26BUDGET(FULL-LINKED) - Flipbook - Page 31
City of Plymouth 2025 / 2026 Budget
Budget Issues
Multi-year budgeting has proven to be a valuable tool for trend analysis, allowing us to
anticipate developing issues years in advance. However, it can only shed light on systemic
problems that have been created, often by the State of Michigan, in their attempts to address
their own financial challenges. Here are the major issues that the City Manager and finance
department have grappled with in preparing this budget for the City Commission:
Continuing Revenue Shortfalls: The City continues to face ongoing limitations in
revenue growth due to constitutional restrictions under the Headlee Amendment and
Proposal A. These limitations cap our annual revenue growth at rates significantly
below actual inflation, which was 7.9% and 5.1% in the past two years, compared to
permitted revenue increases of 5% and now just 3.1% in fiscal Year 2025/26. The City
has taken the required steps to reduce the general operating millage ten out of the last
eleven years, the General Fund remains particularly vulnerable as costs rise faster
than allowable revenues, creating structural imbalances in the long term.
Capital Outlay Replacements: Although the City has received strong support from
residents through bond issues in 1997, 2007, and 2019, totaling $34 million, to support
infrastructure replacement programs, maintenance of aging City facilities, and
equipment purchases, this has strained budgets lacking stable or increasing revenue
streams.
Inflation: Inflation continues to significantly impact City operations, particularly in the
areas of vehicle and equipment procurement. While the Consumer Price Index (CPI)
currently stands at 2.8%, newly implemented tariff increases as of April 5th are
expected to drive prices higher in the coming months. Fuel, utility rates, and vendor
service costs are also rising at unsustainable levels. These financial pressures,
combined with limited flexibility in the General Fund and state-imposed restrictions
on revenue growth, continue to place added strain on the City’s ability to maintain core
service delivery.
Legacy Costs: The City eliminated its defined benefit pension plan for new hires in
1999 and transitioned to a Health Care Savings Plan in 2014, effectively eliminating the
retiree health care plan (OPEB). However, outstanding liabilities for these legacy plans
remain, totaling $4,305,843 for the pension plan and $1,206,592 for the OPEB plan.
Outstanding Debt Balances: In addition to legacy costs, the City has two outstanding
bonds totaling $7,965,000, both of which are tax-supported. The City also has $777,090
in outstanding equipment loans.
Transportation Millage Implementation: Beginning in 2026, the City will no longer
be permitted to opt out of the regional mass transportation millage (SMART), resulting
in a new tax of approximately one mill for City residents. While the service model for
Plymouth under this mandate remains unclear, the legislation removes local discretion
and imposes additional tax burdens with limited benefit clarity. City leadership is
actively coordinating with Canton Township and the Conference of Western Wayne to
pursue service alternatives and advocate for equitable resource distribution under the
new mandate.
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