Council Takes a Long Look at Finances
Finances were at the forefront of the Dec. 12 discussion-only City Council meeting, as Council members heard feedback on an audit of the city and discussed how funds from the American Rescue Plan Act (ARPA) could be used.
Prior to digging into the agenda, Council heard from a series of speakers asking them to support a resolution asking for a ceasefire in the Israel-Hamas conflict. The Human Rights Commission (HRC) drafted a resolution at its Dec. 11 meeting requesting the city ask for the ceasefire. HRC will be presenting the resolution to City Council.
Speakers in public comment plead for the city to support a ceasefire.
East Lansing Islamic Center Trustee and Human Rights Commissioner Thasin Sardar took to public comment to request City Council support calls for a ceasefire in the Israel-Hamas conflict that has claimed the lives of thousands of civilians, mostly Palestinians.
Sardar said it was important for the city to support the resolution because it puts pressure on congressional leaders to support the ceasefire, which in turn may influence the Biden administration. Another speaker later said that U.S. Rep. Elissa Slotkin, whose district includes East Lansing, and Senators Gary Peters and Debbie Stabenow have not called for a ceasefire.
Sardar also mentioned a string of violent and sometimes deadly attacks against Muslims since the conflict began, pointing out that the local Islamic community is not immune from similar attacks.
“It’s causing a climate of hate,” Sardar said.
Three other speakers followed Sardar in public comment, each echoing his request for the Council to call for the ceasefire.
“When there’s a humanitarian catastrophe, it is a human issue that affects all of us,” East Lansing Independent Police Oversight Commissioner Chris Root said. “I cannot think of a reason to not feel connected to what is going on.”
Root went on to lay out precedent for the city acting on international affairs.
“During a previous anti-apartheid struggle involving South Africa, the East Lansing City Council was one of the first city council’s in the country to take an action,” Root said. “The City Council adopted what was called a selective purchasing policy, which was to look at what contracts it had and to see if there was a way of reducing, putting a stop, a halt, on contracts with U.S. companies that were involved in South Africa.”
Pension debt remains a burden and the city did not lose as much money as it anticipated, according to an audit.
Council saw a presentation on an audit of fiscal year 2023, which spanned from July 1, 2022-June 30, 2023. The audit was conducted by the firm Rehmann Robson, which sent two presenters: Doug Deeter and Jason Salzwedel.
The audit first highlighted the city’s general fund, which showed the city both made and spent less money than was expected before the start of the financial year. The city’s final budget projected to bring in just over $54.1 million in revenue and ended up bringing in just under $53,000,000, meaning there was a difference of about $1,150,000.
The city projected it would spend upwards of $57.2 million but ended up spending just under $53 million, partially because of staff vacancies that meant budgeted positions went unpaid. Notably, more than half of city expenses were on public safety, which includes police and fire.
Overall, the city spent about $26,000 more than it made, when the budget projected about $3.1 million in losses.
Next, auditors examined the city’s enterprise funds – which are services city residents pay for including parking, sewage and water.
Presenters explained that these funds should operate with a positive margin so they can pay for future maintenance. Overall, the parking system had a net operating income of $1,459,578, the sewage disposal operating income was $6,849,316 and the water supply system had an income of $1,401,060.
Pension debt was examined next. Presenters showed five years of how much is owed in pension liabilities and how much of these funds the city has mapped out. As of 2022, the latest year data was shown, there were upwards of $220 million owed and $123 million planned to cover those expenses, with about $98 million of unfunded pension liability. In other words, funding for about 55.6% of the pension debt is mapped out, compared to just under 62% in 2021. Over the five years shown, the percentage of planned-for pension liabilities has fluctuated from 49.2% to 62% in 2021.The pension debt has long been an area of concern for the city.
Council discussed how federal dollars from the ARPA could be spent.
The American Rescue Plan Act (ARPA) provided federal money to local economies in the wake of the COVID-19 pandemic. In total, the city received about $12.1 million and has about $5 million left to spend, Finance Director Penny Wright explained.
The more than $7 million of ARPA funds the city has already spent have paid for things like renovations to the fire station and the Hannah Community Center, employee retention pay and the hazardous sidewalks program. (Here is ELi’s longitudinal coverage of the ARPA funds.)
Council discussed how the remaining funds could be spent, with City Manager Robert Belleman saying he and city staff looked for ways to use the ARPA funds to help the general fund and provide direct benefits to residents. Council will be responsible for approving projects that use ARPA funds. (There was no action taken on specific projects or funds at the Dec. 12 meeting).
Belleman went through a long list of projects the ARPA funds could be used for. Some of the major expenses he listed include expanding solar energy capabilities, improvements for the city’s water system, resurfacing and expanding the parking lot at the soccer complex, and modernizing the elevator at the Charles Street parking garage.
Councilmember Erik Altmann asked if the city wanted to spend the ARPA money on enterprise projects, like the water fund? Belleman said water and sewer improvements are needed, which could substantially raise rates residents pay.
“The idea is to help offset some of these costs with those [ARPA] dollars that were not ever intended to be long-term revenue,” Belleman said. “Ultimately, it is up to this body (Council).
“When you look at some of the projects that we have to fund on the sewer side, rates are going to go up substantially in the near future,” Belleman said.
Multiple members of Council expressed a desire to see alternative ways the money could be spent or projects that could be prioritized.
“We can continue to have further discussion on big picture investments using these dollars, if not toward trying to reduce the utility rates,” Belleman said.
After Wright explained that ARPA funds need to be designated by the end of 2024 and spent by the end of 2026, Mayor George Brookover expressed a strong desire to get the ball rolling on allocating the funds.
“I’ve been concerned for the last year that we haven’t had this discussion,” Brookover said after indicating he’d like the topic to return to Council at its next meeting, Jan. 9. “I do not want to lose this in the shuffle again.”
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