Budget Proposals for General Fund, Police, Fire, More Presented to City Council

Budget season is upon us and City Council dove into discussions about the deficit the general fund is proposed to operate under in the next fiscal year, the impact inflation is having on infrastructure improvements and how big projects on Michigan State University’s campus may impact the city’s finances. 

City department heads gave presentations on the proposed budgets for the general fund, police and fire departments, Downtown Development Authority (DDA), the Community Development Block Grant program and parking at the Tuesday, April 15 discussion-only City Council meeting. 

Within these presentations, city officials highlighted plans for future projects and changes within their departments–including an announcement from Fire Chief Dawn Carson that she will soon step down from her post after more than 30 years of service to the city. 

The presentations were an overview of proposed budgets. While there was some discussion with council, more detailed conversations about potential cuts or revenue opportunities will take place later on. 

General fund to operate at more than $3 million deficit under budget proposal. 

The city’s Chief Financial Officer Audrey Kincade started budget presentations by giving an overview of the city’s finances, its general fund and the income tax. 

Across all departments, the city is budgeted just under $140 million for fiscal year 2026, which is about $10 million less than the current fiscal year. Kincade said that a “risk” with the proposed budget is operating costs. Typically, the city’s largest expense is personnel costs. While personnel costs are still slated to be the largest expense, making up 30.8% of the budget, it is just ahead of operating costs at 29.9%. 

Kincade explained that operating costs are creeping up largely due to inflation making construction projects more expensive. 

“Everything costs more for everybody,” she said. 

Looking at the general fund, the FY26 budget is about $52.1 million, about $1.8 million lower than the amended FY25 budget. 

The budget for the next fiscal year projects the city will need to use about $3.1 million in reserve funds. Kincade said city would be using more of its fund balance, but the proposed budget finances more capital improvement projects through bonds. 

“It gives us a little bit more time to have long term conversations, rather than burning cash right now,” she said. “We have a little more opportunity to have conversations about long term operations or finding different funding sources.”

In response to a question from council, City Manager Robert Belleman said he plans to present council with a “laundry list” of potential cuts or revenue opportunities council may opt to pursue during the next fiscal year to try to erase the use of fund balance. Belleman did not indicate what these opportunities may be at the April 15 meeting. 

“I can preview that I’m working with staff to identify some revenue opportunities, as well as some additional cost containment items but I have not yet completed that list or what that looks like,” he said. “I’m hesitant to really delve into that until we get further along.”

Shifting focus to the income tax, Kincade said that the city is projected to take in about $16.6 million. Around $7.2 million of that will go to reimbursing the city for the five mill reduction in property taxes that accompanied the income tax implementation, and close to $1 million will be spent on administrative costs. 

The roughly $8.4 million of net revenue from the income tax will be split 60% to the city’s pension liability, 20% to public safety and 20% to capital improvement projects.

Kincade through the conclusion of FY24, the income tax has generated more than $38 million of additional revenue for the city. Of that, about $23 million went to paying down the city’s pension liability. The city first started collecting the income tax in 2020, though collections efforts were slowed early on due to the COVID-19 pandemic.

Both Councilmembers Erik Altmann and Dana Watson asked about property taxes. Altmann asked for an itemized breakdown of what property taxes are spent on, to help residents better understand what their taxes are going towards. 

Altmann said that residents are often frustrated about their property tax bill, but the property taxes go to fund a number of things outside of the city’s authority like the Capital Area Transportation Authority, Lansing Community College and more. 

“It’s important for people to know that only 30% of their property taxes they pay actually go to the city, and the rest go to other taxing authorities that we are required to collect on their behalf,” he said. “I think we can’t make that point enough.”

Watson said she feels like her property tax bill is high. She asked for a comparison of property taxes paid by residents in East Lansing versus other cities. 

Belleman said a city employee is currently working on a chart that shows that comparison. He said he will check in on where that project stands. 

ELPD budget ask includes funding for a third social worker, employee hiring and retention. 

Interim Police Chief Jen Brown presented on the police department’s $16.2 million budget request, which is about a 5% jump from the current year. 

The police department spends most of its money on personnel. Around $12.9 million goes to personnel, while $3.3 million is used on operating expenses. Brown added that ELPD is pursuing $2.2 million in grants next fiscal year, which is not covered in this budget request. These grants would pay for equipment upgrades, security cameras and facility improvements. 

The East Lansing Police Department (ELPD) has struggled with staffing in recent years, but Brown said she is optimistic the department will be fully staffed in the next fiscal year. If this happens, it will be the first time ELPD is fully staffed since FY19. 

A common request from community members recently has been increased enforcement of traffic violations, especially speeding. However, Brown clarified that even if ELPD receives commitments for full staffing by the summer, it will take some time for the police department to have a full road patrol. 

Brown said the department currently has 44 employees, and conditional offers out to fill the seven vacant positions. These seven employees still need to go through the police academy, with most candidates expected to finish in December. After this, there is a four-month field training process. 

“It’s looking like about a year from now until we successfully add all of those candidates and get them through training,” Brown said. 

Brown said ELPD is also looking to hire officers from other departments, who would go through a shorter training process. 

ELPD plans to create a new social worker position, primarily to work with the homeless population downtown. Brown said the DDA is providing much of the funding for this position. 

Brown said ELPD social workers help unhoused people find housing, jobs, IDs, substance abuse treatment and more. 

Brookover throws water on planned MSU development during presentation from fire department. 

Fire Chief Dawn Carson announced at the start of her presentation that she will soon be stepping down after more than 30 years in service to the city. Carson became the first woman to serve as East Lansing Fire Chief when she took over atop the department in 2021. 

Fire Marshall John Newman, a 24-year veteran in the department, will serve as interim fire chief once Carson steps down on April 25. 

The budget ask from ELFD has a net impact on the general fund of about $5.8 million, as the department plans to spend about $14.2 million, while taking in about $8.3 million. 

Among the fire department’s goals for the next fiscal year is to provide Stop the Bleed training to all city employees, as well as CPR and First Aid training to the broader community. 

Carson emphasized that ELFD will continue to promote its cadet program with hopes of attracting more firefighters and paramedics. Carson called the cadet program “very successful,” saying it has produced six employees for ELFD since 2021. 

The conversation turned to the cost of responding to emergencies at large developments, after Mayor George Brookover asked about extra costs that may accompany the proposed Spartan Gateway project planned for the Michigan State University campus. 

The project includes an Olympic sports arena, hotel and apartment buildings. 

The city is contracted to provide fire services on campus. Newman explained it is much more expensive to respond to fires at large developments, like those proposed for Spartan Gateway, than it is to attend to a house fire. 

“On average, it’s recommended that you have 15-17 firefighters respond to a single residence, so a single-family home,” he said. “Once you get to a high-rise, you start at 43 [firefighters].

“So, when you talk about the demand on resources, we have a total of 13 on duty each day,” Newman continued. “Any response that we would have for a fire in a high rise, is an automatic call out to our neighboring jurisdictions for resources.”

The city receives roughly $326,000 for fire services provided on campus, Belleman said. Councilmember Mark Meadows said city leaders need to speak with university officials about whether this amount is enough.. 

Mayor Pro Tem Kerry Ebersole Singh pointed out that the Spartan Gateway project is still years from coming to fruition, the first phase is planned to be operational in late 2027, giving the city time to prepare. 

Roughly $420,000 in Community Development Block Grants to fund trails, nonprofit organizations, more. 

Community and Economic Development Specialist Matt Apostle presented on the Community Development Block Grant (CDBG) program. 

The federally funded CDBG program is meant to uplift low-to-moderate income communities by providing economic opportunities, and improving housing and living conditions. Right now, the city is expecting to receive about $420,000 in CDBG funding that will be used on capital improvement programs and help fund local nonprofit organizations. 

Apostle explained the city does not yet know how much money it will receive through CDBG, which isn’t unusual for this time of year. The city is budgeting based on the funding it received for the current fiscal year, and will increase or decrease the amount allocated proportionally based on the amount ultimately awarded. 

To find out more about the CDBG program and what it will be funding next fiscal year, read this previous reporting from ELi. 

DDA budget sits at about $2.7 million. 

The DDA is mostly funded through two different tax capture districts. Recently, the body’s budget has exploded, primarily because of large projects built within the DDA district that have resulted in more property taxes being paid..Community and Economic Development Administrator Heather Pope explained that the DDA budget will be about $2.7 million in FY26.

The biggest expense for the DDA is on operating costs. These expenses include costs to maintain downtown facilities, keeping the area clean, lighting, supplementing police overtime costs and helping to pay for a new police social worker, Pope said.

The DDA plans to spend close to $220,000 on personnel next fiscal year, with around $180,000 earmarked for a DDA executive director the city plans to hire. The rest goes to city staff that assist the DDA or downtown activities, Pope said. 

Debt service for the DDA’s long-held Evergreen Avenue properties will continue to be a financial hurdle, as about $570,000 is budgeted to address debt on the properties. The DDA took out a $5.6 million loan to purchase the properties in 2009. A closer look at the budget shows the DDA will spend about $355,000 on the loan’s principal payment and $215,000 on interest. 

Since the properties were purchased more than 15 years ago, the DDA has been unable to reach a deal with a developer – as significant interest costs continue to be racked up and the debt has now been refinanced twice. Late last year, the city hired a new firm to market the properties.

Parking division proposes roughly $6.2 million budget.

The city’s Parking Division is proposing a roughly $6.2 million budget in FY26, Parking Administrator Caleb Sharrow said. 

In response to a question from Altmann, Sharrow said that the parking department adjusts parking fees by looking at the demand to use lots. The department is planning to decrease the rate to park at the Division Street lot from 75 cents per half hour to 50 cents because it is the lowest demand lot.

It’s hard to tell what decreasing the rate will do to demand until data is collected, Sharrow said. 

“You have to try it to see what happens,” he said. 

The parking division is projected to make about $5.7 million in charges for service next fiscal year.