City leaders were forced to eliminate 26 positions due to ongoing budget issues related to the COVID-19 pandemic.

Leaders for the City of Battle Creek are grappling with budget shortfalls related to the ongoing pandemic. Some of the difficult decisions being made to close those deficits include eliminating 26 positions.

City Manager Rebecca Fleury and other leaders notified those team members this week, and the changes will take effect for some on Jan. 1, 2021, and for others on July 1, 2021. July 1, 2021, marks the beginning of the 2021-22 budget year.

This is the hardest thing I’ve had to do as city manager,” Fleury said. “My senior leaders have worked for months to innovate and strategize, thinking of ways we can provide services differently. These eliminations have nothing to do with our wonderful team and their skills, and everything to do with our budgetary shortfalls; I must do what is in the best interest of the city’s financial health.

The City Commission on Tuesday approved a budget amendment reflecting the position eliminations, and projects using the fund balance (the city’s rainy day fund) of $553,328 for the current fiscal year, which ends June 30, 2021.

That is significantly lower than the $4.97 million of fund balance the commission approved in the original city budget resolution. At that time, the commission asked staff to closely monitor the budget, and develop ways to reduce the use of fund balance. The commission indicated, and staff agrees, that the city cannot sustain such high use of that fund.

The savings from eliminating positions are estimated at just under $400,000, for a portion of the 2021 budget year, which started July 1. City leaders expect that amount will at least double in the budget year 2022, reflecting savings for an entire year, as well as the July 1, 2021 implementation date for some of the changes. That amount also takes into account several new city positions, and several the city seeks to fill that have been held vacant, as leaders restructure some service areas, including Assessing and Planning.

The approved amended budget includes a revenue increase of just over $4 million which is comprised of $2.47 million in CARES Act funding from the State of Michigan; revenue sharing increases of $1.1 million; and personal property tax replacement dollars totaling $430,680.

This funding helps us now, but we do not expect the same dollar amounts for fiscal year 2022,” Fleury said. “Our process to responsibly balance the city’s budget is not over, and we will watch our revenues and expenditures carefully as we move forward.

City leaders are all keeping a close eye on the city income tax which accounts for an approximate $16 million revenue stream. A shortfall could come as more and more work remotely from home. Many Michigan communities could see significant decreases in those having to pay income tax for the communities they normally commute to. Battle Creek leaders and others are working on possible legislative solutions to address those impacts.

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