. It’s done to avoid a structural budget deficit, which Proctor says was occasionally incurred when trying to guess what funds would be coming from the state. More often than not, he noted it was a lot lower than projected, which then put them into a structural deficit situation.
Proctor stated the new fund is intended to stabilize the budget from significant downswings in the economy. He noted that when the 2008/2009 recession hit, the city was put in a difficult position financially and there were some resulting layoffs and downsizing. Proctor said they want to avoid that in the future and the more they can save to stabilize service delivery is the intended goal.
Council ultimately approved putting $250,000 into the stabilization fund and will leave the remaining funds in the general fund for now for maximum flexibility. Future discussions will be had as to where to allocate that money, possibly for matching funds for road work. It’s anticipated at least a portion will go toward the purchase of street light posts at intersections on Clinton Street, similar to what was done on Sibley Street.