GLADSTONE — The aftermath of the charter-changing vote in the city of Gladstone is just beginning.

Since the city was forced to stop collecting special assessments, likely consequences the residents may see are either a reduction in services like road maintenance and snowplowing or a city-wide millage increase.

Since 67% of voting residents opted to do away with a chunk of their city charter in order to take away the government’s authority to collect special assessments — money from which has been used to fund work on public roads — Gladstone is left to figure out how to make up the $579,512 that was due to be collected over the next 11 years for work that has already been completed.

Five recent paving and utility projects were completed in the last four years, and property owners in those areas had been responsible for paying 20% of the total cost. Now, the city is on the hook for the full outstanding balance instead of just the 80% they’d been expecting to cover. That’s going to cause problems this year since spending already took place.

Some earlier special assessment bills, like for the Ninth Street and Fourth Street projects, have already been partially recouped because collections began in 2020. Payments from taxpayers were to be spread out over 15 years and collected annually. People who chose to pay their bills off early will not be refunded, but those who still had outstanding payments don’t have to pay the special assessment charge anymore.

The various projects had been budgeted in different ways. The DDA contributed to the Ninth and 15th Street projects, and a grant was applied to the Fourth Street one.

In the case of the Ninth Street project, it was such a large-scale undertaking — over $4 million for work for not only the road but also water and wastewater — that it was bonded, meaning the city essentially borrowed money from investors and must pay them back with approximately 2% interest.

“The people that bought (the bonds) … put that money there knowing that they were going to make — over the course of 15 years — they were going to make 2% on their investment,” said City Manager Eric Buckman.

In order to make payments back to the bond purchasers, the city is going to have to use what money may be available in the general fund, street, wastewater and water funds.

“If we take tax money to pay it, we’re going to have to cut from recreation or public safety or city hall, and where do they want the cuts to happen?” Buckman asked.

For the other four projects that had been special assessed, the city’s portion of the payments was coming entirely from the street funds.

Street funds — of which Gladstone has two, for major streets and local streets — are used for a number of expenses. Coming from street funds are the costs of administration (paying employees), surface maintenance (repairing potholes, etc.), winter maintenance (salting and plowing), street sweeping, traffic control (signs and lights) and storm sewer upkeep.

Now, the city is also going to have to swallow another cost.

Across all five special assessment districts, the city was going to collect about $68,000 this year. That’s about 6% of the total annual street fund income.

The hole in incoming funding is likely to show as a budget deficit. How that will be handled is yet to be determined.

“Deficit plan doesn’t come into consideration until we have our audit done,” said Gladstone Treasurer Vicki Schroeder. “And then that would be something that would have to be filed with the state.”

It’s probable, though, that Gladstone will be faced with an additional millage to raise taxes across the city.

The City of Gladstone’s taxes rank thusly when compared with other Michigan cities with similar population size (4,600 to 6,200). Rounded to the nearest tenth, the 2023 millage rate for principal residences in Ironwood was 53.5; Ishpeming, 46.8; Negaunee, 43.2; Gladstone, 42.4; Kingsford, 40.3; Petoskey, 34.7; Zeeland, 32.2; Frankenmuth, 31.3; Chocolay, 25.2.

Special assessments weren’t solely for roads, but also sidewalks and alleys and other features. In years prior, citizens could petition their neighbors to have a special assessment to get their alley repaved. Now, that can’t be done. One possible route suggested by the attorney was that the residents may have to collect donations themselves, Buckman said.

Gladstone City Clerk Kim Berry relayed that the new charter language approved by the citizens has been sent to Municode and will be officially republished once the election is certified by the state.