(COLDWATER) - Coldwater city officials presented proposed fiscal year 2027 operating budgets to the City Council during a public hearing Tuesday night.
The budgets cover the city's general operating funds, special revenue funds, tax increment financing authorities and the Coldwater Board of Public Utilities.
In a letter to council, City Manager Keith Baker said the current 2026 fiscal year began with a planned deficit of $197,000 but is now projected to end with an $82,000 surplus.
Baker said stronger-than-expected revenues from permits, interest earnings, grants and a $571,000 distribution from Michigan's Local Community Stabilization Authority helped improve the city's financial position. The city is expected to finish the fiscal year with a fund balance of approximately $7.6 million, exceeding 50 percent of expenditures.
The proposed 2027 budget includes a projected deficit of about $165,000. The spending plan includes $560,000 in capital expenditures and $125,000 for sidewalk projects.
Property taxes for the average residential homeowner are expected to increase by 2.7 percent. Overall property tax revenue is projected to rise 4.4 percent because of new development, reaching approximately $5.6 million, including Local Community Stabilization Authority reimbursements.
Revenue from the Board of Public Utilities' payment in lieu of taxes is projected to increase 4.8 percent to $3.95 million. State shared revenue is expected to decline 2.5 percent to $1.53 million.
Wages and benefits, which account for more than 60 percent of General Fund expenditures, are budgeted to increase by roughly 5 percent to accommodate additional positions. Baker noted that some one-time expenses included in the 2026 budget will not continue into 2027.
Planned capital projects include phase two of the Rotary Park project, downtown U.S. 12 streetscape improvements, recreation center upgrades, new public safety and municipal services vehicles, and infrastructure work at the cemetery.
The city also plans several major infrastructure projects. The 2027 road program includes full reconstruction of East and West Pearl Street and portions of Morse and Hudson streets. Those projects will be funded in part through 2025 road bonds and will be accompanied by mill-and-repave work and water and wastewater system upgrades.
An expansion of the city's wastewater treatment facility is also underway. Officials said a significant debt issuance is planned later in 2027 and will be repaid through system revenues.
City officials noted ongoing financial challenges, including a second consecutive Headlee rollback that will reduce operating millage revenue and uncertainty surrounding future Local Community Stabilization Authority surplus distributions and state funding.
Despite those concerns, city officials said Coldwater remains in a strong short-term financial position and plans to continue managing costs conservatively while supporting growth tied to industrial expansion.