Council Receives First Round of Budget Presentations Ahead of FY 2025

The July 1 start of the new fiscal year is looming, which means East Lansing city government is in the thick of budget season. 

There was a special budget work session held Tuesday, April 16 where an overview of the next fiscal year was given and city divisions presented to City Council about their proposed finances. Council heard presentations on Community Development Block Grants, and from the fire department, the parking division and 54B District Court.  

“The proposed fiscal year 2025 city budget is the city’s financial plan, a roadmap per say, on how we intend to invest the public resources received to support programs, projects and services between July 1 of 2024 and June 30, 2025,” City Manager Robert Belleman said. 

Budget overview

To start the budget presentation, Deputy Finance Director Audrey Kincade gave a look at the proposed changes to city staff for the next fiscal year. Some of the departments are fully staffed and seeking employees to fill new positions, some departments are seeking to fill empty positions, Kincade said. 

Mayor Pro Tem Kerry Ebersole Singh asked for more clarification on where the city is in terms of staffing. 

“We’re making significant headway in hiring those that are most challenging – law enforcement, engineers, continue to provide some difficulty in achieving the goal,” Belleman said. “We continue to look at our staffing and we’ll continue to strive to fill those positions, not only in the remainder of ‘24, but if approved into the ‘25 budget.”

According to a memo prepared by Belleman that was included in the agenda packet, the fiscal year 2025 budget totals $146,658,485, which is a $15,355,890 increase from the amended ‘24 budget. 

The budget projects about a $4.6 million operating deficit, $3.5 million due to one-time capital items, and $1.1 million in general operations deficit. Last year, the city ran at roughly a $9.4 million surplus, with $5.8 million of that coming from federal American Rescue Plan Act funds, and much of the rest due to staff vacancies and supplemental pension payments, Kincade said. 

In response to a question from Councilmember Erik Altmann, Kincade said the $1.1 million operating deficit was likely impacted by filling staff vacancies from the previous year. 

“We’ve added a lot of positions and that is probably the major swing in the general fund,” she said. 

Altmann then asked if the city should worry about the trend continuing into next year. 

“It’s a possibility,” Kincade said. “I think there’s got to be a conversation about what is an appropriate staffing, what can we hire, what positions can we fill.”

Kincade said the deficit is not sustainable each year, but the city is still in a “comfortable position” with its unassigned fund balance. 

The city is projected to return about $16 million from the income tax in fiscal year 2024, which exceeds expectations set in the amended ’24 budget, Kincade said. This is largely due to the city receiving information from the state about unpaid taxes from 2020 and 2021, and the city recouping those funds. 

There is a slight projected downturn from ‘24 to ‘25 in returns from the income tax, because the city is not expected to recoup as many funds from previous years in the next fiscal year. The city is projected to make about $15.6 million from income taxes in fiscal year 2025. 

Fire Department

The fire department is fully staffed and looking to expand its department next year, requesting three new employees. 

“The three new employees would allow us to place a third medic in service, it would reduce the amount of mutual aid that we are requesting and it would allow an additional person on the fire ground,” East Lansing Fire Department Chief Dawn Carson said. 

Carson said the fire department’s call volume has been increasing over the last four years and the job is getting more difficult. 

Carson said the department will look to increase revenue by changing the department’s fee schedule. Some of the changes involve charges to private facilities for using ELFD resources, transports in nearby communities and helping Bath and DeWitt with EMS services. Bath and DeWitt are not mutual aid partners. 

Mayor George Brookover pointed out that the fiscal year ‘24 budget projected about $1.9 million in charges for service and the fiscal year ‘25 budget projects nearly $2.4 million. Carson said this is primarily because of better returns on ambulance service fees. 

Councilmember Mark Meadows asked about funds being recouped from Michigan State University. The fire department assists MSU with fire services on campus, but Meadows said the university used to provide more grant funding. Carson said the contract with MSU is old and will be revisited.
 

“They need to pony up,” Meadows said. 

Community Development Block Grant

The Community Development Block Grant (CDBG) program is designed to help low to moderate income resident and neighborhoods, as was explained by Community and Economic Development Specialist Matt Apostle in a previous interview with ELi. 

Examples of how CDBG funds are used include funding nonprofit organizations like homeless shelter Haven House, investments in home rehabilitation programs and improvements to public property. Typically, the city receives $400,000-$500,000 annually from the federal program. Apostle presented on what the city’s CDBG program projects to look like in the coming fiscal year, which council will hold a public hearing on at its May 14 meeting. 

As things stand now, the CDBG program will allocate just over $460,000 in the next fiscal year after receiving nearly $780,000 in funding requests. The biggest projected expenses are the $200,425 designated for the sidewalk program and $117,020 on park improvements. 

Apostle said CDBG funds are not scheduled to go towards the Capital Area Housing Partnership’s home rehabilitation program because the program has about $260,000 saved from previous years. 

The CDBG committee recommended spending 15% of funds on public services – which is the limit, and about $52,000 on administrative costs, Apostle said. 

Parking

Parking Administrator Caleb Sharrow presented next, saying the parking division anticipates a balance of about $5.8 million next year. 

Meadows asked if the parking division adjusts fees to try to adjust to lots that experience shortfalls.

Sharrow said there are adjustments to the rates in these areas. He said there are also rate changes recommended for busier garages and street parking that will be included in the parking master plan. However, more time will be needed to complete analysis for this master plan.

Sharrow said the locations that are not “money makers” for the city are mostly due to debt obligation or parking agreements. He gave one example of the parking agreement between the Marriott Hotel and the city. 

“The Marriott pays us a dollar per room rented per night,” Sharrow said. “Yet, are charging the customers in the teens for that parking per night. So, the agreement, the parking agreement is not in the city’s favor in order to make that a money making facility. But there is also debt service on the 2016 M.A.C. rehab project that we carry. There is some tax capture that we do get back from the DDA (Downtown Development Authority) to take the edge off that.”

The parking agreement is part of a 40-year deal with the Marriott, Sharrow said.

Altmann asked Sharrow about the parking division spending money on homeless outreach, which is done in partnership with nonprofit organization Advent House. Sharrow said when he took over his position in 2015, he noticed there were many homeless individuals in the parking garages. 

“We want to be part of a solution to that issue,” Sharrow said. “Not just finding housing for folks, but also not having folks sleeping in parking garages because customers need to use those stairwells.”

The parking division provides $12,000 and the general fund provides $8,000 annually to Advent House for homeless outreach. The parking division receives reports quarterly about homeless individuals found in parking garages, and parking division staff carries business cards directing people to homeless services. 

54B District Court

The court presentation was not scheduled for Tuesday, but with other presentations finishing quickly, Brookover asked if there were volunteers. 54B District Court Chief Judge Judge Molly Hennessey Greenwalt and Court Administrator Nicole Evans offered to present. 

Hennessey Greenwalt said it was a “period of transition” for the court, with longtime Judge Richard Ball retiring at the end of 2022, and Judge Lisa Babcock filling the vacated role. The court also has many new employees, Hennessey Greenwalt said. 

The main point of discussion was a sunsetting state statute that impacts court funding. Hennessey Greenwalt said there is a state statute that allows the court to assess court costs in criminal matters that is set to sunset on May 1. She said the statute doesn’t touch civil infractions, parking or prosecutorial costs for some offenses like operating while intoxicated. 

There have been talks of sunsetting the statute for a decade, Hennessey Greenwalt said. It previously expired in 2022, but the legislature acted within days to renew it. She said she doesn’t anticipate the legislature letting the statute be out of effect for long. 

“There’s been consideration of different modes of court funding,” Hennessey Greenwalt said, explaining why the statute has been in flux for so long. 

Evans clarified that less than 23% of the court’s collections are from the statute – roughly $3,500 per month. 

Budget season to push forward without Finance Director Penny Wright. 

Friday, April 19 the city sent out a press release announcing Finance Director Penny Wright is retiring for health reasons. 

“I love East Lansing and am so grateful for the warm welcome that I received upon coming here,” Wright is quoted as saying in the press release. “I am very sad to be leaving such a wonderful group of people, but my health and my family have to come first.”

Wright’s retirement will become official Friday, April 26, according to the press release. 

City Council will hear the next wave of budget presentations at a special work session scheduled for 5 p.m. on Tuesday, April 23.