Budgetary Updates

The 2024 budget faces pressures from continued increased inflation, capital needs, and grant programming while maintaining position allocations at levels that are sustainable long term.

The overall budget was developed utilizing the framework of 10 goal areas of Imagine Kalamazoo 2025. The City Commission identified specific goal areas to increase focus for the 2024 budget including:

• Shared Prosperity - Abundant opportunities for all people to prosper.
• Connected City - A City networked for walking, biking, riding, and driving.
• Inviting Public Places - Vibrant streets, exceptional parks, and welcoming activities.
• Environmental Responsibility - A green and healthy City.
• Safe Community - Creating a safe environment for living, working, and playing.
• Youth Development - A City with places and supports where young people thrive.
• Complete Neighborhoods - Residential areas that support the full range of people's daily needs.
• Strength Through Diversity - An inclusive City where everyone feels at home.
• Economic Vitality - A supportive infrastructure for growing businesses and stabilizing the local economy to the benefit of all.
• Good Governance - Ensuring the City organization has the capacity and resources to effectively implement the community's strategic vision in a way that is sustainable over the long term.

Starting in 2023, the City of Kalamazoo began utilizing the new State of Michigan prescribed chart of accounts. This does not affect total budgets, however, presentation of various categories has changed from 2022 to 2023.

Total Budget

The City of Kalamazoo 2024 Budget includes expenditures of $286.7 million, representing a decrease of 5.3% from the 2023 Adopted Budget total expenditures ($302 million). The citywide budget is made up of various funding groups. The highlights of the recommended spending plan are discussed below in greater detail. The decrease in expenditures is primarily due to a decrease in the City's various Capital Improvement Programs. See the Capital Improvement Program listing of the City's 2024 planned projects.

General Fund Overview

The 2024 General Fund budget has a deficit of $741,649. The deficit is intentionally budgeted for one time expenditure items in order to spend unallocated fund balance over 20% of operating revenues per City budget policies.

General Fund revenue is projected to be $81 million in the 2024 Budget, which represents an increase of 7.98% from the Adopted 2023 amount ($75 million). The three largest revenue sources for the City come from Property Taxes, State Grants, and Foundation for Excellence funding (Other Revenue). These three sources represent 78.8% of all estimated General Fund resources.

The 2024 Budgeted expenditures for the General Fund is $81.8 million, representing an overall increase of 6.95% when compared to the Adopted 2023 Budget.

The City’s programs are divided into Governance Programs and Community Programs. Governance Programs are primarily served by the City Commission Appointees, including the City Manager, City Attorney, City Clerk and Internal Auditor. The City Manager oversees the Community Programs of the City and the remaining Governance Programs. The General Fund has four departments that facilitate the majority of community programs of the City: Public Safety, Public Services, Community Planning and Economic Development, and Parks and Recreation. The remaining departments that primarily serve governance programs include: Management Services, Human Resources, Information Technology, and 311 Customer Service. Certain expenses included in the General Fund are general in nature and are therefore not assigned to a specific department or governance program.

Projected General Fund

Position Allocations

The 2024 Budget includes 697 full-time positions and 5 part time positions, for a total of 702 allocated positions. The city-wide increase in staffing is to better meet the needs of the community. The Position Comparison schedule included within this budget document provides further detail of the positions and changes by department.

Non-General Fund Overview

Major & Local Streets

The Major & Local Streets operations are primarily funded by Statewide Gas & Weight Taxes, which are apportioned to the State and Local road and transportation systems through State of Michigan Public Act 51 formulas. Act 51 revenue (as it is known) is expected to see a 7.37% increase from 2023 budgeted amounts, primarily due to increased gas tax revenues.

The Local Street Fund will require an operating subsidy of $1.39 million from the Major Street Fund for 2024. Major Streets and Local Streets are budgeted to receive $230 thousand and $86 thousand, respectively, of American Rescue Plan Act (ARPA) funds due to lost revenues from 2022. These funds will be utilized to continue to fulfill the City's streets plans.

Cemetery

Cemetery operational revenue is projected to remain steady in 2024. Operational revenues are not designed to cover operations and capital improvements, therefore a recurring subsidy from the Perpetual Care Fund supports the cemetery activity.

Solid Waste

Solid Waste operations are funded by a dedicated millage of 1.8 mills. Property Tax revenues of $4.2 million are estimated in 2024. This represents an increase of 11.26% due to anticipated increases in tax values.

Wastewater Fund

The 2024 Budget anticipates an increase in rates of approximately 12% in Wastewater rates as compared to 2023. Revenues are derived from a mix of rates and projected usage. The final budget may be amended to conform to rate consultants reviews of projected system usage and rates that were approved in 2023. The final budget may be amended to conform to rate consultants reviews of projected system usage and rates that were approved in 2023.

Water Fund

The 2024 Budget anticipates an increase of approximately 6% in Water rates as compared to 2023. Rates are dependent on final ratemaking calculations and will be presented in December 2023 for City Commission action. The final budget may be amended to conform to rate consultants reviews of projected system usage and rates that were approved in 2023.

Capital Improvements

General Fund Capital

General capital projects, which are funded in the Capital Improvements Program (CIP) Fund, total $8.5 million. Capital projects in the CIP Fund include $1.6 million in heavy equipment and vehicular equipment, $2.9 million for farmers market and park improvements, and $3.9 million for facilities and improvements. These projects are supported by revenues from bonding, grants, and on hand reserves.

The General Fund transfers funds annually to cover the debt service payments and funding for cash funded projects required by the City’s General Capital Improvement program that is not otherwise funded by other sources. In 2024, the total transfer is $5.4 million as compared to $5.6 million in 2023 adopted transfers.

The Five-Year Fiscal Plan for the Capital Improvement Fund is included in the Budget Summary section of this budget document.

Local Streets

Improvements to various local streets total $2.1 million in 2024. The capital improvements are to be funded with $432 thousand of new capital improvement bonds, $840 thousand from state grants, and $810 thousand in American Rescue Plan Act funds.

Major Streets

Improvements to various major streets total $6.2 million in 2024. The capital improvements are to be funded with $5.4 million in new capital improvement bonds, $473 thousand federally funded, and $320 thousand in funds from the State of Michigan.

Water & Wastewater

Capital improvements of $13.9 million and $46.9 million are planned in the Wastewater and Water Funds, respectively. Capital investment in the Wastewater and Water systems is necessary to ensure the supply and quality of drinking water and the flow and treatment of sanitary sewer. This includes new & replacement mains, service connections, hydrants, meters, pumping station upgrades, capital maintenance, and improvement of existing infrastructure.