Scottville budget projects deficit for 2026–27

SCOTTVILLE — Scottville city officials are projecting a deficit in the upcoming fiscal year as rising costs, declining state revenue and long-term obligations continue to pressure the city’s finances.

The proposed 2026–27 city budget, which takes effect July 1, 2026, anticipates a net shortfall of about $200,000 by the end of the fiscal year.

Among the primary drivers:

• A projected $5,300 decrease in state-shared revenue 
• Continued strain from unfunded pension liabilities estimated at approximately $220,000 
• Increasing operational and personnel costs, including an average 3% wage increase 

City officials report that employee-funded retirement contributions average about 83%, leaving the city responsible for the remaining share of pension costs.

Tax Base Growth Not Keeping Pace

The city is seeing modest growth in its tax base, with state equalized value (SEV) projected at $50.9 million and taxable value at $33.9 million.

However, that increase is not expected to offset rising expenditures, contributing to what officials describe as ongoing structural imbalance in the general fund.

Infrastructure and Cost Pressures

The budget also reflects continued investment in infrastructure, highlighted by an $8 million water main replacement project that will be fully funded by the state.

To manage costs elsewhere, the city is pursuing several strategies:

• Shifting some work to part-time staffing 
• Continuing reductions in city property-related expenses 
• Evaluating alternative funding mechanisms for streets and maintenance 

Officials note that revenue from fuel taxes remains insufficient to support long-term street maintenance needs, and future funding options — including a potential dedicated millage — may need to be considered.

Current Fiscal Year Shows Similar Trends

Financial reports for the current fiscal year show similarly tight conditions:

• The General Fund is expected to finish with a surplus, but only with revenues exceeding expenses by as much as $200,000 
• Most other city funds are expected to end the year with positive balances 
• The Local Streets Fund may require use of reserves, raising longer-term sustainability concerns 

City officials warn that continued reliance on fund balances for street operations is not sustainable without new revenue sources.

The Scottville City Commission will take up the next step in the budget process during its regular meeting today at 6 p.m. at the Scottville Area Senior Center, 140 S. Main St., when commissioners are expected to consider setting a public hearing date.

City officials are recommending April 27, 2026 for the hearing on the proposed budget.

Following the public hearing, the commission is expected to move toward final adoption of the budget in May.

Despite the projected deficit, officials say the proposed budget reflects efforts to maintain services while addressing long-term financial challenges.

The plan underscores a familiar tension for the city: balancing day-to-day operations, infrastructure needs and legacy costs within a revenue structure that is not keeping pace with expenses.

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