Major Spending Cut to Parks on the Table as City Has “No Good Choices” to Balance Budget
East Lansing officials are considering slashing more than $2.6 million from the Parks and Recreation Department budget, as city leaders grapple with a projected $3.1 million deficit in the next fiscal year.
“We are in a situation where there are no good choices,” Councilmember Erik Altmann said at the April 29 discussion-only City Council meeting.
According to a memo prepared by City Manager Robert Belleman, the city currently holds about 18% of its general fund in reserve funds. However, if the city continues at its current trajectory, it will fall below the recommended 12% within the next two fiscal years.
Belleman said the deficit is largely due to the city expecting to fill many staffing vacancies, increasing personnel costs, and the $1.6 million the city will no longer collect from LBWL franchise fee charges, after the Michigan Supreme Court ruled the fee is an illegal tax earlier this year.
Belleman gave eight different options the city can pursue to address its deficit. Some of the most consequential options are significant cuts to the Parks and Recreation Department budget, and increasing general fund revenue from the city’s parking garages.
Notably, the cuts to the parks department come with paths to recoup the lost funds through a property tax millage, contributions from local schools and increased fees to use facilities.
Another option outlined in the memo – but not recommended by Belleman – is charging residents for the cost of maintaining street lights. This would be similar to the bill residents currently receive for maintenance to sidewalks adjacent to their homes.
City Council did not take action on the proposals at the April 29 meeting. Council will look to finalize the city’s budget for fiscal year 2026 by May 27. FY26 begins July 1. Some of the cuts and revenue opportunities may not be implemented going into FY26, but will continue to be discussed during the cycle and into FY27.
City to consider slashing entire general fund contribution to parks and recreation department.
The biggest adjustment proposed is the $2,641,470 reduction to the Parks and Recreation fund – eliminating the general fund’s entire contribution.
The impact of the cuts would be significant, as the general fund provides about 40% of the department’s roughly $6.2 million budget.
Belleman gives three different ways the department can replenish the funds lost: Through a property tax millage, assistance by East Lansing Public Schools and increasing charges for service.
Belleman recommends placing a parks and recreation millage on either the November or August ballot this year. One mill would generate about $1.4 million, meaning voters would have to approve close to two mills to recoup all of the lost funding.
Belleman said if the city opts to eliminate parks funding from the general fund, he recommends the changes be made after voters have the opportunity to decide whether or not to pass a millage. The current Parks and Recreation budget proposal for FY26 includes the $2.6 million general fund contribution.
In response to a question from Councilmember Dana Watson, Belleman said that it would be up to council to determine the duration of the millage.
“Some go as long as 10 years, some go shorter,” Belleman said.
Parks and Recreation Advisory Commission Chair Sarah Reckhow spoke out against the proposal at the meeting. Reckhow said the city should be wary of relying on a millage to pay for services that were previously provided by the general fund.
“I think East Lansing voters this fall will be able to see exactly what that is, which is an increase in general city taxes,” she said. “I think the manager and the City Council need to think very carefully about any approach to raising revenue that would rely on that type of an approach.”
The parks and recreation department plans to increase fees for access to facilities and services. The increases are estimated to generate close to $320,000 in the next fiscal year.
Reckhow also sees issues with this proposal. She pointed out that the city already pays for about 42% of parks operations and maintenance through fees and other earned revenue, far more than the 25% average in Michigan.
The fee increases will make facilities and programs that are meant for the public even less accessible, Reckhow said.
The third component of Belleman’s proposal for the parks department is to decrease expenses on school programs run through the city.
Belleman said the city will not ask East Lansing Public Schools (ELPS) for funding, rather the schools may take some programs back in-house, reducing the city’s expenses running the programs.
The amount the city may save by sending some programs back to ELPS is not stated in the memo.
The fee increases will make facilities and programs that are meant for the public even less accessible, Reckhow said.
The third component of Belleman’s proposal for the parks department is to decrease expenses on school programs run through the city.
Belleman said the city will not ask East Lansing Public Schools (ELPS) for funding, rather the schools may take some programs back in-house, reducing the city’s expenses running the programs.
The amount the city may save by sending some programs back to ELPS is not stated in the memo.
Residents to be billed for the cost of street lights?
One of the more eye-catching options to raise revenue is assessing residents for the cost of installing, maintaining and operating street lights, which would save the city more than $1.3 million.
Belleman’s memo references several municipalities that currently charge residents for street light costs. Right now, the city assesses residents for the cost of maintaining sidewalks adjacent to their homes.
An assessment is very different from a millage because it does not need to be approved by voters.
Belleman, however, said he does not recommend the city implement the assessment because it would almost certainly be met with animosity from many community members.
“If we’re building trust with our residents, we should ask them if they want to increase their costs through a millage, [rather] than us using a city-wide special assessment to redirect street lights [costs] to them,” Belleman said. “I don’t believe that’s an appropriate way to cover this deficit.”
Parking garages could be used to support general fund.
Belleman proposed instituting leases on city-owned parking garages to support the general fund. The plan would redirect money from the city’s Parking Department to the general fund and collect revenue from developers.
The first lease outlined in the memo would provide about $640,000 annually from the MAC parking garage. The garage’s current 40-year lease with University Place Condominium Association, which houses the Marriott hotel downtown, expires in March 2026. Currently, the city collects only $1 per year from the lease.
Under the new lease agreement, University Place would pay two-thirds of the lease agreement and the city’s Parking Department would pay one-third. Notably, the new lease would begin with just four months remaining in FY26, meaning only about $210,000 would be collected next fiscal year.
Belleman has also proposed putting ground leases on the city’s other six parking garages, which the Parking Department would pay into the general fund.
The memo justifies the charge by stating that the garages occupy valuable land in the city, but do not pay property taxes. Collecting lease payments from the remaining six garages would generate close to $600,000 annually for the general fund.
City will look to assemble Financial Health Team during next fiscal year.
City officials have been talking about recruiting residents to help analyze the city’s finances for months now, and assembling a Financial Health Team is still a part of the city’s long term plan.
The team, however, will not be formed in time to help the city with its planning ahead of FY26. Belleman said a resolution to form the team will be brought to council after budget season is over. The city will then look to recruit team members to help analyze the city’s finances and provide recommendations to council.