East Lansing Will Soon Assemble a Volunteer Team to Address the City’s Financial Challenges
On the heels of a failed millage proposal that would have provided financial relief for East Lansing government, the city will assemble a task force of community volunteers to provide recommendations on how to address the city’s financial challenges.
The review team is scheduled to spend six months looking at ways to preserve the city’s general fund, which is projected to run at a deficit and burn through the city’s reserve funds, unless adjustments are made.
The city initially opened applications for the review team in August, but received little interest. The application period was then reopened until mid-October and saw interest from 11 applicants to serve on the seven-member body.
Council selected Councilmember Mark Meadows to serve as liaison to the Financial Health Review Committee. In an interview shortly after the application window closed, Meadows told East Lansing Info he is impressed with the pool of applicants.
“You would expect in a university community – not just a university community, but the third most educated university community in the country – that you’d get tremendous applications,” he said. “That’s exactly what we’ve gotten.”
Most applicants have a background in business or municipal finances. One member from a previous financial review team assembled in 2016, Jill Rhode, applied to serve on the next committee.
The 2016 financial review committee made 42 different recommendations over a thorough six-month review period that included 12 full meetings and 55 work group meetings.
“While we didn’t go through line-by-line [and install] every recommendation, virtually every recommendation had some kind of response through action,” said Meadows, who also served as council liaison to the 2016 review team.
The previous financial health review team made many influential recommendations, like implementing an income tax and switching to a less expensive benefit plan for many city employees, Meadows said.
The resolution passed by council establishing the committee says it will look into pensions, post-employment benefit financing, ideas to increase revenue and cost containment. Meadows added that the committee could do things like look into development incentives used by other Big 10 cities, such as Ann Arbor.
Additionally, the next review team may take a closer look at what cuts would mean for city departments by examining what each department would look like if it operated with a five or 10 percent budget cut, Meadows said.
City officials disagree about where city finances sit.
The city’s fiscal year ends in June, and planning for the next budget will ramp up early next year, long before the review team finishes its work.
Ahead of the nearing budget season and assembly of the review team, members of council have displayed varying perspectives on the city budget.
Meadows said he doesn’t think the city is operating at a significant deficit, and noted that the city has been budgeted to run at a deficit in past years, and ended up performing better than expected.
Mayor Erik Altmann, however, has said he thinks the city is operating under a structural deficit of more than $4 million – about 8% of its general fund – and that significant changes will be needed to address the shortfall.
City Manager Robert Belleman has also warned that some of the city’s financial challenges have been masked by delaying large capital improvement projects, the $12 million boost from the one-time federal American Rescue Plan Act program and staff vacancies in recent years.
The review team will conduct its work in the shadow of a lost revenue stream for the city.
Early this year, the Michigan Supreme Court ruled East Lansing issued a “disguised tax” through a franchise fee installed in Lansing Board of Water and Light bills. The city was ordered to pay $7.8 million and stop collecting the fee, which generated about $1.6 million annually.
Following a recommendation from Belleman, City Council voted to place a millage on the Nov. 4 ballot that would increase property taxes by two mills to replace the general fund’s roughly $2.6 million contribution to the parks department. Some city leaders thought that passing the millage was critical.
“We need to pass the ballot proposal. If we do not pass the ballot proposal, then whoever is sitting at this table is going to have the job from hell,” former Mayor George Brookover said at his final City Council meeting on Oct. 21.
Voters overwhelmingly rejected the millage at the Nov. 4 election, sending city leaders back to the drawing board to find a way to offset the loss of the franchise fee.