Council Seeks Public Input About Tough Financial Choices

As East Lansing’s City Council and City Manager continue to face a looming budget crisis with obligations and expenses likely to soon start outpacing revenues by millions of dollars per year, they also continue to seek citizens’ views of what should be given priority.

The second session hosted by East Lansing government on January 18 to obtain input from the public about potential budget cuts and new tax options was well-attended, like the first. An official press release issued the following day indicated that 215 people participated in the two sessions.

People who did not attend either meeting may submit a survey online. The deadline for submitting the survey is this Wednesday, January 24, at noon. (Links to the survey and handouts from the second meeting appear at the end of this article.)

As expected, at the January 18 meeting, City Manager George Lahanas basically repeated the introductory presentation he made at the first public session the week before. Lahanas’ nineteen presentation slides have now been made available online.

They show the decline in revenue sharing payments from the state, the shrinking of City staff by more than 100 employees, low wage increases, and changes to retirement and retiree health care to reduce costs to the City. At last week’s meeting, Lahanas commented that the City has been cutting about nine positions each year, and that this trajectory – of cutting five, or eight, or ten positions – can be expected to continue in each upcoming year.

A recent press release from the City provides a compact summary of the City’s financial difficulties:

“The City of East Lansing has and continues to face significant financial challenges as a result of decreased revenue sharing from the state over the past 16 years, tight state restrictions on the ability of local governments to raise new revenue, the ongoing impact of the drop in property values as a result of the recession and Proposal A/Headlee limits, low taxable value per capita, legacy costs (which have increased due to the recession and below-average market returns; the City’s pension obligations were 80% funded in 2003 and they are 53% funded today) and the ongoing need to renew aging infrastructure. It’s important to note that the City has had no growth in revenue in a decade. The percent change from 2006 to 2017 is -1.4 percent.” [emphasis in original]

The press release goes on to summarize what the City has done to reduce costs:

“Steps taken to address the City’s financial challenges over the years include decreasing the overall size of government (elimination of 130+ positions since 2007), restructuring pension and retirement benefits for employees, consolidating and restructuring City departments, creating a Healthcare Task Force to keep rising healthcare costs at a minimum, adding 2 mills to the East Lansing Public Library operating budget, sharing services with neighboring municipalities and making other strategic cost-cutting decisions across all City departments.”

At last week’s meeting (shown above), hired facilitators from Public Sector Consultants told the crowd sitting at more than a dozen tables that the individual surveys to be handed in at the end of the meeting were the main way their input would be collected.

Some people expressed frustration that more time was not being given to listening to people’s comments, many of which occurred in small-group discussions. Lahanas pointed out that there was a large group present and only two hours allotted for the meeting.

People expressed a wide range of views in the limited time available. One person commented, near the end of the session, “The facts are compelling….We need to find ways to raise money.”

A few minutes later, another participant addressed the City Manager: “You said we’ve already made all the small cuts. I think we could cut 24 things on the list [handed out tonight]. Maybe do some cutting, and then go back to voters” to talk about further revenues.”

Several people wanted to consider dealing with the City’s financial problems using means that were not on the lists of budget cuts or ways to bring in additional income.

One person suggested raising user fees. Lahanas explained that Council reviewed in detail the Parking and Parks & Rec user fees about a year-and-a-half ago, and increased a number of fees for both residents and non-residents. Parks & Rec Director Tim McCaffrey said that the resulting increased fees had brought in about $20,000 more income to his department in the past year. Lahanas pointed out that this is a small amount compared to a need to make $3 million in cuts unless more revenue is found.

At the City Council “discussion only” meeting on January 16, held between the two public input sessions, Councilmember Shanna Draheim urged that all options that have been relayed to Council be included in the list made available to the public, despite the consultants’ concern that the public-input meetings needed to be kept manageable and not too confusing.

Below: The Orchard Street Pump House in a photo provided by kennethaw88 at Wikimedia.

For example, she asked why closing Hannah Community Center is on the list of possible cost-cutting options, while closing the Pump House or the building at Valley Court Park are not. (The building at Valley Court current houses Helping Hands Respite Care.)

Another person at the Thursday meeting expressed opposition to the Tax Increment Financing (TIF) incentives that have been given to developers for a number of years, arguing that use of TIFs for future projects needs to be reconsidered. The TIF for Center City District means that no additional taxes will come to the City on that project for 30 years, he pointed out.

Lahanas replied that the Council recently has approved TIFs only for public infrastructure and environmental clean-up. For the Center City District project, the TIF covers costs of the public parking ramp (which the City will own and from which it will collect parking fees) and infrastructure along Albert Avenue. Although the development will not be producing taxes that go towards the City’s general fund, it will pay $200,000 per year to lease the retail space along Albert Avenue and the space for apartments for seniors (age 55 and above) above the parking ramp.

In response to the broader question of TIF-funded projects not financially benefiting the City, Lahanas pointed to benefits from University Place and the public space at Ann Street Plaza and noted that the recession starting in 2007-2008 threw off economic projections everywhere.

Another participant asked about the debt of $5.5 million that the City still faces for buying “Park District” properties along Evergreen Avenue for a redevelopment project meant to occupy a large area northwest of the intersection of Abbot Road and Grand River Avenue. (When the Evergreen Avenue properties, shown below, were purchased, the project was known as City Center II, but it has since changed hands, morphed, and been renamed the Park District.)

The “Park District” buildings along Grand River Avenue have been demolished, but there is not yet a new plan for this area. Lahanas said the City hoped the debt for these properties would somehow be folded into this future plan. (At present, rental income from the houses the East Lansing Downtown Development Authority purchased is covering the debt payments, but that will not continue in the longer-term.)

Few reactions were shared in the whole-group discussion about options for new taxes. Lahanas said that Council members have asked for language for a ballot question that would amend the City Charter, designating a new income tax for a particular purpose if voters approved that change.

This suggestion has been made at several meetings, and it appears on the list of three options for possible new taxes that could be put to voters. All three of the new tax options shared at the meeting involve designating the income for specific purposes. A question about a new tax could be placed on a ballot in May, August, or November.

The Council has not yet decided when it will make decisions about substantial budget cuts or a possible new tax. At the January 16 Council meeting, Lahanas said he expected that the City will receive the report of the public input and survey results by the end of January. He also gave the following timeline for Council’s consideration of the budget for Fiscal Year 2020, which begins on July 1:

• Saturday, February 10, 2018: City Council Budget Retreat and five-year financial forecast set to start at 8:30 am at the Hannah Community Center
• Tuesday, April 10, 2018: Staff will provide draft FY 2020 budget to Council at its meeting
• Tuesday, May 22, 2018: Council is expected to approve the final FY 2020 budget

All these meetings are open to the public.

To assist people who wish to take a Budget Priorities Survey, several resources from the meetings are now on the City’s webpage on Community Engagement Meetings on Budget Priorities. These include:

1. Potential Reductions and Revenue Worksheet (a larger font version of the revenue sheet [page 6 of this handout] is available here)
2. 2017 Millage Rates Pie Chart
3. Police Staffing Comparison
4. National Fire Protection Association (NFPA) Fireground Staffing Levels

The survey will be closed by the City on January 24 at noon.