2. Financial Troubles

The dour village lawyer and mayor, Paul Waters has a lot on his mind as he leaves his new colonial house on the golf course south of Pineville. He’s heading to the Thursday, July 11 meeting of the City Council. He expects it to be warm and stuffy in the crowded conference room so he’s wearing his lightweight Ermenegildo Zegna suit.

The City Treasurer alerted him a few weeks earlier the village’s finances are bleak. He’s been trying to decide how to handle the situation. Being the mayor has been good for him. It’s enabled him to capitalize on situations allowing him, with his Cousin Glen Lund’s devious help, to buy and sell land at big profits. His income from being mayor and his law practice in town is too small to keep up his big house, membership in the golf club, and continue buying the luxury cars and designer clothes he desires. Not solving the financial problems in ways voters approve could lead to losing the next election for mayor. He knows he can control the City Council, but he needs to decide how to direct them. 

It’s no comfort most other small towns in the rural part of northern Michigan are shrinking. Towns on Lake Huron, like Pineville, enjoyed a boom when salmon were introduced into the Great Lakes. Now, with the salmon mostly gone the village is no longer drawing hundreds of fishermen every summer weekend. As the mayor drives his black Mercedes slowly down shady Main Street he sees the result of having few fishermen visiting. Without the money from the fishermen a few local businesses have closed. He’s worried more may follow.

He arrives at the City-County Building, which everyone still calls the Courthouse, and goes straight to the conference room where the council members and a few locals are gathered. He greets everyone and glancing at his Rolex, sees it’s time for the meeting to start. He calls the meeting of the City Council to order and announces, “I’ve asked Marylynn Bates, my law office secretary to join us tonight to fill in for our Council Secretary, Marjorie White. Marjorie resigned due to her recent health problems. Marylynn has agreed to keep the minutes until we elect a new secretary. Let me offer a brief prayer before we begin.” 

After his prayer, Waters continues, “Marylynn emailed each of you the minutes of last week’s meeting. Are there any corrections or additions?” 

He pauses, and then continues, “Seeing none is there a motion to approve the minutes?”

“I move the minutes to be approved,” says Councilwoman Nancy Wells, the mayor’s most faithful supporter on the council. 

“I second the motion,” adds Councilman Jack Gauthier, another faithful supporter.

“All in favor say aye, opposed nay, motion approved,” Mayor Waters says quickly then adds, “The only item on the agenda tonight is the Treasurer’s annual report. For reasons I’ve never understood, our fiscal year ends at the end of June. Our Treasurer will report on how we did against last year’s budget and offer a budget for this coming fiscal year. Ralph, the floor is yours.”

“Thank you, Mayor Waters. Here is the summary statement for last year,” The white-haired Treasurer Ralph Hess says as he passes a single sheet of paper to each council member and Marylynn Bates.

“As you see at the bottom, we ran a deficit of $302,400 against our planned budget and $393,250 against our revenues. I’m sad to say we were forced to dip into our reserves to cover the deficit,” Ralph informs the Council.

“We’ve never had a deficit this big before, what happened last year?” asks Councilwoman Wells.

“As you might guess, it’s a combination of factors. The income from property taxes and fees is down from the previous year. People lost their jobs with businesses closing. They’ve moved and stopped paying their taxes. Total back taxes increased. And expenses increased significantly. Some, like the costs for street lighting, is due to inflation.  Maintenance costs increased for our aging water and sewer systems. We had more snow last winter than usual so street plowing costs were up. A combination of things increased our budget deficit compared to previous years. Now, concerning next year’s budget, I’m afraid it’s not good news. I learned six weeks ago the county is increasing its charges to the city for our share of costs for the sheriff’s office, fire department, EMS services, and street maintenance. Our village is too small to support having independent police, fire, road maintenance, and EMS services. We are at the mercy of the county for the costs of these shared services,” Ralph reports in a serious voice.

After pausing to let the council members absorb his report, he continues, “As soon as I learned of the increased expenses we are facing next year I alerted the mayor. He told me the city can ill afford to raise taxes due to our businesses already struggling because we get few fishermen now. That and higher gas prices have reduced tourism. He directed me to scrub every budget item and review every income source. I told the mayor this would require more work than I could accomplish by myself in time for this annual report. He directed me to hire Glen Lund, our City Tax Assessor as a part-time Assistant Treasurer, which I have done. Glen and I did as the mayor directed. The result is the budget for next year I am passing out now. I asked Glen to come to this meeting, but he begged off. Something about his wife being upset if he goes out at night now.”

Councilman Gauthier points at the proposed budget paper and says, “This budget has an even bigger deficit than this year. Do we have the reserves to cover it?”

Hess replies, “Barely. If we have many unexpected increases in expenses we’ll deplete all our reserves.”

Mayor Waters interjects, “You see the problem our village is facing. We can’t risk adopting this unbalanced budget. I have directed Ralph and Glen to scrub every income and expense item again and to prepare a list of possible belt-tightening measures for this council to consider. They have promised to finish this second look in two weeks. In the meantime I want each of you to review this budget for your suggestions on where we can cut expenses or increase revenues.”

“If we can’t increase taxes, can we increase our fee income?” Councilwoman Wells asks.

Ralph answers, “We don’t have many sources of fee income. The license fees for pets all go to support the County Animal Shelter. The fees for recording deeds are too small to have any benefit from acceptable increases. We have always avoided charging license fees to our businesses. Many already pay the State for their licenses.”

“What about asking some of the organizations earning money from tourists at our 4th of July celebration to share their earnings with the city? I hear the Art Society made twice as much as usual this year. Shouldn’t they share with the city?” Councilman Gauthier asks.

The mayor replies, “That’s a reasonable question, Jack. Let’s include it with any other ideas you come up with before we revisit this budget in two weeks. Before the next meeting, I want each of us to tell our fellow villagers we have financial issues. Listen to their comments and questions. We need the villager’s support when we make the difficult decisions to adopt a painful budget. Now, unless anyone has a pressing issue for us I’ll entertain a motion to adjourn.”

“So moved,” replies Councilwoman Wells.

“Second,” adds Councilman Gauthier.

The mayor says, “All in favor say aye, opposed nay. We are adjourned.