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City of Muskegon,
Michigan


2005 Proposed Budget and
Quarterly Budget Reforecast

For The Year Beginning January 1, 2005






                CITY OF MUSKEGON, MICHIGAN

                    PROPOSED BUDGET

         FOR THE YEAR BEGINNING JANUARY 1, 2005


























                     CITY COMMISSION

                STEVE WARMINGTON - MAYOR


CLARA SHEPHERD                           LAWRENCE SPATARO
CHRIS CARTER                             STEVE GAWRON
BILL LARSON                              KEVIN DAVIS


                      BRYON MAZADE
                      CITY MANAGER






                                CITY OF MUSKEGON, MICHIGAN

                        Budget for the Year Ended December 31, 2005

                                      TABLE OF CONTENTS

                                                                                              


INTRODUCTORY SECTION                                                                      5

City Manager's Budget Message                                                           7

Summary Charts and Graphs                                                              17

Division Budget Narratives                                                             23

         Public Representation Division                                                24

         Administrative Services Division                                              26

         Financial Services Division                                                   29

         Public Safety Division                                                        32

         Public Works Division                                                         36

         Leisure Services Division                                                     39

         Community & Economic Development Division                                     42



I.  GENERAL FUND BUDGET                                                                47

Budget Summary                                                                         48

Detailed Revenue Summary By Revenue Classification                                     49

Detailed Expenditure Summary By Function                                               53

Comparison of Revenues and Costs of Selected Functions                                 62








                                                   1



                                         CITY OF MUSKEGON, MICHIGAN

                                Budget for the Year Ended December 31, 2005

                                      TABLE OF CONTENTS - CONTINUED
                                                                                                                                            



II.  NON-GENERAL FUND BUDGETS                                                                                                63

Major Streets and State Trunklines Budget                                                                                    64

Local Streets Budget                                                                                                         65

Enterprise Community Budget                                                                                                  66

L.C. Walker Arena Budget                                                                                                     67

Sidewalk Improvement Budget                                                                                                  68

Public Improvement Budget                                                                                                    69

State Grants Fund Budget                                                                                                     70

Marina & Launch Ramp Budget                                                                                                  71

Municipal Golf Course Budget                                                                                                 72

Equipment Budget                                                                                                             73

Public Service Building Budget                                                                                               74

Engineering Services Budget                                                                                                  75

General Insurance Fund Budget                                                                                                76

Water Fund Budget                                                                                                            77

Sewer Budget                                                                                                                 78









                                                                    2



                          CITY OF MUSKEGON, MICHIGAN

                   Budget for the Year Ended December 31, 2005

                       TABLE OF CONTENTS - CONTINUED


III.  MINOR BUDGETS                                                79


IV.  APPENDICES                                                    81

Debt Service Requirements                                          83

2004 Budgeted Capital Improvements                                 85

2005 Budgeted Capital Improvements                                 89

Budgeted Personnel Complement                                      93

2005 Budget Resolution                                            101
























                                       3



4



INTRODUCTORY SECTION


















         5



6



Affirmative Action
(231)724-6703
FAX (231)722-1214

Assessor
(231)724-6708
FAX (231)726-5181

Cemetery
(231)724-6783
FAX (231)726-5617

City Manager
(231)724-6724
FAX (231)722-1214

Civil Service
(231)724-6716
FAX (231)724-4405
Clerk                  August 30, 2004
(231)724-6705
FAX (231)724-4178

Comm. & Neigh.
Services               Honorable Mayor and City Commissioners:
(231)724-6717
FAX (231)726-2501      Enclosed is the proposed 2005 Budget for the City of Muskegon.  The current economic
Engineering            situation, rising personnel and operational costs and reductions in state shared revenue continue
(231)724-6707
FAX (231)727-6904      to have negative impacts on the City's General Fund Budget. While the City was prepared for
                       difficult economic times, unfortunately, the economic climate has suffered much longer than
Finance
(231)724-6713          expected and has required the City to reduce services in many areas and use reserve funds.
FAX (231)724-6768      Nevertheless, the 2005 spending plan was prepared considering the type and scope of programs
Fire Department        the City Commission identified as priorities during the February strategic planning process and
(231)724-6792
FAX (231)724-6985      subsequent budget meetings throughout 2004.
                        
Income Tax
(231)724-6770          The City's total proposed 2005 spending plan (including all budgeted funds) is $64,602,550 as
FAX (231)724-6768      compared to $70,213,116 for 2004.   In addition to scaled back operating budgets, the decrease
Info. Technology       is attributable to the fact that several budgeted capital projects including Smartzone, Cross
(231)724-4126
FAX (231)722-4301      Lake Ferry, the downtown section of the Lakeshore Trail, Shoreline Drive and the water
                       filtration plant improvements will be substantially completed in 2004. Capital outlays for
Inspection Services
(231)724-6715          routine water, sewer and street improvements will continue in 2005.
FAX (231)728-4371
Leisure Services       It is important to note that the proposed spending plan does not include a property tax increase.
(231)724-6704
FAX (231)724-1196      In fact, the city's total property tax rate remains virtually unchanged at just over 10 mills for
                       the thirteenth consecutive year.
Mayor's Office
(231)724-6701
FAX (231)722-1214      The city's budget is made up of several individual funds that are reviewed below.
Planning/Zoning
(231)724-6702
FAX (231)724-6790      General Fund
Police Department
(231)724-6750          Despite significant program and personnel cuts outlined below, proposed general fund
FAX (231)722-5140      expenditures are $23,218,094, virtually unchanged from the 2004 revised estimate of
Public Works           $23,187,121.  Revenues for 2005 are estimated at $23,265,606, up very slightly from the 2004
(231)724-4100          revised estimate of $23,033,068.   Revenues are not growing at a pace to keep up with rising
FAX (231)722-4188      costs largely due to the economy and skyrocketing personnel-related costs.   Moreover, state
Treasurer
(231)724-6720          shared revenues have fallen dramatically and remain at risk for further cuts.
FAX (231)724-6768       
Water Billing
(231)724-6718
FAX (231)724-6768

Water Filtration
(231)724-4106
FAX (231)755-5290

                                                                 7



The proposed general fund budget is based upon conservative estimates of revenue and realistic
projections of expenses and is structured so as to allow the city to maintain a fund balance equal to
10% of prior year expenditures, in accordance with City Commission policy.   However, it has become
necessary to use money from the budget stabilization fund to maintain city services and the 10% target
level.  The budget stabilization fund will contribute $500,000 in 2004 and 2005 to the City's general
fund.  These transfers will reduce the available budget stabilization fund balance to $500,000 at the
end of 2005.

Several significant changes to the general fund budget are proposed for 2004 and are worthy of note.
These include the following:

     Because personnel costs represent such a large portion of the city's General Fund, it is necessary to make
   reductions to the personnel complement in order to achieve any significant cost savings. Even with these
   cutbacks, total General Fund salaries and benefits will increase 3.13% in 2005, highlighting the dramatic
   rise in personnel costs, especially pension and healthcare costs. The following adjustments to the
   personnel complement are included in the proposed budget:  

          Two vacant police positions have been eliminated from the Police Department.   
          One vacant Leisure Services Maintenance II position and one vacant LSM III position will be
         eliminated. The LSM II is in cemeteries and the LSM III is in parks.
          Eliminate two Housing Inspector positions.  This work will be transferred to the Fire
         Department as is allowed for in the firefighter's union contract. 
          Eliminate the Housing Rehabilitation Inspector position in Community and Neighborhood
         Services.  This work will be absorbed by the Fire Services Division.
          Eliminate the Fire Chief position through the Public Safety administrative consolidation.
          One Customer Service Representative II position will be eliminated in the Police
         Department.
          Eliminate one vacant Environmental Inspector position.
          Eliminate the vacant Computer Technician position in Information Systems.
          Eliminate the vacant Deputy Director of Community of Economic Development position.
          Eliminate one vacant Assistant Planner position.
          Eliminate the part-time Customer Service Representative position in Leisure Services.







                                                  8



     In accordance with Commission goals, the number one priority for 2005 is continuation of the fight
   against neighborhood blight. Several departments will continue to work collectively to eliminate
   blighting influences. The allocation of CDBG funding to the general fund has been increased to
   facilitate the blight fight effort.  Continuation of the City's successful anti-graffiti efforts is also
   provided for.  Additionally, the fire department budget anticipates taking over the housing inspection
   function.  Staff believes that this will significantly bolster the City's blight fight efforts for the
   following reasons:

          More total personnel and man-hours will be made available for this function meaning that
         more regular inspections can be done on a more systematic basis.  Also, customer service will
         be enhanced since inspections will be able to be scheduled outside of regular business hours
         without incurring overtime costs;
          Over time, more resources will be made available for blight fight from fees generated through
         more systematic inspections;
          Integrating fire prevention with housing inspection will help reduce the incidence of blight
         created by fire damage and burned-out structures;

 The fire union contract currently allows for firefighters to perform housing inspection duties.
 However, the changeover will likely require negotiations with the SEIU unit. If these negotiations are
 unsuccessful, I would propose elimination of three firefighter positions.  

     The police department will eliminate two vacant police officer positions from the patrol division.
   The department will also eliminate one Customer Service Representative position. Both of these
   personnel cuts will affect department service levels. While the department intended to eliminate the
   DARE program in 2004, private funding was found to continue the program for 2004 and 2005.

     The Parks budget includes the elimination of the Landscape Horticulturist position. The department
   will add the responsibility of maintaining the new section of Shoreline Drive and the new section of
   the Lakeshore Trail that were completed this year.  The budget also anticipates reducing or
   eliminating a number of service and maintenance activities, such as mowing terrace areas in
   downtown, shutting down irrigation systems for downtown terraces and small parks, eliminating
   port-a-jons in all parks and reducing sidewalk snowplowing.  We would also like to eliminate the
   set-up of holiday season lights and structures in Hackley Park and instead find a volunteer
   organization to take on that responsibility.   We anticipate that all of these cuts will have a noticeable
   impact on service to our citizens.

     The Planning and Economic Development will eliminate the Deputy Director for Community and
   Economic Development position and an Assistant Planner position. This reduction in staffing,
   coupled with previous reductions is having a serious impact on service levels.  We will consider
   reassigning duties and position upgrades to lessen that impact.




                                                     9



     The Streetlight budget will increase due to the addition of forty new streetlights on the completed
   section of Shoreline Drive.

     The general fund budget includes the use of $400,000 of CDBG funds for various general fund
   purposes.  This is an increase of  $184,000 over 2004. CDBG functions will be reduced by a like
   amount, including the elimination of the Housing Rehabilitation Inspector position and the
   elimination of the Community Based Organization (CBO) grants ($60,000).

     The budget anticipates increased sharing of health insurance costs by employees.  This will help
   lessen the burden on the City of rising health insurance costs.  This will, of course, require
   negotiations with represented employees.

     Some user fees will be increased and new fees recommended in December when the city's master
   fee resolution is adopted.  Fees currently being considered for increases include those for the
   cemeteries, farmer's market and marina. 

     No major general fund capital expenditures are budgeted for 2005.  Several worthwhile projects will
   continue to be deferred to future years.       

     Conference, travel and training accounts continue at a minimal level for 2005. For the most part,
   only conferences and training required to maintain registrations and certifications will be permitted
   in 2005.                                                                                                         

     Transfers to Major and Local Street Funds remain at $620,000.  This includes funds from the
   METRO Act distribution.

     The forestry budget was eliminated and combined with the cemetery budget since the forestry work
   is coordinated out of the cemetery office.


There are significant items not included in the proposed 2005 budget that will be studied in the coming
months to determine if they can help the budget situation. These include:

     Consider selling advertising in City publications, on City vehicles and at City facilities.  We are
   currently doing this on the City website with some success and will sell advertising in the City's
   2004 income tax return booklet.

     Consider soliciting sponsorships for certain services/programs, such as McGraft Park Concerts, Life
   Guards at PM Park, Dog Beach mitts, Park Rangers, etc.




                                                                           10



     Staff will explore the possibility of selling property that the City does not need to own.  Such
   properties include Meuer Court and the former Shaw Walker parking lot.

     The City will continue to explore the feasibility of adding Advance Life Support (ALS) service to
   the fire department.  At this time it does not appear that assumption of full ALS service is possible,
   but we are researching ways to coordinate services with Pro Med for mutual benefit of both
   organizations.


 The proposed budget includes no overall property tax increase from the current 10 mills.  However,
 the City Commission has discussed the possibility of increasing the millage to retain some of the
 current services/programs/improvements.  One mill would generate $640,000 annually and would cost
 the owner of a $100,000 home $50 per year.  The following is what I would propose to use the funds
 for should the City Commission decide to levy one additional mill:

       1.  Police Officers (4) for a Neighborhood Response Team (working 
             primarily in Nelson, Angell, McLaughlin and Marsh neighborhoods)            $280,000

       2.  City facility maintenance improvements                                        $100,000

       3.  Capital Improvements (Streets, Fire Stations, etc. perhaps funded
          through a bond issue to be paid for by the millage)                            $260,000


 Other Budgeted Funds

 In addition to the general fund, the city's budget is made up of several other funds, which, as a group,
 account for nearly two-thirds of the city's total 2005 budget.  A summary of budget highlights for
 these funds follows:

     Major and Local Street Funds ­ These budgets contemplate continuation of current service levels.
   The 2005 budget provides for $4.75 million of major street capital improvements. The bulk of these
   improvements ($2.5 million) are attributed to the completion of the Shoreline Drive project, but
   several other projects totaling $2.25 million are also proposed.  Local street capital improvements
   are budgeted at $945,000. As noted, the General Fund transfer to the street funds remains at
   $620,000, including the METRO Act funds.

     L.C. Walker Arena ­ The City will continue utilizing uncommitted TIFA funds to reduce the
   general fund subsidy in 2005.  Nevertheless, the general fund subsidy for arena operations is
   projected to be $260,000. We anticipate corresponding increases in revenues and expenditures with
   the addition of professional basketball in the facility.  Additionally, City staff will continue to
   explore new uses for the Annex.


                                                  11



     Sidewalk Improvement Fund ­ Continued funding for the sidewalk program is included at an
   estimated cost of $200,000.  Sidewalks in the Glenside and Campbell Field neighborhoods are
   targeted for 2005.  This will be the final year for the sidewalk replacement program.  

     Public Improvement Fund ­ Funds are allocated for repayment of one-third of the Urban Land
   Assembly (ULA) Loan debt service payment. Pending state approval, the other two-thirds is
   scheduled to be paid from Downtown Development Authority (DDA) funds.  

     State Grants Fund ­ The Core Community grant will be completed in 2005.  We anticipate grants
   for the Neighborhood of Choice and Site Assessment programs.  Neither of these grants will require
   a City match. 

     Marina & Launch Ramp Fund ­ No significant changes in funding or operations are budgeted.  A
   funding source needs to be found to match state grant funds for necessary future capital
   improvements.  The City may want to consider contracting for management of the facility to reduce
   its economic risk.

     Municipal Golf Course Fund ­ This fund holds the proceeds from sale of the Chase Hammond
   Golf Course. These funds have been used to purchase property for the Lakeshore Trail and to match
   grants for the Trail.  Only $85,351 remains in this fund.   Therefore, the fund will be eliminated and
   the remaining funds will be deposited and accounted for in the Public Improvement Fund for future
   Trail construction.

     Equipment Fund ­ No significant operational changes are planned. Scheduled vehicle and
   equipment purchases totaling $799,400 are planned for 2005.  

     Public Service Building ­ No significant operational changes are planned. Ongoing physical
   improvements at the facility are scheduled at $52,000.

     Water Fund ­ Major improvements to the filtration plant are ongoing and are estimated at $4.5
   million for 2005. Phased-in water rate increases have previously been discussed to pay for these
   improvements and will increase from $1.09 per hundred cubic feet to $1.40 per hundred cubic feet.
   Other capital improvements, many of which are tied to street projects, are proposed and total
   $880,000.

     Sewer Fund - No significant changes are planned for sewer fund operations. The County is
   increasing its rates by 10%, but it is not anticipated that the City will need to increase our rates to
   customers during 2005.  Capital improvements, many of which are tied to street projects, will total
   $970,000.




                                                   12



 New Debt Issuance

 The budget proposes possible issuance of one new bond issue:

     Recreation Bonds  ­ The City will have to bond to provide matching funds for a state grant for
   improvements to the marina if we are unable to find other sources. Also, the City has applied for a
   large grant to complete the Lakeshore Trail. Monies from the sale of the Chase Hammond Golf
   Course have been exhausted, so the local match for this grant, if awarded, will have to be found.


 Future Outlook

 The proposed 2005 budget provides a sound-financing plan for the city.  However, as noted, many
 cutbacks were necessitated by increased operational costs, the slow economy and state budget
 problems, among other factors.  It should also be noted that there are several unknown factors that
 could affect this spending plan.

     Healthcare and Other Benefit Costs ­ Increased healthcare costs continue to be a major problem
   for the City.  The 2005 budget incorporates an estimated 12% annualized increase for healthcare
   costs for the coming year. The increase in healthcare costs for the more than 300 retired city
   employees and their beneficiaries' compounds the problem.  Pension costs also have increased
   sharply. Both health insurance and pension costs are issues that are important subjects of current
   employee contract negotiations and will continue to be for 2005 and beyond.

     State Shared Revenue ­ In recent years the City's annual share of these revenues has decreased by
   over $1 million.  Because the State's budget situation is very tenuous, further cuts in Revenue
   Sharing are a very real possibility.

     Continued Operating Deficits ­ The 2005 budget is balanced using a significant infusion
   ($500,000) from the budget stabilization fund. It is extremely important to realize, however, that
   these funds will not be available in future years and that more severe cutbacks will be needed to
   bring the budget into balance if recurring revenues do not rebound soon.

     Stagnant Property Tax Revenues - The City's property tax base has not grown appreciably in
   recent years.  Compounding the problem for future City budgets is the fact that most of the City's
   economic development initiatives are in areas where any property tax growth has been already
   allocated to spur the development (e.g. tax increment districts, Renaissance Zones, etc.). With state
   shared revenues stagnant for the foreseeable future, this means that the only engine for budgetary
   revenue growth is the City income tax.




                                                  13



     Employee Contracts ­ The contracts with the police patrol expired at the end of 2003 and is
   currently in binding arbitration. The contracts with the firefighter's union and the SEIU (DPW)
   union expire at the end of 2004.  The outcome of these negotiations will have a major impact on the
   city's budgetary situation.

     Charter Amendments ­ The City Commission recently approved two proposed charter
   amendments to be placed on the November 2004 ballot.  These amendments deal with the city's
   fiscal year and budget processes.  If voters approve these amendments, the budget proposed herein
   will need to be redone to facilitate the changes. 

 We will monitor these issues closely in the coming months and keep you informed.  Also, we will
 continue the quarterly reforecast of the budget in order to make adjustments as changing conditions
 and/or Commission policies dictate.  The 2004 third quarter reforecast and update is incorporated into
 this budget document.

 Budget Process and Detail

 The proposed 2005 City Budget is again prepared and presented in a manner intended to focus
 attention on overall resource allocation priorities and policies rather than line item expenditure detail.
 Staff believes that the "top-down" resource allocation budget process that has now been used for eight
 consecutive budget cycles is a more efficient and effective method of making resource allocation
 decisions than building budgets "up" from detailed line-item expenditure estimates.  Also central to
 the City's budget process is the belief that responsibility and accountability for budgeted funds should
 rest largely with department heads and that these managers should be permitted considerable
 flexibility in managing their operations within the overall limits of their budgets.

 As presented herein, proposed departmental expenditures are shown at the expenditure category level
 of detail (e.g. 5100 "Salaries and Benefits", 5200 "Contractual Services").  To further explain by
 example, "Contractual Services" (5300 level accounts) are budgeted in total rather than listing detail
 for each of the 50 individual line-item accounts that make up this category.  Following are descriptions
 intended to help the reader understand the makeup of the expense categories as presented in the
 budget.  

 Salaries and Benefits (5100 level accounts) ­ This category comprises 23 separate line-item accounts
 for all wage and benefit costs paid to city employees.  Examples include accounts for regular full-time
 salaries, temporary salaries, FICA, retirement, health insurance, etc.

 Operating Supplies (5200 level accounts) - This category comprises 34 separate line-item accounts for
 supplies purchased by city departments.  Examples include accounts for office supplies, computer
 supplies, irrigation supplies, road maintenance supplies, etc.




                                                    14



Contractual Services (5300 level accounts) - This category comprises 50 separate line-item accounts
for various services purchased from outside service providers.  Examples include audit fees,
electricity, gas, and other utilities, printing, vehicle rental, insurance, etc.

Other Expenses (5400 level accounts) - This category comprises 6 line-item accounts, the primary one
being expenditures for conferences, training and travel.  

Capital Outlays (5700 level accounts) - This category comprises 17 separate accounts for capital
equipment purchased by city departments.  Examples include land purchases, vehicles, and office
furniture and equipment.

Other Financing Uses (5900 level accounts) - This category comprises 19 separate line-item accounts
for uses not technically categorized as "expenditures".  Examples include principal and interest
payments on debt, operating transfers between funds, and depreciation.


The above is intended to provide you with highlights of the proposed 2005 Budget and prepare you for
a detailed review of the same.  This review is scheduled for the September work session on September
13, 2004.  A public hearing on the budget is scheduled for the regular City Commission meeting to be
held on September 14, 2004.  The budget could be adopted at that meeting or at a special meeting.
Regardless, the City Charter requires that the budget be adopted no later than September 25, 2004.

Finally, I would like to thank Tim Paul, Finance Director, Beth Lewis, Assistant Finance Director, and
the other members of the Finance Department for their efforts in preparing the financial information
and the proposed document. 



Respectfully, 

/s/

Bryon L. Mazade
City Manager








                                                      15



                                            Citizens of Muskegon
           The 7-member 
           Commission                                               The Citizens of                       The 7-member 
           appoints various                                         Muskegon elect                        Commission 
           Boards and                                               this Commission                       appoints the City 
           Commissions                                                                                    Attorney


Various Boards &                               7-Member City                                   City Attorney
 Commissions                                    Commission

                                                                    The 7-member 
                                                                    Commission 
                                                                    appoints the City 
                                                                    Manager

                                               City Manager







                Administrative Services                                Financial Services 
                        Division                                             Division





                 Public Safety Division                                 Leisure Services 
                                                                             Division






                Community & Economic 
                Development Division                                  Public Works Division









                                                      16



SUMMARY CHARTS AND GRAPHS























           17



City of Muskegon
2005 Proposed Budget
Summary of Budgeted Funds

                                                             Projected Beginning                                                                                                    Projected Ending 
                                                           Fund Balance/Working                         Projected                                Projected                                   Fund 
Fund Name                                                              Capital                          Revenues                               Expenditures                         Balance/Working 


General                                                                          2,277,365
                                                           $                                        $    23,265,606
                                                                                                                                             $     23,218,094
                                                                                                                                                                                 $                2,324,877
                                                                                                                                                                                                      

Major Streets                                                                            708,988
                                                                                                            7,385,312
                                                                                                                                                      7,863,475
                                                                                                                                                                                                      230,825
                                                                                                                                                                                                           

Local Streets                                                                            438,799
                                                                                                            1,929,262
                                                                                                                                                      2,158,272
                                                                                                                                                                                                      209,789
                                                                                                                                                                                                           

L.C.Walker Arena                                                                 (189,158)
                                                                                                            1,059,100
                                                                                                                                                      1,023,764
                                                                                                                                                                                                    (153,822)
                                                                                                                                                                                                           

Sidewalk Improvement                                                                     916,395
                                                                                                               480,000
                                                                                                                                                         608,333
                                                                                                                                                                                                      788,062
                                                                                                                                                                                                           

Public Improvement                                                                       553,783
                                                                                                               306,000
                                                                                                                                                           55,000
                                                                                                                                                                                                      804,783
                                                                                                                                                                                                           

State Grants                                                                               1,519
                                                                                                            3,400,000
                                                                                                                                                      3,400,000
                                                                                                                                                                                                          1,519
                                                                                                                                                                                                                     

Municipal Golf Course (Trail Matching Funds)                                                  -                                         -
                                                                                                                                                                            -
                                                                                                                                                                                                       - 

Marina & Launch Ramp                                                                      16,171
                                                                                                            2,285,000
                                                                                                                                                      2,261,677
                                                                                                                                                                                                        39,494
                                                                                                                                                                                                                

Public Service Building                                                                   32,554
                                                                                                               569,872
                                                                                                                                                         575,101
                                                                                                                                                                                                        27,325
                                                                                                                                                                                                                

Engineering Services                                                                      16,826
                                                                                                               616,500
                                                                                                                                                         633,203
                                                                                                                                                                                                             123
                                                                                                                                                                                                                          

Equipment                                                                        1,131,313
                                                                                                            2,410,000
                                                                                                                                                      2,331,531
                                                                                                                                                                                                   1,209,782
                                                                                                                                                                                                      

General Insurance                                                                1,050,093
                                                                                                            4,171,251
                                                                                                                                                      4,125,802
                                                                                                                                                                                                   1,095,542
                                                                                                                                                                                                      

Sewer                                                                            1,833,781
                                                                                                            5,286,433
                                                                                                                                                      4,758,440
                                                                                                                                                                                                   2,361,774
                                                                                                                                                                                                      

Water                                                                            4,428,812
                                                                                                            6,115,655
                                                                                                                                                    10,040,711
                                                                                                                                                                                                      503,756
                                                                                                                                                                                                           

                                                                                                                                                                                                                 - 

Minor Funds:                                                                                                                                                                                                     - 

Criminal Forfeitures Fund                                                                144,980
                                                                                                                 10,000
                                                                                                                                                           10,000
                                                                                                                                                                                                      144,980
                                                                                                                                                                                                           

Budget Stabilization Fund                                                        1,000,000
                                                                                                                                        -
                                                                                                                                         500,000
                                                                                                                                                                                                      500,000
                                                                                                                                                                                                           

Land Reutilization Fund                                                                   23,576
                                                                                                                   1,000
                                                                                                                                                             1,000
                                                                                                                                                                                                        23,576
                                                                                                                                                                                                                

Tree Replacement Fund                                                                     12,434
                                                                                                                   3,000
                                                                                                                                                             3,000
                                                                                                                                                                                                        12,434
                                                                                                                                                                                                                

Tax Increment Finance Authority Debt Fund                                                   849
                                                                                                                 60,000
                                                                                                                                                           60,000
                                                                                                                                                                                                             849
                                                                                                                                                                                                                          

Special Assessment Debt Service Fund                                                     153,106
                                                                                                                 70,000
                                                                                                                                                           70,000
                                                                                                                                                                                                      153,106
                                                                                                                                                                                                           

Downtown Development Authority Debt Fund                                                 199,649
                                                                                                               550,000
                                                                                                                                                         700,000
                                                                                                                                                                                                        49,649
                                                                                                                                                                                                                

Local Development Finance Authority I Fund                                                  311
                                                                                                                        10
                                                                                                                                                                            -
                                                                                                                                                                                                   321
                                                                                                                                                                                                                          

Local Development Finance Authority II Fund                                               20,813
                                                                                                                                        -
                                                                                                                                                                            -
                                                                                                                                                                                              20,813
                                                                                                                                                                                                                

Local Development Finance Authority III Fund (Smartzone                                  488,727
                                                                                                                 50,000
                                                                                                                                                         205,147
                                                                                                                                                                                                      333,580
                                                                                                                                                                                                           


  Total All Budgeted Funds                                                   15,261,686
                                                           $                                        $    60,024,001
                                                                                                                                             $     64,602,550
                                                                                                                                                                                 $              10,683,137
                                                                                                                                                                                                 













                                                                             18



                                                                                                                                                                  MINOR FUND BUDGETS 2.4%    PUBLIC IMPROVEMENT 0.1%                     PUBLIC SERVICE BUILDING 0.9%    SIDEWALK 0.9%    LC WALKER ARENA 1.6%    ENGINEERING SERVICES 1.0%

                                                                                                                       STATE GRANTS 5.3%                                                                                                                                                                                                       MARINA & LAUNCH RAMP 3.5%




















                                                                                                                                                                                                                                   Other 15.6%

                                                                                                                                            LOCAL STREETS 3.3%
CITY OF MUSKEGON                                                                                               EQUIPMENT 3.6%


                                                                                           INSURANCE 6.4%






                                                                             SEWER 7.4%

                                                                                                                                                                                                                                                                                                                                                                            GENERAL FUND 35.9%



                     TOTAL 2005 BUDGETED FUND EXPENDITURES - $64,602,550 
                                                                                                             WATER 15.5%

                                                                                                                                                                                                            MAJOR STREETS 12.2%





                                                                                                                                                                                             19



     2005 GENERAL FUND REVENUES
                            $23,265,606

      All Other 
      Sources
           22%




                                                    Taxes
  State Shared                                       58%
    Revenue
      20%






     2005 GENERAL FUND EXPENSES
                            $23,218,094

                                     Off-Budget 
                                         Items
 Business                                 7%
Value Added 
 Activities
    17%





                                                     Customer 
                                                    Value Added 
                                                     Activities
                                                        76%



     2005 GENERAL FUND EXPENSES
                            $23,218,094
                             Supplies
               Other Uses      2%        Other 
                                     Expenses
                      4%                  0%

Contractual 
 Services
   30%




                                                     Salaries & 
           Capital                                   Benefits
             1%                                         63%







                                 20



                    GENERAL FUND REVENUES AND 
                    EXPENDITURES - LAST 10 YEARS

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

        $-          $5,000,000    $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000

                                  REVENUES         EXPENDITURES



              ACTUAL FUND BALANCE VS TARGET -
                                     LAST 10 YEARS

$3,500,000

$3,000,000

$2,500,000

$2,000,000

$1,500,000

$1,000,000

 $500,000

              $-
                    1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

                             FUND BALANCE                  TARGET FUND BALANCE





                                                 21



22



BUDGET NARRATIVES BY DIVISION





















             23



CITY OF MUSKEGON, MICHIGAN


                            PUBLIC REPRESENTATION DIVISON

DIVISION SUMMARY
                                                               Promote Economic Stability, Diverse
PUBLIC REPRESENTATION                                        Economic Growth and Redevelopment.
                                                             The City Manager's Office works with
Division Description                                         existing and prospective businesses to
The Public Representation Division is                        retain and grow the economic base of the
responsible for developing, adopting, and                    City.  This is achieved in part by the
implementing policy decisions for the City.  The             Business Partnership Initiative Program that
division is made up of three departments: City               began in 1998.  The City also achieves this
Commission, City Manager's Office, and the                   goal by encouraging economic development
City Attorney's Office. Major divisional                     through the use of various economic
responsibilities include establishment of                    development incentives. This office also
policies, services, and programs for citizens,               works closely with Muskegon Area First to
administration of daily City operations, and                 retain businesses and develop new
providing guidance and direction to all City                 business opportunities.
Departments.  The Attorney's office prepares
ordinances, contracts, and other legal                         Sustain the Natural, Cultural and
documents for the City and provides legal                    Recreational Resources of the
advice.                                                      Community.
                                                             The City Commission and the City
Divisional Relationship to City                              Manager's Office continually promotes this
Commission Goals                                             goal through adoption and implementation
                                                             of policies and programs (Blue Wave
                                                             designation for Pere Marquette Beach) that
     Take Leadership Responsibility for                      preserve the natural resources of the City.
   Improving Race Relations and Diversity.                   The Public Relations Committee works to
   The City Commission and the City                          create awareness of the positive qualities of
   Manager's Office will continue working to                 our city to inspire community pride,
   improve race relations through action and                 confidence and support.  Each summer the
   policy. The City Manager's Office will work               City Commission sponsors the
   on this goal with various community groups                Beautification Awards to three City of
   and by encouraging employees to                           Muskegon homeowners for aesthetically
   participate in the Institute for Healing                  attractive landscaping.  The City has also
   Racism.  The City Commission, through the                 improved waterfront public access through
   Community Relations Committee, provides                   site plan approvals for new developments.
   opportunities for positions on various boards
   and committees to a diverse mix of citizens.                Foster Strong Ties Among Governments
   The City also co-sponsors the Martin Luther               and Community Agencies.
   King (MLK) Diversity Day Breakfast.                       The City Commission and City Manager
                                                             address this goal by participation with
     Foster Opportunities for City Youth.                    various local governments and community
   The City Commission and City Manager's                    agencies in a number of projects and
   Office support our youth through programs                 programs.  Some of these include, but are
   like Youth in Government and Bring Your                   not limited to Muskegon Area First, The
   Child to Work Day.                                        Municipal Wastewater Committee, Central



                                                    24



   Dispatch, MATS, MAP, MALMC, and
   Muskegon Neighborhood Associations. The
   City furthered this goal by providing water-
   billing service to Muskegon Township and                  CITY OF MUSKEGON, MICHIGAN
   through an agreement with the City of North                  F MUSKEGON, MICH
   Muskegon and the County to maintain                          Smartzone Development, Promotion of
   Veterans Park.                                               Seaway Industrial Park, Redevelopment of
                                                                former Muskegon Mall property,
     Maintain and Enhance the                                   Renaissance Zone Implementation, Career
   Neighborhoods of the City.                                   Tech Center Construction, Boilerworks
   The City Commission appropriates funds                       Building Redevelopment and WaterMark
   and sets policy to address blighting                         Project Implementation.
   influences in the City.  The City Manager is
   coordinating a multi-department effort to                      Contributions to Outside Organizations: The
   improve implementation and operational                       Contributions budget provides the
   issues to address blight.  The City                          mechanism for the City to fund several
   Commission also works with Neighborhoods                     agencies that assist the City in achieving its
   Associations on their events and promotion                   goals and providing certain services.
   of our City.                                                 Unfortunately the City's financial situation
                                                                has caused a reduction in the amount
2005 Budget Highlights                                          available for these purposes.  The following
                                                                agencies are funded in 2005:
     City Commission: The City Commission will
   continue to improve community relations by                   1)  Neighborhood Associations of
   utilizing the City's Public Relations                            Muskegon
   Committee.  The Commission will also                         2)  Muskegon Area Transit System
   continue to work towards improving race                      3)  Muskegon Area First
   relations within the City through financial                  4)  Institute for Healing Racism
   contribution to the Institute for Healing                    5)  Veterans Memorial Day 
   Racism.                                                      6)  MLK Diversity Day Program
                                                                7)  Muskegon County Animal Control
     City Attorney's Office: The City Attorney will             8)  Muskegon Area Labor/Management
   continue to provide routine and special legal                    Committee
   services to the City.  The City Attorney will
   also prepare the necessary legal documents
   (development agreements, etc.) relative to
   special projects. Outside legal counsel will
   continue to work on the cable TV lawsuit
   and the Nugent Sand matter.

     City Manager's Office: No additional
   personnel is requested this year for the City
   Manager's Office. The City Manager's
   Office will continue ongoing efforts to
   improve community and race relations. The
   office will pursue cooperative efforts and
   potential functional consolidation with other
   local governments.  This office will also
   continue to work to improve the economic
   climate in the City in order to create an
   environment conducive to private
   investment.  Specific projects include, but
   are not limited to the following:


                                                       25



CITY OF MUSKEGON, MICHIGAN

                            ADMINISTRATIVE SERVICES DIVISON

DIVISION SUMMARY                                                particular initiatives throughout the County
                                                                that seek to improve the job skill
ADMINISTRATIVE SERVICES                                         development of young people. Through the
                                                                City's Government Day Program and Youth
Division Description                                            in Government Program, we work closely
The Administrative Services Division provides                   with Muskegon Public Schools to promote
direct services and internal support services                   and encourage youth participation in
necessary for the operation of the City.  The                   government, including using students as
division is made up of four departments:                        election workers as well as hold field trips in
Administration Department, City Clerk's Office,                 the fall and spring. Additionally, through the
Civil Service Office and the Affirmative Action                 Junior Achievement program, staff volunteer
Office. Major divisional responsibilities include               in the schools and the County's Juvenile
labor relations, legislative activities, public and             Detention Center.
community relations, election administration,
City Commission affairs, business registration                    Promote Economic Stability, Diverse
and permits, personnel recruitment and record                   Economic Growth and Redevelopment.
keeping, workers compensation, oversight of                     Administrative services division meets this
budgetary expenditures among departments,                       goal through coordination of the following
effective implementation of the City's Equal                    programs: business registration, tax
Employment Opportunity Policy and contract                      abatements and contract compliance.  It
compliance.                                                     also fosters opportunities for women and
                                                                minority owned businesses to participate in
Divisional Relationship to City                                 the economic development process.
Commission Goals                                                  Sustain the Natural, Cultural and
     Take Leadership Responsibility for                         Recreational Resources of the
    Improving Race Relations and Diversity.                     Community.
    We support and encourage this goal                          This goal is met indirectly through our
    internally by fostering cultural sensitivity                written support of grant requests (by various
    among employees and externally by our                       community agencies/groups) to enhance
    direct involvement with community groups                    and promote cultural activities.
    undertaking initiatives toward improving
    race relations in the community.  The                         Foster Strong Ties Among Governments
    division also promotes racial diversity on                  and Community Agencies.
    City boards and committees by directly                      This division maintains very close working
    encouraging residents of minority groups to                 relations with many neighboring units of
    apply for appointment.  We are directly                     government as well as community agencies.
    involved in the Institute for Healing Racism                We meet this goal through project specific
    which was created for the purpose of                        partnerships, representation on common
    healing and bridging the racial divide within               boards and committees, shared resources
    the community.                                              and value specific information, and often
                                                                times through joint agency group meetings
     Foster Opportunities for City Youth.                       throughout the year.
    We support this goal internally through the
    Julia Hackley Summer Internship Program,                      Maintain and Enhance the
    which employs three to five students per                    Neighborhoods of the City.
    year.  Externally, staff works closely with                 The Administration Division contributes to



                                                       26



  the City's fight against blight through
  aggressively investigating environmental                CITY OF MUSKEGON, MICHIGAN
  and sidewalk appeals.  It reevaluates
  approaches to service delivery aimed at
  curtailing conflict between the general                     communication.  We will publish The
  citizenry and staff attempting to implement                 Channel newsletter and provide access to it
  policies set by the City Commission.                        through the web.  Direct mail will be
                                                              discontinued.   We will continue to update
                                                              and add to our City Clerk web page to
2005 Budget Highlights                                        provide more information and ways to do
                                                              business through the city web page.  This
                                                              budget reflects the full costs of the August
       Administration Department: no staffing                 and November City Primary and General.
     changes.  Although such                                  Schools will be billed for their election.
     programs/initiatives as Employee
     Education Reimbursement,                                  Civil Service Department:  Staffing -- the
     organization-wide employee training and                  Personnel Analyst position will not be filled.
     City-wide Citizen Survey were not                        Job Line is discontinued.  Recruitment will
     budgeted, for the most part, we foresee                  be significantly curtailed. The proposed
     continuation of services at current                      operating budget solely provides for
     levels.  A high priority item will be to                 continuation of basic services. Efforts to
     successfully negotiate new collective                    fine-tune use of departmental staff and
     bargaining agreements with one to three                  material resources in order to advance
     of our five labor groups (Clerical                       output will continue. Improvements in
     bargaining session will begin in                         relaying information through the City's
     September of 2005 and the 2004 Fire                      intranet and internet sites will continue.
     and SEIU 517M Unit #2 negotiations will
     most likely continue into 2005 budget                Future Outlook
     year). We will also continue oversight
     and coordination of the organization's               Following are the major goals of the
     administrative needs.                                Administration Division incorporated in the
                                                          proposed budget:
       Affirmative Action Department:  No
     staffing changes.  We will continue                       Administrative Services:
     responsibility for the Worker's                               Negotiate one to three union contracts
     Compensation program, community                              and manage grievances filed.
     outreach, participation in special interest
     programs, administration of the Julia                         Continue to work towards improving
     Hackley internship program, contract                         Labor / Management relations.
     compliance and equal employment                               Continue on-going efforts to improve
     opportunity responsibilities.  The                           race relations.
     hardship contingency fund will be                             Foster the accomplishment of the City
     discontinued along with National                             Commission Vision, Value and Mission
     recruitment --although we will maintain a                    within the organization and the
     presence where necessary.                                    community.
       City Clerk's Office: No staffing changes.               Affirmative Action:
     We will continue to work with the                             Work more closely with the Civil Service
     Commission on their Community                                and Finance departments to implement
     Relations and Public Relations                               the Workers Compensation Program.
     Committee projects as well as work on                          Meet Equal Employment Opportunity
     various committees with the Chamber to                       efforts.
     enhance and provide better public                             Continue to pursue contract compliance.



                                                    27



     City Clerk's Office:
         Continue with current programs.                  CITY OF MUSKEGON, MICHIGAN
         Continue to Design Clerk's Office Web
        page with links to program applications
        such as licensing, permits, voter
        registration, and absentee ballot.
         Enhance existing voter registration
        programs with seniors, students, and
        neighborhood groups.
         Upon receipt of new election equipment,
        plan implementation training for staff &
        precinct inspectors.

     Civil Service:
         Revise employee orientation process.
         Update Civil Service Rules &
        Regulations.
         Conclude personnel file reorganization.
         Promote educational information on
        workplace issues with articles in the
        employee newsletter.
         Revise Commercial Drivers License
        (CDL) Drug Testing and Leave policies.
         Continue development of Civil Service
        web pages.
         Revamp employee handbook.


























                                                    28



CITY OF MUSKEGON, MICHIGAN

                                 FINANCIAL SERVICES DIVISON

DIVISION SUMMARY                                              the City in accordance with the highest
                                                              professional standards. 
Financial Services

Division Description                                            Foster Opportunities for City Youth.
The Financial Services Division is made up of                 The Division participates in the City's Julia
the following departments: Finance                            Hackley and Grand Valley State University's
Administration, City Treasurer's Office, Income               Internships programs.  Staff spends quality
Tax Administration and Information Systems.                   time to provide personal and professional
The division is responsible for all financial                 development to interns which ensures their
management activities of the City; specifically,              competitive advantage when entering the
property tax collections, utility billing and                 job market.  Additionally several staff
collections, payroll and employee benefits,                   members volunteer in the schools through
accounts payable and accounts receivable,                     Junior Achievement. 
income tax collections and management of the
City's computer network and related information                 Promote Economic Stability, Diverse
systems.  Additionally, the division oversees the             Economic Growth and Redevelopment.
contract with Muskegon County under which                     The Finance Division plays a key role in
the County Equalization Department performs                   analyzing the financial impact, budgeting
property tax assessment services for the City.                and identifying funding sources for City
                                                              economic development initiatives such as
Divisional Relationship to City                               the Mall Redevelopment, Smart
Commission Goals                                              Zone/Edison Landing, Seaway Industrial
                                                              Park, Cross Lake Ferry and Renaissance
                                                              Zone. Ultimately, implementation and future
     City Mission Statement: To improve the                   oversight of these initiatives becomes the
    quality of life for the citizens of                       responsibility of the Finance Division
    Muskegon through stewardship of                           through activities such as bond issuance
    resources, excellent service and                          and tax increment administration.
    leadership for the greater community.
    It is primarily in the area of resource                     Foster Strong Ties Among Governments
    stewardship that the Finance Division                     and Community Agencies.
    contributes to this mission.  Employees of                The Finance Division works closely with
    the division work to maximize the financial               other governmental units to ensure services
    resources available to support municipal                  are provided in a cost-effective manner.
    services through revenue collections,                     Examples include tax collection services
    investments, and sound financial                          provided by the City Treasurer's Office,
    management practices.  Also, they provide                 water billing services provided under
    the City Commission and department                        contract to Muskegon Township and the
    managers with timely and accurate financial               intergovernmental agreement with
    information critical to prudent and effective             Muskegon County for assessment services.
    stewardship. Sound finances are important                   
    in shaping the perception that citizens,                    Develop and Maintain City Infrastructure
    investors, bond rating agencies and others                and Facilities.
    have of the City of Muskegon.  Staff of the               The Finance Division strives to be on the
    Financial Services Division take pride in                 cutting edge of new technology. 
    providing excellent financial leadership for



                                                     29



     Improvements and updates to the security
     of the City's information network protect the
     integrity of our information and continual               CITY OF MUSKEGON, MICHIGAN
     enhancements to the City' web site and
     Intranet site provide access to more                          Information Technology: Elimination of one
     information and services to City of                          Computer Technician position is proposed.
     Muskegon employees and citizens.                             Every attempt will be made to provide the
     Recently the City of Muskegon's web site                     end users with the same level of support
     was rated 5th out of 534 city and villages in                they have received in the past.  Current
     the State of Michigan by Cyber-state.org.                    levels of service will be provided for data
                                                                  center operations, network services and
     Maintain and Enhance the                                     application development and maintenance.
     Neighborhoods of the City.
     The Division's Reengineering Committee is                Future Outlook
     continually reevaluating techniques for
     improving our collection efforts especially on           Following are some of the major goals of the
     environmental invoices.  The Committee                   Finance Division that are incorporated in the
     has also been instrumental in updating and               2005 proposed budget:
     centralizing data bases used by City
     departments for everything from City                          Finance Administration
     mailings to billing information.  These efforts                   Constant monitoring of the City's budget
     will reduce blight in our neighborhoods and                      so management has the most up-to-
     increase the flow of information to residents.                   date accurate information to respond to
                                                                      changes as quickly as possible.
2005 Budget Highlights                                                 Continue GASB 34 Implementation.
                                                                      Work still needs to be done to complete
     Finance Administration: No staffing changes                      the capital assets and infrastructure
     are proposed.  The budget provides for                           reporting requirements.
     continuation of current services.                                 Implementation of proposed fiscal year
                                                                      change if approved by the voters in
     Assessing Services: The 2005 budget                              November 2004.
     contemplates continuation of the contract                         Increase ACH vendor payments using
     with the Muskegon County Equalization                            GEMS software enhancement.
     Department for all assessment services.
     The cost of this contract is tied to the actual               Assessing Services
     year-to-year increase in the City's total                         Update the cadastral mapping of the
     taxable property valuation.  For 2005, this                      entire city and convert the drawing into a
     cost increase is approximately one half of                       new geo-database.
     one percent (0.50%).                                              Activate and integrate an elevation
                                                                      model and digital orthophotography as
     City Treasurer: No staffing changes are                          GIS layers.
     proposed. The budget contemplates
     continuation of billing services and                          City Treasurer  
     enhancement of collection services. The                           Continue with a more aggressive use of
     department is committed to working on                            our outside collection agency for
     opportunities that will improve productivity                     delinquent accounts and initial billing for
     and operational efficiency through the use                       environmental invoices.
     of technology.                                                    Increase marketing of the city's e-
                                                                      government (on-line) and automatic
     Income Tax Administration: Staffing levels                       water/sewer utility bill payment options.
     will remain constant.  The budget 
     provides for continued aggressive collection                      Continue to seek opportunities to make
     and tax enforcement activities.                                  more city services available through the
                                                                      internet, providing alternate options to


                                                        30



       help decrease lines at the counter and
       delays on the phone.                                  CITY OF MUSKEGON, MICHIGAN

     Income Tax Administration
        To have 70% of our 50 largest
       companies electronically submit their W-
       2's and W-3 information to our
       department.  
        Offset the cost of printing tax forms with
       advertisement revenue.  The Income
       Tax Department will seek companies
       that would like to advertise on the back
       of our tax returns.  Over 25,000 tax
       forms are distributed regionally.
        Overhaul existing withholding tax
       compliance programs and databases.
       Create a new database and compliance
       program that would help our department
       become more efficient in dealing with all
       issues concerning our number one
       source of revenue, payroll withholding
       taxes.

     Information Technology
        Continued work with departments to
       maximize their web presence and
       generate revenue by offering online
       services to local companies.  Rather
       than incurring the cost of dispatching an
       employee to City Hall, companies will
       have the option to pay a yearly or
       transactional fee for customer lookup,
       accident reports and other information
       through the internet.  Initial focus has
       been on the Treasurer's office with the
       Police Department to follow.
        Continue to help departments recognize
       cost savings through the use of
       technology and business process
       review.
        Migrate remaining databases to a
       standard Database Management
       System for future data mining, research
       and support.
        Create a portal for local "registered"
       businesses that will allow a web
       presence through the use of links and/
       or advertisements. When a business
       registers with the Clerk's office, they will
       have the option to have a small ad or 
       link placed on our website for an
       additional fee.



                                                       31



CITY OF MUSKEGON, MICHIGAN

                                    PUBLIC SAFETY DIVISION

DIVISION SUMMARY                                                Promote Economic Stability, Diverse
                                                              Economic Growth and Redevelopment.
POLICE DEPARTMENT                                             The department actively partners with
                                                              developers and local businesses to address
Department Description                                        parking, traffic and security concerns.  
The Muskegon Police Department consists of
the following bureaus: Patrol, Investigations,                  Sustain the Natural, Cultural and
and Administration. Each bureau encompasses                   Recreational Resources of the
units of related functions that contribute toward             Community.
the department's overall goal accomplishment.                 In partnering with groups and coordinating
Primary responsibilities of the department                    events such as Summer Celebration, Unity
include law enforcement, investigations, and                  Fest and Shoreline Spectacular, the
the maintenance of public records.  The police                department has become adept at handling
department operates within the context of                     special events.  Department staff takes
community policing i.e., forming community                    great pride in the success of these events. 
partnerships to reduce crime and enhance the
quality of life within the city.                                Foster Strong Ties Among Governments
                                                              and Community Agencies.
Departmental Relationship to City                             The department works in conjunction with
Commission Goals                                              other regional law enforcement agencies
                                                              such as West Michigan Enforcement Team
                                                              (WEMET) in coordinating drug enforcement.
     Take Leadership Responsibility for                       This association has produced favorable
    Improving Race Relations and Diversity.                   results for the city.  The department also
    The department continues its efforts to                   works closely with Child Abuse Council and
    recruit members of the minority community                 Every Woman's Place to address domestic
    and women. The department has                             violence and child abuse issues.
    established strong ties with the NAACP,
    Urban League, and our Hispanic
    community.  We actively participate in                      Develop and Maintain City Infrastructure
    community forums and neighborhood                         and Facilities.
    meetings. Our Citizen's Police Review                     Staff is part of the city's Emergency
    Board is an integral part of our outreach.                Management Team.  With the onset of
    The department is committed to building                   Homeland Security efforts, there are new
    trust, especially with our citizens from                  responsibilities associated with facility
    minority groups.                                          security of a number of public facilities.
     Foster Opportunities for City Youth.                       Maintain and Enhance the
    The department continues to have a strong                 Neighborhoods of the City.
    presence at, and commitment to, our                       Community policing will continue to serve as
    schools through programs such as Keep                     the cornerstone in the department's efforts
    Kids in School (KKIS) and Kids and Cops.                  to provide effective police services to our
    The neighborhood officers have been                       community.  Our organizational structure is
    directed to spend a portion of each week in               designed to encourage a team approach in
    their neighborhood elementary schools,                    addressing issues within the
    middle schools and the high school.                       neighborhoods. The department will
                                                              continue to address the perception of crime
                                                              within our city.



                                                     32



2005 Budget Highlights                                     CITY OF MUSKEGON, MICHIGAN
     Proposed elimination of two vacant Police
   Officer positions and one Customer Service                   Schedules of the neighborhood officers to
   Representative.                                              better meet the needs of the community.

     The DARE program will continue. Private                    Focus on quality of life issues (blight) and
   DARE funding will allow for training and                     the perception of crime in the
   materials. The closing of two elementary                     neighborhoods.
   schools will make it easier to schedule                 .
   DARE officers.  
                                                           Investigations Bureau:
     The success of our Citizen's Police
   Academies has continued throughout 2004                      Continue to pursue technology that will aid
   and we will continue to host academies                       in the development of effective investigation
   throughout the 2005.                                         strategies.

     State training funds (Public Act 302) will                 Continue to improve our caseload
   remain constant and will be available to us.                 management.  Ensure that detectives are
   We have pooled a portion of these funds                      being assigned to cases in an effective and
   with 52 other police agencies in west                        efficient manner.
   Michigan and formed a training consortium.
   This allows for very low cost training.                      Provide a coordinated response to narcotics
                                                                violations throughout the city with an
     Due to the passage of a millage increase for               emphasis on street-level and neighborhood
   Muskegon Central Dispatch, municipal                         enforcement.
   assessment costs will be frozen during
   2005.                                                        Partner with neighborhood and patrol
                                                                officers in developing strategies to resolve
     Managers have been directed to provide                     crime issues.
   strict control and oversight of our overtime
   costs.                                                       Maintain positive, working relationships with
                                                                the media.
Patrol Bureau:
                                                                When necessary, utilize regional task forces
     Continue to monitor the impact of the 8.5                  to investigate violent crimes.
   hour shift schedule.  Preliminary results
   show a decrease in overtime costs.                           Eliminate take-home vehicle privileges for
                                                                the Detective Sergeant and CSI Detective.
     In conjunction with Public Works, continue
   to monitor the quality of our vehicle fleet.            Administration:
   Review vehicle assignments to maximize
   the use of our fleet.                                        Maintain an "open door" policy for our
                                                                community.  Focus on outreach to our
     Provide consistent traffic enforcement in                  minority communities.
   those areas of the city, including
   neighborhoods, with identified needs.                        Serve as a leader and mentor in the
                                                                development of the department's
     Maintain  strong ties with our neighborhood                management team.
   schools.
                                                                Develop a Vision/Mission/Value statement
                                                                for the department.



                                                     33



     Ensure that our complaint process is open,
    fair and accessible to our community.                     CITY OF MUSKEGON, MICHIGAN

     Foster positive labor-management relations.
                                                                   Foster Opportunities for City Youth
     Fully utilize the resources of the West                     Our Firematch and Juvenile Firesetter
    Michigan Training Consortium to reduce our                   programs are designed to help troubled
    training costs.                                              kids.  We will partner with schools and
                                                                 community groups in an effort to establish
     Develop an effective crime mapping                          positive relationships with youth within our
    program.  Begin the process of evaluating                    city.
    our 30 year-old patrol districts.
                                                                   Promote the Economic Stability, Diverse
     In conjunction with court officials, review the             Economic Growth and Redevelopment
    scheduling of officers with the goal of                      Inspections staff and fire prevention staff will
    reducing overtime costs.                                     assist homeowners, contractors and
                                                                 developers in meeting their code
     Develop alternative sources of funding for                  obligations.  Our responsibility will be
    community programming.                                       carried out in a professional, customer-
                                                                 service oriented manner.  
     Be aggressive in seeking out non-
    personnel-based grants.                                        Sustain Natural, Cultural and
                                                                 Recreational Resources of the
                                                                 Community
FIRE DEPARTMENT                                                  The development of ice and water rescue
                                                                 capabilities in conjunction with our water-
Department Description                                           borne firefighting function provides a safety
The Muskegon Fire Department provides the                        net for those utilizing the waterways within
following services: fire suppression, emergency                  our city.
medical service, fire prevention, specialized
rescue, building and trade inspections and code                    Foster Strong Ties Among Government
enforcement.  The department provides the                        and Community Agencies
aforementioned services as well as fire                          The department currently uses mutual aid
prevention and fire safety education for our                     with neighboring jurisdictions to deliver life
community.                                                       safety services to citizens in the most rapid
                                                                 and efficient manner possible.  Staff will
Departmental Relationship to City                                also explore the possibility of regional
Commission Goals:                                                training and the development of regional
                                                                 specialty teams.  An advisory committee will
     Take Leadership Responsibility for                          be formed to provide feedback to the
    Improving Race Relations                                     building and trade inspectors as to customer
    The department will continue its efforts to                  service issues and inspection procedures.
    recruit and retain members of the minority
    community and women.  Department                               Develop and Maintain Infrastructure and
    personnel will participate in community                      Facilities
    forums and neighborhood meetings.  Staff is                  Review the current status of our facilities as
    committed to building and maintaining trust,                 to any needed repairs.  Begin the process of
    especially with members of our minority                      evaluating the need for station re-alignment.
    communities.





                                                        34



     Maintain and Enhance the Residential
   Neighborhoods of the City 
   The department will continue to meet with              CITY OF MUSKEGON, MICHIGAN
   neighborhood associations in an effort to
   become familiar with neighborhood-specific
   issues.  Staff and apparatus are also
   present at neighborhood functions.
   Inspections staff will continue to focus on
   identifying dangerous structures and other
   blight related issues.

   2005 Budget Highlights

     Proposed elimination of the housing
   inspection function from Inspection Services
   (two Housing Inspector positions).  The
   function would be re-assigned to fire
   suppression personnel as provided for in
   the current labor agreement.

     The development of an effective apparatus
   maintenance program to provide safe
   vehicles for staff and to reduce unnecessary
   repair costs.

     Continue our review of purchasing practices
   within the department.  Eliminate
   unnecessary purchases when possible.

     Develop and properly maintain a training
   calendar in order to better track and
   maintain certifications and mandated
   training.

     Managers have been directed to provide
   strict control and oversight of our overtime
   costs.

     Aggressively seek non-personnel based
   grants.

     Foster positive labor-management relations.

     Develop a Vision/Mission/Value statement
   for the department.

     Monitor efforts to reduce Overtime Time
   costs.






                                                    35



CITY OF MUSKEGON, MICHIGAN

                                     PUBLIC WORKS DIVISON

DIVISION SUMMARY                                                Promote Economic Stability, Diverse
                                                              Economic Growth and Redevelopment.
Public Works Services                                         The Public Works Services Division works
                                                              directly with developers and architects
Division Description                                          during design and construction to provide
The Public Works Services Division is                         civil engineering and public works expertise.
responsible for maintaining the City's                        The division also works towards improving
infrastructure, the life-blood of the City.  The              and upgrading the City's infrastructure to
division consists of four general departments                 provide adequate facilities (water, sewer &
with each having several distinct functional                  roadway system) to encourage and facilitate
operations:  Public Works Department                          economic development.
comprising of major streets and trunklines
including functional areas such as Equipment,                   Sustain the Natural, Cultural and
Highway, Street Lights, Traffic Signals and                   Recreational Resources of the
Signs and Barricades; Utilities Department                    Community.
comprising of Water Filtration Plant,                         Public Works Services is a community
Water/Sewer Maintenance, Storm Water                          representative in environmental activities
Management and Sanitation; Engineering                        such as Ruddiman Creek Task Force,
Department comprising of Engineering Services                 Muskegon Lake Public Advisory Committee
and Building Maintenance; and Public Works                    and the Muskegon River Watershed
Administration comprising of Administrative                   Assembly. 
Support, Public Service Building and Senior
Transit.                                                        Foster Strong Ties Among Governments
                                                              and Community Agencies.
Divisional Relationship to City                               Public Works Services represents our
Commission Goals                                              community on the Countywide Phase 2
                                                              Storm Water Committee, Metro Wastewater
                                                              Users Group, Solid Waste Planning
     Take Leadership Responsibility for                       Committee and West Michigan Shoreline
    Improving Race Relations and Diversity.                   Regional Development Commission
    The Public Works Services Division works                  (WMSRDC) Technical Committee. We also
    to improve race relations through the                     work with the Muskegon Conservation
    services that it provides. Our clerical staff             District on environmental projects.
    has been trained in Spanish to enhance
    their ability to answer questions and serve
    customers. Our Sanitation Coordinator                       Develop and Maintain City Infrastructure
    works extensively with neighborhood groups                and Facilities.
    to bridge cultural gaps.                                  The Public Works Division is the primary
                                                              caretaker of the City's infrastructure assets.
                                                              Most of the resources allocated to the
     Foster Opportunities for City Youth.                     Division are used directly for maintenance
    The Engineering Department hires 2-3                      of streets, water and sewer facilities and
    college students as seasonal workers                      other physical assets.
    during the summer and gives them a broad
    exposure to civil engineering functions. The
    division also participates in the "Take your                Maintain and Enhance the
    child to work day."                                       Neighborhoods of the City.
                                                              Through its sanitation program, Public
                                                              Works Services responds to illegal



                                                     36



   dumping, provides neighborhood
   associations with Saturday dumpster                        CITY OF MUSKEGON, MICHIGAN
   service. We also support many volunteer
   cleanup projects and volunteer housing                        Maintains all signalized intersections within
   rehab projects with disposal of wastes as                     the City of Muskegon and neighboring
   well as heavy participation in the City's fight               communities in Muskegon County.  We will
   against Blight.                                               update signals with new controllers as 
                                                                 needed and replace outdated incandescent
2005 Budget Highlights                                           signals/pedestrian crossing signals with
There are no significant staffing changes                        Light-emitting Diode (LED) fixtures.
proposed for Public Works Division budgets.
The budget provides continuation of current                        Signs and Barricades: Provides barricading
services.  The re-organization of the division in                on all city streets/alleys/parks and parking
2003 is expected to continue to improve                          lots to assure the safe flow of traffic. Assists
operation without additional staffing.                           with traffic control with MPD on various
                                                                 special event activities/emergency
PUBLIC WORKS DEPARTMENT (Major and                               response/crowd control concerns. Continue
Local Streets and State Trunkline)                               to update to LED lighting systems in
                                                                 overnight barricades and maintain the group
     Equipment Operation: This office purchases                  purchasing contract with Muskegon County
   and maintains all City vehicles and                           Road Commission (MCRC) and neighboring
   equipment.  Several purchases are                             municipalities to reduce costs.
   budgeted for 2005 including three small and
   two large dump trucks, six patrol cars, five                    Community Event Support:  We will more
   sedans, three pick up trucks, one loader,                     closely monitor Special Event requests to
   and one backhoe.                                              ensure that they are billed for services
                                                                 rendered and thereby reduce costs to the
     Highway Operation: This office maintains                    organization.
   200 miles of City streets including
   snowplowing, salting, catch basin cleaning,                UTILITIES DEPARTMENT
   crack sealing, pothole patching, street and
   shoulder grading, dust control and guardrail                  Water Filtration Plant:  The City of
   repair.  We will step up maintenance of local                 Muskegon serves its 14,000 customers as
   streets with crack sealing, pavement repair                   well as the cities of Roosevelt Park, North
   and storm drain repairs. Alleys will receive                  Muskegon, Laketon, Muskegon, Dalton and
   more attention with brush cutting and gravel                  Fruitland Townships. Producing and
   treatment. Concentrate on cleaning storm                      delivering clean and safe drinking water at
   drainage structures by developing strategic                   an economical cost to our customers is a
   cleaning areas.                                               major goal of our office. The state-required
                                                                 reliability study triggered a major project to
     Street Lights: This office administers the                  make mandated upgrades to the water
   reliability of 3,159 streetlights within the City             filtration plant. We are required by 2006 to
   streets and coordinates the removal/                          eliminate the discharge of sediments to
   installation of streetlights.  We will monitor                Lake Michigan, which is created during the
   more closely the weekly/monthly checks of                     water treatment process. Our goal in 2005
   the reliability of streetlight functions                      is to make strides toward meeting that
   (outages) to insure proper billing.  More                     deadline.  Plant treatment capacity will be
   than forty (40+) new streetlights (L-3) will be               increased from 28 to 40 million gallon per
   installed in the Shoreline Drive project area                 day (mgd). This capacity is expected to
   and eight (8) new ornamental streetlights in                  meet demands of the system until 2025.
   the Western Avenue area.                                      Additional security measures are being
                                                                 implemented to protect our facility.
     Traffic Signals (County-wide maintenance):



                                                        37



     Water/Sewer Maintenance: We maintain
   170 miles of sewer main and 22 lift stations.            CITY OF MUSKEGON, MICHIGAN
   We also maintain 180 miles of water main in
   the City of Muskegon and serve 14,000                       will cover the Campbell/Glenside areas. The 
   water customers. We will continue efforts to
   reduce sanitary sewer backups and                            2005 sidewalks will be the last year of the
   consequent liability claims. We will continue                sidewalk program as we know it.  We will
   our inspection program to eliminate cross                    continue efforts towards accreditation.
   connections between city water and unsafe
   sources. We are locating streets and                          Building Maintenance: We will continue to
   parking lots that have drainage to the                       maintain facilities and equipment in City
   sanitary sewer in order to reduce                            owned buildings.
   wastewater volumes from storms. We will
   be replacing substandard fire hydrants and               PUBLIC WORKS ADMINISTRATION 
   will complete the retrofit of all commercial
   water meters to "radio-read" type.                            Public Service Building: We will continue to
                                                               retrofit the lighting to energy-efficient units.
     Water Distribution: Maintain our contracts to             Security improvements will continue and we
   distribute water to Muskegon Township area                  will replace worn-out vinyl flooring.  The
   located south of the Muskegon River and                     replacement of obsolete computers will also
   the Northside District north of the Muskegon                continue.
   River in Muskegon, Laketon, Dalton and
   Fruitland Townships.                                     Future Outlook

     Stormwater Management: We will be                      Public Works is one of the City's largest
   implementing the second year requirements                divisions in terms of manpower and funding.
   of our Phase II National Pollution Discharge             We continue to provide quality services for
   Elimination System (NPDES) permit. This                  internal customers and residents, alike.  We are
   will involve Illicit Connection Identification           also working to develop and implement
   /Elimination and Public Education Plans.                 additional programs that will add to our
                                                            efficiency and benefit our customers.  The
     Sanitation: We service 14,000 residential              division will continue to maintain the City's
   customers including refuse collection,                   infrastructure elements and will look toward the
   recycling, yard waste, neighborhood                      future to prepare to address the growing needs
   dumpsters. We will continue with defective               of the community in the 21st Century.
   garbage cart. replacements. Our Saturday
   neighborhood dumpster program will
   continue, but "Pitch-It" stickers have been
   discontinued due to budget restrictions. We
   will explore a large cart subscription service
   to reduce the need to replace carts.

ENGINEERING DEPARTMENT

     Engineering Services: We are proud of
   some 2004 accomplishments including the
   completion of Smart Zone, Seaway
   Industrial Park and Shoreline Drive East.  In
   2005, we will continue to develop, construct
   and inspect all infrastructure projects and
   monitor any third-party work within the City
   right-of-way.  The 2005 sidewalk program 




                                                      38



CITY OF MUSKEGON, MICHIGAN

                                  LEISURE SERVICES DIVISION

DIVISION SUMMARY
                                                                 The division also works closely with the
Leisure Service                                                  Police Department to improve community
                                                                 safety.  Programs are jointly sponsored to
Division Description                                             provide information on drugs and other
The Leisure Services Division is made up of the                  harmful substances, as well as fun
following departments: Parks, L.C. Walker                        recreational activities for Muskegon's youth.  
Arena, Cemeteries, Parking Operations,
Forestry, Farmer's/Flea Market, Recreation,
and Hartshorn Marina.   The division is                            Promote Economic Stability, Diverse
responsible for managing all City park land and                  Economic Growth and Redevelopment.
other City properties with responsibilities                      The development of the Lakeshore Trail and
including grass cutting, litter removal, irrigation,             the sports complex will help to promote the
preparation of ball diamonds and athletic fields,                economic stability of the community and
set up for special events, maintenance of the                    encourage growth. The need to complete
L.C. Walker Arena, care and maintenance of                       the trail through Lakeside has already been
the cemeteries, maintaining City trees,                          demonstrated by the demand from the ferry.
management of the Farmer's Market, providing                     We continue to work with the West Michigan
recreational activities, and administration of the               Trails Council to find money to build trails
marina and launch ramps.                                         throughout the region and connect them to
                                                                 other western Michigan cities. The addition
Divisional Relationship to City                                  of the Clipper to Hartshorn should enhance
                                                                 the promotion of tourism on the downtown
Commission Goals                                                 lakefront.  We continue to promote and
                                                                 encourage special events, which help to
     Take Leadership Responsibility for                          bring people to the community and help
    Improving Race Relations and Diversity.                      area businesses.  The national recognition
    The department endeavors to improve race                     obtained for Pere Marquette Park beach
    relations and promote positive community                     through the Healthy Beaches and Clean
    diversity through bringing various diverse                   Beaches Campaigns, also helps to promote
    cultures together in recreational programs.                  the benefits of living in Muskegon.  Each of
    Most of the supervisory staff are graduates                  the neighborhood parks developed help to
    of the Institute for Healing Racism program.                 improve the economic stability of the
    The department is also working on having                     community by raising property value and
    the seasonal staff reflect the ethnic diversity              promoting Muskegon as a place to live and
    of the community.                                            work.

     Foster Opportunities for City Youth.                          Sustain the Natural, Cultural and
    Through the Recreation budget, the City                      Recreational Resources of the
    offers opportunities for youth to participate                Community.
    in a variety of programs including                           We continue to manage the parks and open
    swimming, basketball, and playgrounds.                       spaces to enhance and sustain their use by
    We also work with various community                          residents and visitors to the city. We
    groups, organizations, and youth sports                      received a grant from the state to plant
    programs to provide facilities and funding                   additional trees within our right-of-ways and
    for youth programs. The new Heart's N                        park and cemetery properties.
    Park's program promotes healthy lifestyles.                  Unfortunately, in 2004 we were not able to



                                                        39



   work with neighborhood organizations to                     
   plant flowers and beautify our neighborhood
   parks because of budget cuts. We are                    CITY OF MUSKEGON, MICHIGAN
   working with the Muskegon Conservation
   District to provide storm water runoff                     Waterways Division of the DNR to do other
   vegetation at the Grand Trunk Property.                    major improvements including replacement
   With the new Special Events policy, groups                 of the breakwall.  Energy improvements
   are requesting fewer services from the city                have been done at the Walker Arena. A new
   due to the charge for services provision                   maintenance management plan is being
   within the new policy.  Therefore, staff will              developed to enhance our ability to
   spend more time on maintenance of city                     schedule the management of our facilities
   facilities and less time on processing special             and properties.  
   events requests. 
                                                               
     Foster Strong Ties Among Governments                       Maintain and Enhance the
   and Community Agencies.                                    Neighborhoods of the City.
   Our partnerships with Norton Shores for                    By maintaining a high level of maintenance
   lifeguards have ended, as they are no                      on our public properties, we help to
   longer providing lifeguards.  We are                       enhance the residential neighborhoods of
   continuing the agreement with Muskegon                     our community. Improvements to parks like
   Township for the use of Softball World.  We                Beachwood help to improve the appearance
   will be building partnerships for the use of               of neighborhood parks that help maintain or
   the soccer complex.  We partnered with the                 improve the neighborhood. We continue to
   Soccer club to redevelop Reese Field.  We                  remove dead trees to clean up the
   continue to work with Volunteer Muskegon                   neighborhoods. The Walk Michigan
   on many projects, including graffiti removal.              program was reinstated in 2003 getting
   We also continue to work with Muskegon                     hundreds of people walking for their health.
   Public Schools on the joint use of facilities.             The walking track at Marsh Field is an
   We are a member of such County-wide                        excellent example of putting new facilities
   committees as the Accommodations Tax                       within a neighborhood to spur new activity.
   committee, the Heritage Landing master                     The youth recreational programs that
   plan committee and the Stay Active                         service most neighborhoods provide
   Muskegon Board.  The Risk of Drowning                      wholesome activities for neighborhood
   Committee, which we are a member of, is                    children which enhance the quality of life for
   trying to promote the safe use of the beach                the residents of those neighborhoods.
   through Safety Sam.  We work with the "Y"
   on the Summer Swim team and we are                      2005 Budget Highlights
   working with the Main Street program to
   beautify the downtown.                                       Parks Department:  The department will
                                                              eliminate one Horticulturist.  Scheduled
     Develop and Maintain City Infrastructure                 capital replacement projects are on hold.
   and Facilities.                                            Priorities for the Parks budget will be to
   This goal is integral to our purpose as a                  increase maintenance on City properties as
   division -- that is to protect and improve the             the need to process special events requests
   public facilities we manage.  To that end,                 is reduced.  The City will no longer fertilize
   Phase IV of the Lakeshore Trail from                       all properties. 
   Fisherman's Landing to Heritage Landing
   has been completed and is being heavily                      Cemetery Department: One Cemetery
   used; we are working with the Muskegon                     Maintenance Worker has been eliminated in
   County Community Foundation to add a                       the 2005 budget.  Capital replacement
   larger (6ft) half-pipe skateramp in the                    purchases are not anticipated in 2005.
   skatepark which was rebuilt in 2004; and                   Several of the seasonal employees will be
   we have received a grant from the                          eliminated.



                                                     40



     Recreation Department: Much of the youth
    recreation programs will be continued. All             CITY OF MUSKEGON, MICHIGAN
    the playgrounds, the grade school
    basketball program, and the winter
    recreation programs will continue, as well as
    the adult sports programs, where income
    covers the expenses.

     Forestry Department: The Forestry staff will
    assist in the Cemeteries as necessary.
    Little or no work shall be done to trees in
    Parks and Cemeteries or other city property.

     Farmer's/Flea Market: No changes are
    proposed for the Farmer's Market.  The city             
    will continue to look at possibly moving the
    market sometime in the future.

     Marina Department: No major changes are
    planned for the 2005 season.  Plans for
    future renovation of the marina will be
    completed during 2005.  Plans are under
    way to accommodate the move of the
    Clipper to the Marina

     Parking Ramp: The parking ramp will
    remain closed, but the budget reflects work
    to be done to the former mall parking lots.

     L.C. Walker Arena: Emphasis is being
    placed on bringing in new events to the
    facility and for reducing the general fund
    subsidy to the facility.  We anticipate that
    the basketball team will generate new
    revenue.


Future Outlook
The City of Muskegon has one of the finest
Park systems in all of Michigan.  The City is
committed to continuing maintenance and
improvement of this valuable resource. Through
working with the neighborhood associations,
private businesses, other governmental units,
and local organizations, the Leisure Services
Division will continue to improve the quality of
life for all residents.







                                                     41



CITY OF MUSKEGON, MICHIGAN

             COMMUNITY AND ECONOMIC DEVELOPMENT DIVISION 

DIVISION SUMMARY                                                have youth "mentor" with us throughout the
                                                                year.  These are good opportunities to help
COMMUNIT