Budget Transmittal Letter
City Manager's FY 2023 Budget Transmittal Letter
Fiscal Year 2023 Budget Transmittal Letter
To: Mayor Anderson, Vice Mayor Cooney, and City Commissioners
From: James K. Ritsema, ICMA-CM, City Manager
Subject: Fiscal Year 2023 Budget
Date: December 1, 2022
I am pleased to present to you the Fiscal Year 2023 Budget. This budget reflects our continued commitment to becoming a High-Performance Organization and encompasses the community’s values and goals included in the Imagine Kalamazoo 2025 (IK2025) Strategic Vision.
Our efforts are paying dividends with six consecutive Budgets and Five-Year Fiscal Plans reflecting the development of staffing capacity, equipment, and capital investment to realize high-impact services and projects without draining critical reserves or budget cutting. We are able to achieve this milestone and increase services to the community while recovering from the COVID-19 pandemic. Moreover, this budget reflects continued support from the Foundation for Excellence (FFE) to stabilize our budget, reduce property taxes, and implement aspirational projects and programming.
On July 17, 2017, the City Commission adopted a new Strategic Vision, IK2025, which set forth ten strategic goals. The Administration and the Commission use these goals to guide our work, strategies and plans as we implement the community’s vision. The ten strategic goals are:
Shared Prosperity – Abundant opportunities for all people to prosper.
Connected City – A city that is networked for walking, biking, riding, and driving.
Inviting Public Places – Parks, arts, culture, and vibrant streets.
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 that help 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 – 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 sustainable way.
From Vision to Action
Multi-year plans are flowing from the Strategic Vision and Master Plan documents to guide our City’s capital planning, resource and programmatic prioritization, operational focus, and tactical decision-making through the 10:5:1 Vision Alignment Strategy.
The proposed 2023 budget solidifies IK2025 in our departmental work plans and drives action to achieve the vision. We have created strategic goal maps for each of the nine community goals and one for our organization called “Good Governance.” Each goal map includes action items for each of the sub goals. These action items translate goals to strategies and tactics that span the entire organization.
We will continue to fuel this transformation with objective data, meaningful and purpose-driven measurement, program evaluation, continuous improvement, and positive adaptation.
American Rescue Plan Act (ARPA)
In 2021, the City of Kalamazoo was allocated $38.9 million in American Rescue Plan Act funding to meet pandemic response needs and rebuild a stronger, and more equitable economy as the country recovers. Five major categories of spending were indicated by the U.S. Treasury.
- Support public health expenditures
- Address negative economic impacts caused by the public health emergency
- Replace lost public sector revenue
- Provide premium pay for essential workers
- Invest in water, sewer, and broadband infrastructure
IK2025 has focused our vision towards allocating these funds within Treasury’s guidelines. The 2023 budget proposes projects totaling over $13.1 million and lays out a plan to utilize the full allocation through 2026.
Foundation For Excellence (FFE)
The Kalamazoo Foundation for Excellence (FFE) was created in 2017 by the City Commission’s adoption of FFE Articles of Incorporation in order to address systemic challenges to the prosperity. The Mission of the FFE is to support the goals of the City of Kalamazoo, fund aspirational investments in the city, and empower Kalamazoo residents to achieve the lives they want for themselves and their families. The FFE operates in an exclusive financial relationship with the City in a nationally unique model. Philanthropic donations are received into the FFE endowment, which in turn generates a grant to the City each year. FFE funds directly support City departments in their work, often conducted in partnerships with external service providers whose missions align with the Imagine Kalamazoo 2025 Strategic Vision and other adopted City plans.
Every meeting welcomes the public and features an opportunity for comment. The Board of Directors is comprised of fifteen voting members, including small business owners, community organizers, artists, faith leaders, and a wide array of engaged professionals that represent important sectors such as healthcare, education, and business. Significant ongoing effort is undertaken to cultivate a Board that is representative of the community and will add unique insights into every facet of Kalamazoo.
The Board selection process includes convening members of stakeholder groups to prioritize candidates and ultimately results in a recommended slate achieving diverse abilities to conduct the duties of the board, diversity across sectors of the economy and culture, and diversity of perspectives. Five board members are City Directors, comprised of the current Mayor, City Manager, two City Commissioners, and an At Large Director chosen by the City Commission. Additionally, former Mayor Bobby J. Hopewell was given a non-voting lifetime emeritus role by the Board in recognition of his unique contribution to co-founding the FFE.
With the 2023 fiscal year the FFE will have contributed over $168 million to the City’s budget since 2017 in the three key areas of budget stabilization, tax reduction, and aspirational projects.
The FFE has reduced the City’s property tax millage, beginning in 2017, from 19.2705 mills to 12.0000 mills (a mill is 1/1000th of a property’s Taxable Value, which is approximately 50-percent of a property’s market value); this tax reduction will deliver over $13.99 million of relief to Kalamazoo property taxpayers in 2022 alone and make Kalamazoo a more attractive place for businesses and residents to locate long term.
In 2023, the FFE will provide $4.51 million for General Fund budget balancing. This amount will track the inflation of local government expenses based on the rolling two-year Consumers Price Index. The FFE Articles of Incorporation state that this grant is intended to "create long-term fiscal stability/sustainability given new realities; build a high-performance organizational culture by engaging the workforce; (and) continue to provide exceptional 'core' municipal services."
Finally, the FFE has contributed $48 million for aspirational projects since 2017. “Aspirational Projects” align with the focus areas of the FFE and the IK2025 Strategic Vision and Master Plan. They are approved following the recommendation of the City Manager and approval by the City Commission to accomplish the following:
- address generational poverty, promote youth development, and remove barriers to employment opportunities for youth, under-employed and unemployed individuals, and persons seeking re-entry to the Kalamazoo community.
- address infrastructure needs identified by ongoing studies and the Capital Improvement Program; and
- reinvest in public spaces to attract and connect people.
The City has already embarked on exciting and impactful projects and programs starting in 2017 as approved each year by the City Commission. We have dedicated a page in our budget book for the 2023 FFE Aspirational Budget.
Last year, we as a City were proud to announce a $400 million endowment commitment. This gift will be made over ten (10) years and establish the $500 million endowment to sustain the FFE’s impact in perpetuity. The FFE will continue to carry forward a bold vision for the City of Kalamazoo and fulfill the goals of Imagine Kalamazoo 2025 and future strategic visioning.
I would like to thank the Budget team of Jeff Chamberlain, Laura Lam, Steve Vicenzi, Stephanie Radant, Melissa Fuller, Jennifer Clark, Steve Brown, Kerry Lyn Williams, the entire Cabinet, and key budget personnel across the City for their dedication to this process.
In addition, I would like to thank the 54th City Commission for your vision, leadership, direction, and support. Pursuant to Section 43(f) of the City of Kalamazoo Charter, the following summary and Fiscal Year 2023 Budget is presented for your consideration.
James K. Ritsema, ICMA-CM, City Manager