Lackadaisical fiscal oversight by the St. Ignace City Council nearly cost citizens $3.8 million in lowinterest loans for a state-required sewage project last month. Only through hasty appeals and a special council meeting did the state return the funding.

The state stopped project funding Monday, August 25, after the city failed to meet a deadline to submit a mandated five-year deficit elimination plan. The plan is required because the city's audit of its 2007 operations showed deficits in eight of its funds, and it needed to be filed before the bond process could move forward.

The funding was restored late Thursday, August 28, following a rushed filing of the required report, plus appeals to the state from Department of Public Works Director Les Therrian, City Clerk Renee Vonderwerth, Executive Secretary Kathy Cryderman, Mayor Paul Grondin, and St. Ignace resident Barbara Brown, who works in the office of the state Attorney General.

The city says it missed the deadline because it did not receive a June 20 letter from the Michigan Department of Treasury reminding the city that it needed to file the deficit elimination plan in 30 days, as required by state law.

Even without the letter, however, the city was aware of the requirement, since fund deficits in 2006 triggered a similar report last year. In addition, the city auditor, in a May 1 audit report, told the city it needed to file again this year.

"While the fund balances remain in deficit position," auditing firm Rehmann Robson wrote May 1, "the City must again file a timely deficit elimination plan with the State of Michigan Department of Treasury."

Each council member received a copy of the audit report, but failed to make sure their administrators followed through.

At the special meeting Wednesday, August 27, City Manager Eric Dodson said it was his fault the plan had not been submitted earlier.

"Really," said Mr. Dodson, "it's my responsibility, bottom line. And that's the way it is with so many things in city government, because of my job."

The city was advised Friday, August 22, that documents had not been received. By Monday afternoon, said Mr. Therrian, word came that the sewer project funding was stopped by the state.

A draft plan was quickly prepared by City Clerk Vonderwerth and sent to the state for review Tuesday morning, August 26. It was approved by Council during the special meeting Wednesday, and word came Thursday afternoon, August 28, that funding for the St. Ignace sewer project was back on track.

"Our wastewater project is on," Mr. Therrian told The St. Ignace News Friday, August 29, "and it saved the city a lot of money. If we'd had to refinance, it would have been devastating to the city."

"I guess all of our calls and whining paid off," he added.

The sewer improvement project is mandated by the Department of Environmental Quality. The $3.8 million in funding is coming from Michigan's State Revolving Fund at about 2% interest for 20 years. Had the funding been lost, said Mr. Therrian, the city would have had to turn to the U.S. Department of Agriculture's Rural Development for a 4.5% interest loan for 40 years.

At the tense special meeting in council chambers August 27, Councilman Willie LaLonde said the city has to insure the deficit elimination plan is filed in a timely manner in the future.

Mr. Dodson said he was counting on the state letter to trigger city action on the required plan.

The city should take responsibility for annually recurring obligations, said Councilman Don Gustafson, rather than wait for prompts from auditors or state agencies. He suggested a monthly reminder file be established.

Council came to no conclusion on the matter.

The city's deficit elimination plan covers eight funds, including major streets, building inspector, cemetery, wastewater plant, building authority, data processing, equipment, and office equipment pool.

The major streets fund ended 2007 with a $17,011 deficit. Funding support from the state has been dropping yearly, said Mr. Therrian, and last year's increased snowfall drove up expenses. The fund includes plowing major streets, sweeping, plowing side- walks, and routine maintenance.

The proposed plan to eliminate the deficit includes levying 0.5 mills in 2010, if needed, reduced plowing, and not filling a heavy equipment operator position.

The building inspector's fund was in the red by $2,077. To eliminate the debt, a proposed 25% fee increase is needed in 2008 and 5% increase annually is required beginning in 2009. City council would have to approve the fee hikes.

The cemetery fund ended 2007 with a negative balance of $1,727. An annual contribution from the general fund will increase 3% and a proposed fee increase of 3% each year will have to be considered by council.

The office equipment pool ended the year with a $3,198 deficit. General fund contributions are scheduled to increase by 3% each year.

The remaining funds now are in the black and forms were prepared for the state to show the positive balances.

Council adopted the plan during the meeting, but not the fee increases or the millage proposal.