City Council Approves FY 2011 Budget East Lansing City Council approved a pared-down Fiscal Year 2011 budget at its May 18, 2010 meeting. When approving the budget, City Council considered a half-mill property tax increase, use of reserves, employee concessions and numberous other budget reductions. All City of East Lansing union and non-union employees have agreed to 2 percent concessions for FY 2011. These concessions will be made in the form of five unpaid furlough days from July 2010 to July 2011 or 2 percent employee contributions to pension plans.
The FY 2011 general fund totals $32,251,260, which is approximately $2.17 million less than the original FY 2010 budget of $34,420,075.
Fitch Changes East Lansing to AAA Bond Rating
Fitch Ratings has changed the City of East Lansing’s limited tax general obligation (LTGO) bonds from AA+ to AAA, with a rating outlook that is stable. Despite the hard economic times and East Lansing’s two-year, $5 million budget challenge, Fitch’s rating change reflects the City’s conservative budgeting, sound financial forecasting and employee healthcare cost management.
Lansing State Journal Editorial Commends City's Budgeting Approach On April 23, 2010 the LSJ recognized the City of East Lansing's budgeting approach. Download LSJ 4-23-10 editorial.
Feedback Solicted by Community
Residents were encouraged to weigh in on the fiscal challenge via an online survey from mid-February through April. The City continues to consider the community's input as it moves forward with the budgeting process.
A History of the Challenge
As anyone who follows the news is aware, the national and state economic downturn has had a devastating impact on funding of essential public services provided by local governments. As fortunate as the City is to have anchor institutions like MSU located within its boundaries, the community is far from immune to the effects of economic volatility. The City lost close to $11 million in revenue sharing (funding used by local governments to provide vital municipal services such as police and fire protection) from 2001 to 2009 due to the state's financial troubles and additional, drastic cuts are projected for Fiscal Year 2010-2011. The revenue sharing cuts, combined with a decline in the local housing market and a reduction in property tax revenues to the City, have created a perfect storm in terms of East Lansing's fiscal challenges.
Budget Shortfalls
Here are some specific examples of "curveballs" the City has been thrown:
These large items total approximately $5 million in shortfalls that will need to be offset in the current and next fiscal years. Since May of 2009 the City has made reductions totaling $2 million, therefore our remaining two-year shortfall is $3 million.
The City's Pro-active Stance If there is a "positive" note, it is that the City has planned for this contingency for a long time, beginning with the development of a Five-Year Financial Forecast in 2005. The forecast is a tool that helps City Council maintain fiscal stability. It is constantly updated to reflect projections about future expenditures and revenues. Using a fiscal road map such as this has helped the City choose the best path for the community. The forecast can be made available to residents.
The City is also currently working to address the shortfall by developing a two-year budget that meets current and future challenges. Some of the specific budgetary measures the City is already taking include keeping vacant positions unfilled and delaying capital expenditures, sidewalk repairs and vehicle/employee computer replacements. Also, 130 union and non-union City employees are taking voluntary, unpaid furlough days. These furlough days have resulted in intermittent closures of the East Lansing Public Library and the Prime Time Seniors' Program for five days this fiscal year. In addition, there are a number of other things individual City departments are doing to help with the shortfall. [See Full List of Departmental Cost-Cutting Measures]
Soliciting Stakeholder Input Over the past year, City Manager Theodore Staton has personally met with City staff during a series of seven budget brainstorming meetings to solicit input about how to meet the City’s fiscal challenges. While much has been done to address the problem, more will need to be done in the next two years to address the City's fiscal challenges. That is where residents' input comes into play. Residents are encouraged to let their voice be heard by taking the quick online survery below. Residents can also attend a number of public meetings to learn more about the challenge. [View Calendar of Public Meetings]