Council Begins Deliberations on Budget Cuts and Revenue Options

At Tuesday night’s “discussion-only” meeting, the East Lansing City Council held a far-ranging discussion about options for budget-cutting and about possibilities for new revenues. Their conversation, which followed initial information-sharing about budget options on Sunday at the East Lansing Public Library, was the start of tackling the problem of how to find $3 million to cut from the City budget, which is currently around $34 million per year.

Mayor Mark Meadows said at several points that this was not a meeting at which decisions were being made. “None of this is set in stone,” he said. “What’s really important here is how the community wants to view itself going forward.”

Many possibilities for making cuts as well as potential new sources of revenue were introduced – too many ideas to fully report here.

After one-and-a-half hours of sharing their ideas about how to approach this difficult task, Council members looked to City Manager George Lahanas to say what he would prepare before their next meeting in response to their requests.

Lahanas answered: “I appreciate Council’s deliberations and working on this very tough issue, I was listening intently…. Unfortunately, I did not see a high degree of agreement across all of the items [in the budget], which makes it much more challenging. I think you also saw that, that you have different items that you value depending on your perspective.”

What to do about summer recreational programming:

Lahanas then asked the Council to give him feedback on a recommendation he made at the beginning of the discussion – that the Council decide whether, at this point, many of the summer recreational programs and festivals that normally take place in East Lansing should definitely go forward for one more year.

He explained that many people are waiting to hear whether they should go ahead and plan these events for the summer of 2018, and many contracts, such as for the Art Festival and Jazz Festival, need to be signed in January or February, so delaying a decision is problematic.

In addition, if facilities like the soccer complex and softball complex are to be closed, organizations that use these facilities need to be given enough notice so they can try to make alternative arrangements. In some cases, that includes the East Lansing Public Schools.

On this question, Meadows polled members of the Council, and all of them agreed to keeping the typical major summer programs and festivals going for another year. Meadows pointed out that this timeline gives an opportunity to communicate with the public about what activities might need to be given up before they are abruptly stopped.

Councilmember Ruth Beier agreed with continuing festivals and recreational programs, generally, for at least one more season. She said this creates time for another opportunity to seek additional revenues, as well, which Council cannot explore right away.

What to do about the Hannah pool:

One specific exception considered to maintaining recreational facilities at current levels was the indoor pool at the Hannah Community Center. The pool is in need of a new heat exchange unit very soon. This machinery would cost about $45,000 to fabricate and install.

The Council was not prepared to make a decision immediately about whether to go ahead with that investment in the pool. Councilmember Shanna Draheim asked Parks and Recreation Director Tim McCaffrey to provide a list of other expenses for the indoor pool that can be expected soon, such as new decking. She said she thinks this pool should be closed because there are five other public indoor pools in the surrounding area, some with only slightly higher pricing than the Hannah Community Center.

Closing the indoor pool at the Hannah Center could be an example of what Draheim identified as not simply a budget “cut” but a “reallocation.” She also suggested that the Hannah Center should be a “shining star in the community” that should be expanded and made better, for example by finding a good way to utilize the vacant third floor, one that might bring in more revenue.

Methods for considering budget cuts:

One approach for how to decide on budget cuts suggested by Mayor Pro Tem Erik Altmann was to have each member propose a “package” of cuts that would add up to about $3 million savings. In other words, each member would set a target and then ball-park adding up cuts that come to close to this amount.

Annual cuts of about $3 million are needed in large part to make payments toward reducing the $87.7 million in unfunded, accrued, retiree-related liabilities. (That being the figure as of December 31, 2016.) Altmann thought that using this “package” cut approach might “leverage” the fact that Council members are bringing different perspectives and ideas. It could be a more fruitful way to look at alternatives than debating programs to cut one-by-one, he thought.

Altmann himself suggested a list of cuts amounting to almost $4 million. Meadows’ list totaled $2.6 million. Beier expressed a common sentiment, saying, “This is an awful thing we have to do.” Both Beier and Lahanas pointed out that Councilmembers and staff have to consider cuts that they do not favor or even think are advisable, but that would be necessary to meet the budget constraints the City now faces.

Among possible cuts on these lists were reducing the numbers of police officers, paramedics, and firefighters through attrition (for a savings of about $900,000 per year in each of the police and fire departments) and assessing property owners for street lights and drains (saving the City about $630,000 and $55,000, respectively). What the property assessment approach would accomplish is freeing up some East Lansing funds to use for other needed public purposes.

On some people’s list but not others’ was terminating the videotaping of most City Council meetings. Draheim suggested a middle-road approach of continuing to videotape meetings of the Council but not of the Planning Commission. The current cost of all the meetings that are being videotaped is about $154,000 per year.

These and other possible cuts that were talked about at the meeting came from the list of possible cuts presented at Sunday’s meeting and the 5% budget reductions by departments that also was distributed on Sunday. (This second document is an updated version of a list originally prepared at the request of the Financial Health Review Team.)

Draheim expressed a preference for a different approach to deciding on cuts. She said, “I am a process thinker. I feel we are jumping into the weeds.” She acknowledged that a thorough process of priority-based budget-setting was not possible for the FY 2019 budget, which begins on July 1, 2018, and which the Council must therefore consider during the spring of 2018.

Draheim suggested a more structured process that would consider, for example, which programs are mandated and which are not and then considering which meet important goals of the community. She also advocated adding up small cuts within some programs, such as reducing the number of summer outdoor concerts but not cancelling all of them.

Parks and Recs facilities involve complex relationships and contraints:

There was considerable discussion of Parks and Recreation facilities, especially those on the north side of the city, including the Soccer Complex, Family Aquatic Center, and Softball Complex. Draheim argued that these facilities (along with the Hannah Center and downtown festivals) are part of “what makes East Lansing East Lansing.”

Director of Parks and Rec Tim McCaffrey explained that the land for the three northern facilities had been acquired through agreements between the City and the East Lansing Public Schools. The schools do not pay rent for use of the sports complexes now, in exchange for their having provided the land for the facilities east of Chandler Road.

McCaffrey also explained that some of the facilities had been developed with grants from the Natural Resources Trust Fund, which require that they be held in perpetuity for “purposes of public parks and recreation.”

Meadows made a case for continued use of these facilities plus the Hannah Community Center based on the fact that East Lansing voters had voted in favor of bonds to support them (as voters did with the East Lansing Public Library), demonstrating a willingness to fund these amenities. Considerable private fundraising was done for the Soccer Complex, as well.

What not to cut:

Councilmembers asked whether they could take anything of the budget-cutting options off the table so that staff would not need to do any more work providing additional details about them.

Meadows and Councilmember Aaron Stephens suggested that closing the fire station on the MSU campus be taken out of consideration, based on information provided at Sunday’s meeting that MSU pays for this building and utilities. Moving the apparatus and staff to the main fire station on Abbot Road would save the City only about $10,000, and doing so would certainly cause delayed response times on campus and the south side of the city, include the Red Cedar neighborhood.

Stephens also suggesting taking off the table terminating some Commissions, both because of their importance and because there would be little cost savings. Commissions are comprised of volunteers, and the people who staff them are salaried, not hourly, City employees.

“My thought is of trying to maintain what makes East Lansing East Lansing. Festivals and Commissions are both part of those,” Stephens said.

Draheim also expressed the believe that citizen Commissions are important to East Lansing’s character.

What’s next:

The next Council meeting will start at 7:00 p.m. next Tuesday, December 19. Draheim urged that the Council make a decision at this meeting about a plan and timetable for obtaining input from the public about these issues.

Altmann and Meadows spoke in favor of convening one or more facilitated discussions at Hannah Center, perhaps starting in January or February.

A phone survey is another option that could be used to obtain views from a wide array of residents.

Next Tuesday, members of the public will be able to share their views at the beginning of the meeting in a Public Comments period. They can also send written comments to all Councilmembers at this email address: council@cityofeastlansing.com.

You can watch the entire Council discussion on budget and revenue options from Tuesday night by clicking here. Under the video screen you’ll see an index of topics covered at the meeting. If you select item number 6, “Strategic Priorities and Budget Discussion,” the video will jump to that part of the meeting. You will hear more discussion than could be reported here, particularly about initial exploration of revenue options.