Budget for Fiscal Year 2026-2027

Annual Budget Fiscal Year July 1, 2026 – June 30, 2027 74

CITY OF SAUGATUCK ANNUAL BUDGET FOR THE FISCAL YEAR

July 1, 2026 – June 30, 2027 102 Butler Street PO Box 86 Saugatuck, MI 49453 (269) 857-2603 phone FOR Saugatuck City Council Holly Anderson, Mayor Joe Clark, Mayor Pro Tem Scott Dean, Council Member Russ Gardner, Council Member Gregory Muncey, Council Member Chris Peterson, Council Member Lauren Stanton, Council Member PREPARED BY Ryan Cummins, City Manager Nicole Bredeweg, City Treasurer/Finance Director

TABLE OF CONTENTS Budget Transmittal Memo and Presentation

1-37

Resolution Adopting General Appropriations Act

38-43

Budget Report

44-80

TO:

City Council

FROM:

Ryan Cummins, City Manager

DATE:

June 8, 2026

SUBJECT:

Recommended Budget for Fiscal Year 2026/2027

INTRODUCTION: In accordance with the City Charter, I am pleased to present the recommended budget for the City of Saugatuck for fiscal year 2026-2027. This budget reflects the City Council's and my commitment to responsible fiscal management while ensuring the continued delivery of essential services to our residents and visitors. BUDGET DEVELOPMENT PROCESS: The budget presented here is the culmination of a collaborative effort. It considers the City Council’s goals and priorities, public feedback, community needs, essential services, and anticipated revenues. ESTABLISHED GOALS: • Operations, Public Health and Safety - We will maintain a culture of fiscal responsibility and friendly, honest, and transparent government. We will partner with the Fire District and Sheriff’s office to ensure we take the right measures to keep our community safe. • Infrastructure - We will focus on maintaining and improving current infrastructure while planning and saving for future needs. • Parks and Recreation - We understand that our natural resources are the foundation of residents’ quality of life and our tourism economy and will invest to sustain and enhance them. BUDGET HIGHLIGHTS: The attached presentation highlights the proposed budget which involves the following: •

Maintaining a Low Operating Millage Rate: The proposed operating millage rate for next fiscal year is 2.1784 mills lower than it was in FY 2016/17, an 18% decrease. Comparing FY 2016/17 to FY 2025/26, the City’s overall millage rate has decreased significantly, down 2.5730 mills, or 16.27%, driven largely by Headlee rollbacks. The

proposed operating rate remains lower than most nearby cities, reflecting the City’s continued commitment to fiscal responsibility. •

Healthy Fund Balances: The proposed budget proposes the use of reserves to fund several capital projects while maintaining adequate reserves for a “rainy day” far above the current policy goal.

Strategic Investments: The budget allocates resources for infrastructure investments including Mt. Baldhead, Village Square, Blue Star Trail, restroom upgrades, sidewalk repairs, Maple Street (water main, lead service lines, sidewalk, stormwater, and road replacement) and Elizabeth Street (water main, sanitary repairs, lead service lines, sidewalk improvements and road replacement). The budget provides for staff wage increases, continued invasive species treatment, completing the master plan, finishing the parking study, website redesign, deer management, and wayfinding signage. It also invests in continued planning and design for future projects including Park Street, Grant Street, and City Hall interior.

PUBLIC HEARING AND BUDGET ADOPTION: A public hearing on the final budget is required to be held as provided by law and has been scheduled for June 8, 2026. The City Council is required, not later than June 30 of each year, to adopt by resolution a final budget for the ensuing fiscal year and make appropriations. An appropriation should be viewed as an authorization to spend and not a mandate to spend. An appropriation provides authority, not cash. It indicates that, if the revenue is there, it may be spent in a certain way. The budget, while often viewed as a financial instrument, is first a planning and management tool and second an accounting device. SAMPLE MOTION: Motion to approve Resolution No. 260608-B to adopt the general appropriations act for fiscal year 2026-2027.

Proposed Budget Presentation Fiscal Year 2026-2027

The overriding purpose of the budget can be defined in three key points:

PURPOSE AND DEVELOPMENT

 Allocation of public resources over time and among public operations.  Accountability to the public for the expenditure of public funds.  Maintenance of financial stability of the City of Saugatuck.

Master Plan Survey– Completed in October

City Council Sets Priorities for Year – Completed in February

City Council Review/Approval of Capital Improvement Plan – February/March

City Council Workshop on Proposed Budget – April 22

Individual Meetings with Council Members to Answer Questions – As Needed

Additional Budget Workshops – As Needed

Department Head Submittal of Requested Budget to City Manager – Completed in March

City Manager Submittal to City Council – Completed in April

Public Hearing Prior to Adoption – June 8

Council Adoption of Budget – Required No Later Than June 30

BUDGET PROCESS

CITY AT A GLANCE Census Population: 865 Square Miles: 1.47 Housing Units: 916 Median Household Income: $113,309 Median Age: 58 Parks: 500 acres  Oval Beach, Saugatuck Harbor Natural Area, Mt. Baldhead , Coghlin Park, Jones Park, Cook Park, Wicks Park, Willow Park, Peterson Preserve, Village Square Park, and Saugatuck Wilds Nature Preserve. Roads: 11.5 miles. Water Utilities: 298 curb stop valves, 138 fire hydrants, 302 system valves, and 14.6 miles of main. Sanitary Sewer Utilities: 17 lift stations, 259 manholes, and 4.8 miles of gravity/force main. Storm Sewer Utilities: 84 manholes, 68 catch basins, 51 outfalls and 6.7 miles of gravity main.

FINANCIAL HEALTH  The Michigan Department of Treasury maintains a community financial dashboard. Here are our 2025 rankings: -General Fund Ratio: 4th of 239 (98th percentile) -Governmental Net Position: 2nd of 240 (99th percentile)  Pension Funding -Our latest actuarial report from MERS shows the funding percentage at 113%  Debt -Amount Outstanding – $1,343,000 -Debt Millage – 1.4 mills (ends FY 28/29)

Our Organization

Citizens of Saugatuck

City Council

City Attorney (Contracted)

Director of Public Works

Oval Beach Manager

Beach Patrol and Gate Attendant (13 Seasonal)

DPW Supervisor

Engineer (Contracted)

Administrative/Project Coordinator

Equipment Operator/Maintenance Worker (3 FT, 1 PT, 3 Seasonal)

City Treasurer/Finance Officer

City Manager

City Clerk

Boards/Commissions

Sheriff’s Office (Contracted)

Director of Planning and Zoning

Deputy Clerk/Administrative Assistant

Planner (Contracted)

Election Workers

Building Department (Contracted)

City Assessor (Contracted)

Code Enforcement (Contracted)

WHERE WILL EACH TAX DOLLAR GO? TAXING ENTITY CITY OF SAUGATUCK OPERATING CITY OF SAUGATUCK ROADS CITY OF SAUGATUCK ROAD DEBT SCHOOL STATE EDUCATION SCHOOL OPERATING* SCHOOL DEBT SCHOOL BLDG/SITE SCHOOL RECREATION SCHOOL INTERMEDIATE DISTRICT ALLEGAN COUNTY OPERATING ALLEGAN COUNTY MED CARE ALLEGAN COUNTY CONSERVATION ALLEGAN COUNTY ROADS ALLEGAN COUNTY SENIORS INTERURBAN TRANSIT AUTHORITY DISTRICT LIBRARY DISTRICT LIBRARY DEBT FIRE DISTRICT

TOTAL MILLAGE RATE 9.9774 1.6413 1.4000 6.0000 18.000 3.4500 0.5000 0.2405 6.3164 5.1619 0.2394 0.0957

VOTED EXPIRES 2031 VOTED EXPIRES 2028 *Non-Principal Residence Only

0.9870 0.4823 0.4798 0.4284 0.2381 2.9000

Millage Rate Changes Over Time City Millage Rates • Comparing FY 16/17 to FY 25/26, overall City millage rates decreased significantly. • Down 2.5730 mills (-16.27%) • Driven largely by Headlee rollbacks Non-City Millage Rates • During that same period: • County and regional millages increased • County Operating: +.5117 mills • ISD: +.8194 mills • Fire District increased • +1.2000 mills • New Millages • Library Debt: .2381 • County Medical Care: .2394 • County Conservation: .0957 • Total New/Additional: +2.0333 mills

Taxing Jurisdiction CITY OPERATING (CHARTER) CITY ROADS CITY ROAD DEBT Total City of Saugatuck

FY 16/17 FY 25/26 Difference in Millage Rate Millage Rate Mills % Difference 12.1558 10.1676 -1.9882 -16.36% 1.7974 1.6726 -0.1248 -6.94% 1.8600 1.4000 -0.4600 -24.73% 15.8132 13.2402 -2.5730 -16.27%

SCHOOL STATE EDUCATION SCHOOL DEBT SCHOOL BLDG/SITE SCHOOL RECREATION SCHOOL INTERMEDIATE DISTRICT ALLEGAN COUNTY OPERATING ALLEGAN COUNTY ROADS ALLEGAN COUNTY SENIORS INTERURBAN TRANSIT AUTHORITY DISTRICT LIBRARY FIRE DISTRICT SCHOOL SUPPL LIBRARY DEBT ALLEGAN COUNTY MED CARE ALLEGAN COUNTY CONSERVATION

6.0000 3.5900 0.4972 0.2485 5.4970 4.6502 0.9984 0.4353 0.4968 0.4203 1.7000 0.9337 0.0000 0.0000 0.0000

6.0000 3.4500 0.4812 0.2405 6.3164 5.1619 0.9870 0.4823 0.4798 0.4284 2.9000 0.0000 0.2381 0.2394 0.0957

0.0000 -0.1400 -0.0160 -0.0080 0.8194 0.5117 -0.0114 0.0470 -0.0170 0.0081 1.2000 -0.9337 0.2381 0.2394 0.0957

0.00% -3.90% -3.22% -3.22% 14.91% 11.00% -1.14% 10.80% -3.42% 1.93% 70.59% Fell Off New New New

Total Other Taxing Jurisdictions (excluding school operating)

25.4674

27.5007

2.0333

7.98%

Not inherently bad—many increases reflect legitimate needs or voter-approved services—but this is important context when comparing overall tax trends.

OPERATING MILLAGE RATE HISTORY • • • •

From at least 1996 to 2017, the operating millage rate for the City was always 12 mills or higher. The City’s operating millage rate has declined 9 out of the last 10 years due to Headlee Amendment rollbacks. The operating millage rate for next fiscal year is 2.1784 mills (18% lower) than it was in FY 16/17. Based on current taxable values, this equates to $579,220 less revenue annually compared to the original FY 16/17 rate (if not rolled back or reduced). 14.0000

12.0000

10.0000

8.0000

6.0000

4.0000

2.0000

0.0000 Millage Rate

FY 14/15

FY 15/16

FY 16/17

FY 17/18

FY 18/19

FY 19/20

FY 20/21

FY 21/22

FY 22/23

FY 23/24

FY 24/25

FY 25/26

FY 26/27

12.0000

12.0000

12.1558

11.9467

11.9013

11.4780

11.3928

11.0348

10.8030

10.8030

10.5880

10.1676

9.9774

HOW DOES OUR OPERATING TAX RATE COMPARE TO OTHER AREA CITIES? 16.3607

Wayland

16.1306

Allegan 14.5152

Fennville

13.9743

Plainwell

13.7778

Holland

13.0818

Douglas 10.8352

Otsego

Saugatuck

South Haven

9.9774

9.5124

Largest Fund

FUNDS The City of Saugatuck currently has seven separate funds.

101 - GENERAL FUND

Government resources and activities not listed in other funds

202 - MAJOR STREETS

Maintenance and construction of the Major Streets System

203 - LOCAL STREETS

Maintenance and construction of the Local Streets System

301 - DEBT SERVICE

Account for payment of principal and interest on City's debt

496 and 497 – WATER and SEWER

Fees collected for water and sewer and capital improvements to systems.

661 - MOTOR POOL

Maintenance of the Motor Vehicle Fleet

CITY REVENUE BY FUND $1,113,500 8.99%

$308,800 2.49%

General

$155,000 1.25%

Major Streets

$343,890 2.78%

Local Streets Debt Service

$2,377,850 19.21%

Sewer

$589,350 4.76%

$7,492,510 60.52%

Water Motor Pool

GENERAL FUND The General Fund is the City’s general operating fund and accounts for all financial resources of the general government, except for those required to be accounted for in another fund. The general fund is made up of sixteen (16) departments. These departments include:

101 COUNCIL 173 CITY ADMINISTRATION 215 CITY CLERK 253 CITY TREASURER 257 ASSESSING 262 ELECTIONS 265 CITY HALL 301 POLICE

441 PUBLIC WORKS 721 PLANNING/ZONING 723 HISTORIC DISTRICT COMMISSION 730 HARBOR 751 PARKS & RECREATION 756 OVAL BEACH 760 SPEAR BOAT LAUNCH 965 TRANSFERS

Main Budget Message Remains

• Maintain, repair, and replace what you have. • Community survey results show infrastructure as the top priority for the fiscal year. • Projects, projects, projects!

GENERAL FUND BALANCE City savings/cash reserves. Audited Total End of Last FY: $7,444,857 • Committed • Parks - $1,000,000 • Policy decision. We haven’t needed to use fund balance for parks projects, but Council could choose to reduce. • Rose Garden - $98,001 • Spear Street - $26,942 • Unassigned: $ 6,319,914

Very healthy. • Important to strike the right balance of keeping adequate reserves for a “rainy day” and investing in much needed maintenance and improvement of City infrastructure. • Current Policy – Keep at least $1,000,000 total in reserves.

General Fund Balance Over Time 8,000,000 7,444,857 7,000,000

7,187,834

6,258,658

6,000,000

5,762,779

5,857,755 5,568,224

5,180,724 5,000,000 Dollars

4,199,679 4,000,000

3,195,293

3,000,000 2,294,653 2,000,000

1,994,962

1,000,000

0 2016-2017

2017-2018

2018-2019

2019-2020

2020-2021

2021-2022

2022-2023

2023-2024

2024-2025

2025-2026 Projected

2026-2027 Est.

General

1,994,962

2,294,653

3,195,293

4,199,679

5,180,724

5,762,779

5,857,755

6,258,658

7,444,857

7,187,834

5,568,224

GF Policy Level

1,000,000

1,000,000

1,000,000

1,000,000

1,000,000

1,000,000

1,000,000

1,000,000

1,000,000

1,000,000

1,000,000

Budgeted vs Actual Addition or Use of General Fund Balance 1,500,000

1,000,000

500,000

-500,000

-1,000,000

-1,500,000

-2,000,000 2015-2016

2016-2017

2017-2018

2018-2019

2019-2020

2020-2021

2021-2022

2022-2023

2023-2024

2024-2025

2025-2026 Projected

Budgeted Add or Use

-167,105

-91,500

-506,975

-387,500

-465,085

-1,573,280

Actual Add or Use

178,884

-84,130

299,691

900,640

1,004,386

981,045

582,055

94,976

400,903

1,186,199

-257,023

General Fund Revenue Highlights Estimated Operating Millage Rate Reduction to: 9.9774

• Decrease of .1902 mills (1.87%) due to Headlee Rollback.

Real Property Tax Revenue Increase of $100,000

• Driven largely by a 2.7% CPI increase and new construction. Without the Headlee rollback, revenue would be $50,572 higher.

Permit Revenue Continues to be Up Over Prior Years - $145,000

• Largely due to zoning and historic district fee schedule adjustments in 2023, street dining, and increased fees and renewal frequency for short-term rentals.

Interest Income - $150,000

• Return on cash reserves continues to produce interest income. Interest rate reductions will have an impact.

Oval Beach - $660,000

• Increase in daily and seasonal pass fee in 2024 has increased revenue.

Federal and Other Grants $1,740,000

• TAP and DNR Trust Fund for Blue Star Trail, DNR Grant for Village Square

Miscellaneous Donations and Income - $105,000

• Donor support for Blue Star Trail, Holiday Lighting, and Saugatuck Harbor Natural Area

Fund Balance Transfer – $1,619,610

• Use of approximately 22.5% of projected savings to fund capital improvement projects.

Recommended Fee Schedule Updates Water Infrastructure Fee

• In 2024, a $20 per Meter Equivalent (MEU) charge was established to fund watermain, lead service line replacement, and other local water needs. • Asset Management Plan recommends $3 increase from $23 to $26 per MEU.

Sewer Infrastructure Fee

• Still to be determined. • Rate study approved and will occur after updated water-sewer agreement is finalized.

Water-Sewer Connection/Tap Fees

• Have not been updated since 1996. • New rates still to be determined. • Rate studies approved and will occur after updated water-sewer agreement is finalized.

Credit Card Fee

• Credit card payments for permit fees is costing the City 2-3% in fees. • Staff is evaluating a proposed credit card processing fee for permits. • If tax payments are taken by card in future, a fee will also be recommended.

Planning/Zoning Fees

• Updates to provide further clarity on certain fees.

GENERAL FUND APPROPRIATION HIGHLIGHTS  Investment in Staff  Salary/Wage increases that will allow for both inflationary adjustment and merit increases  Continuing to offer high quality health insurance plans.  Consulting and Contractual Support for Council Priorities - $162,500  Remainder of Logo Redesign and Branding Project and Wayfinding/Park Signage Designs  Deer Management  Remainder of Parking Study  Website Redesign  Studies and Assessments for Addressing Low Water Issues  New Election Equipment - $15,000  Required by state law.  Replace Public Works Furnace - $15,000

LEGAL FEES  City remains in litigation with Dune Ridge

 Large portion of legal fees are budgeted for this purpose

700,000.00 600,000.00 500,000.00

 Current Fiscal Year Trend Shows Legal Fees Continue to Decrease

400,000.00

 Uses of Legal Services:

200,000.00

 Reviewing contracts and agreements as required by City code.  Drafting ordinances.  Legal research related to various matters that arise.  Updated Water/Sewer Agreements  Supporting Enforcement  Attendance at meetings

300,000.00

100,000.00 0.00 -100,000.00 20212022 Legal Fees Increase/Decrease

20222023

20232024

20242025

20252026 Projected

417,066.83 629,192.02 381,662.63 254,649.07 231,415.00 50.9%

-39.3%

-33.3%

 Now mostly via Zoom to reduce costs

 Recommend Budgeting 11% Less (than current budget) for Legal Fees Next Fiscal Year  City Council - $215,000  City Manager - $50,000  City Clerk - $7,500  Planning/Zoning - $67,000

 Note: Portion of permit, license, and escrow fees covers these legal costs.

-9.1%

PLANNING AND ZONING

 Short-Term Rental Enforcement and Inspections - $117,500  Granicus 1-800 Hotline and Address ID, Contracted Code Enforcement, Fire Department Inspections  Revenue source from STR license fees to cover costs.  Master Plan/Zoning Code Updates $30,000  Planner and Engineering Contractual Services - $37,000  Revenue source from permit fees and escrows to help cost cover.

 Blue Star Trail - $1.7 Million  Construction - TAP and DNR grants covering majority of cost  Additional Engineering and Assessments Requested from Tribes $100,000  Some revenue to offset expenses from Township and Friends of the Blue Star Trail

GENERAL FUND SUPPORTED PROJECTS

 Traffic Signal at Lake/Blue Star - $240,000  In conjunction with Blue Star Trail installation. Not currently grant funded.  Mt. Baldhead Park Improvements - $380,000  Remainder of design engineering for upper platform, construction of new upper platform and retaining walls (if necessary), parking lot maintenance and improvements, and design engineering for stairs and river deck improvements.

 Invasive Species - $120,000  Milfoil, Saugatuck Harbor Natural Area, and assessments and treatment of others.  Endowment Fund will provide reimbursement for SHNA.

 City Hall - $35,000  Design, options, and engineering for interior remodel.  Village Square Courts - $240,000  Nearly all is donor and grant funded.

GENERAL FUND SUPPORTED PROJECTS

 Restroom Upgrades at Wicks and Village Square- $185,000  Interior upgrades to both and exterior siding at Village Square  Resurface Public Works Lot - $155,000  Concurrent with Maple Street Project  Wayfinding and Updated Park and Street Signage - $130,000  Maple Street Sidewalk - $630,000  Transfer to local streets fund to cover portion of sidewalk cost.

 Sidewalk Repairs - $20,000

IMPACT OF CAPITAL PROJECTS ON GENERAL FUND

 After accounting for grants and donations for these projects, the net amount is $1,900,000.  As noted previously, proposed fund balance use of $1,619,610 is for capital projects, not to support daily operations.

MAJOR AND LOCAL STREETS  Regular Funding Sources  Act 51 – State Gas Tax/Registrations - $256,000  County Road Millage - $210,000  Local Road Millage - $425,000  Decrease of voted millage from 1.6726 to 1.6414 (1.86%) due to Headlee Rollback

 Additional Revenue

 Township Cost Share for Maple Street Restoration- $241,000  General Fund Transfers - $630,000  Maple Street Sidewalk  EGLE MCMP Grant for Park Street -$15,000

 Major Street Current Fund Balance - $912,302  Use of $297,350 for Elizabeth Street project.  Local Street Current Fund Balance - $2,564,302  Use of $838,900 for Maple Street project.

Major and Local Street Fund Balances Over Time 3,000,000 2,564,302

2,681,927

2,402,820

2,500,000

2,249,674 2,002,592

2,000,000

1,843,027

1,736,491

Dollars

1,661,183 1,500,000

1,000,000

500,000

1,312,498

1,287,576

895,767

887,926

970,378 572,252

912,302 759,765

777,513

780,669

2021-2022

2022-2023

2023-2024

662,838

453,106

540,416

0 2016-2017

960,188

2017-2018

2018-2019

2019-2020

2020-2021

2024-2025

2025-2026 Projected

2026-2027 Est.

Major

540,416

970,378

453,106

572,252

887,926

759,765

777,513

780,669

912,302

960,188

662,838

Local

895,767

1,287,576

1,312,498

1,661,183

1,736,491

2,002,592

2,402,820

2,249,674

2,564,302

2,681,927

1,843,027

Major

Local

MAJOR AND LOCAL STREET PROJECTS  Maple Street - $2,010,000

 Road Restoration, stormwater Improvements, concrete sidewalk

 Elizabeth Street - $400,000

 Road restoration and stormwater and sidewalk improvements.

 Updated PASER Ratings- $8,000  Park Street Planning and Beginning Design- $70,000  Partially grant funded.

 Grant St (Holland to Elizabeth) and Elizabeth St (Grant to North) $50,000  Design engineering.

 As Needed Asphalt Repairs - $50,000

 Revenue  Tap Fee: $2,000  Interest: $5,500

SEWER CAPITAL IMPROVEMENT FUND

 Use of Fund Balance - $62,500  Projects  Maple Street Sanitary Sewer Repairs $5,000  Elizabeth Street Sanitary Sewer Repairs $45,000  Sewer Agreement and Rate Study $14,000

WATER CAPITAL IMPROVEMENT FUND

 Revenue  Water Infrastructure Fee: $340,000  Tap Fee: $4,500  Interest: $4,000  Township Cost Share for Watermain Replacement: $435,000  Use of Fund Balance - $330,000  Projects  Maple Street Watermain and Lead Service Replacements $848,500  Elizabeth Street Watermain Replacement - $150,000  Additional Lead Service Line Replacements - $100,000  Water Agreement and Further Rate Study - $14,000

MOTOR POOL  Cash and Investments – $997,051  New or Replacement Equipment  John Deere Mower - $15,000  Auger Attachment for Skid Steer - $5,000  Replace Pickup Truck - $65,000  Replace Snow Plow Attachment - $13,000  Various Small Engine Equipment - $4,000

 The City has built up healthy savings in its various funds and needs to invest in infrastructure needs.

SUMMARY

 The proposed budget:  Funds all of Council’s approved priorities for fiscal year 2026-2027.  Adequately funds City services and operations.  Invests significantly in existing and new infrastructure.  Requires no debt service to complete projects.  Still maintains healthy reserves in the general fund that are far above Council’s policy requirement.