Monday, Dec. 20 — Finance Director Jerry Ambrose said today that the city will have to make up a projected $15 million budget gap in the next fiscal year’s budget.
City expenditures are projected at roughly $118 million for FY 2012, which begins July 1, while revenues are anticipated at $103 million, Ambrose said.
That shortfall is equivalent to a 13 percent across the board reduction in all city services, or the salary and benefits for 214 employees at an average cost of $70,000 per employee.
At this time last year, the budget disparity was $11 million, Ambrose added, which was made up with cuts in city services and staffing.
“Every year when we start there is never enough money to go around,” Ambrose said at a City Council meeting.
Ambrose also announced that the city took an extra $1.2 million from the general fund to cover unanticipated shortfalls in revenue, mainly from property taxes, in the FY 2010 budget, which ended June 30. The city initially took out $3.4 million to cover the gap, but since some property tax filings came in late (and less than expected), the city needed more to cover the $4.6 million shortfall.
At-Large Councilman Brian Jeffries expressed concern that the Council was notified after the fact that the administration dipped in for another $1.2 million — even if it didn’t require Council approval.
”I understand the year-end deficit plan, but I don’t understand the default position where if at the end, you automatically pull out of the fund without approval from Council,” Jeffries said. “$1.2 million is significant — it doesn’t happen overnight.”
These revenue shortages stem from a combination of lower property values generating less in property taxes, state revenue sharing cuts, a rise in property tax appeals and lower interest rates. Property values are projected to decrease by 8 percent in the upcoming fiscal year, while increases in wages, health and pension costs and energy are also expected. The city gets about $14 million from state revenue sharing dollars.
“The reality is that the recession is happening right here,” Ambrose said.
Planning for FY 2012 will be even more complicated than balancing the current budget, though. City staffing has been trimmed by about 15 percent, along with less general fund reserves, which is now at about $6 million.
“We are out of the easy stuff,” as far as trimming goes, Ambrose said. “For the next round (FY 2012), the numbers are bigger and the choices are fewer.”
The FY 2011 budget, at $109.4 million, appears to be on track after the first quarter, Ambrose said. However, there are concerns about having to go back to the general fund in light of cuts in state revenue sharing and further declining property tax rates.
“If that happens, then we’ll come back to you,” he said.
The next step is drawing up a budget that will erase the $15 million gap between revenues and expenditures, which Ambrose said Mayor Virg Bernero would present sometime in March.
In other business, the Council unanimously approved a resolution that supports a “green infrastructure toolkit” authored by the Tri-County Regional Planning Commission. Besides formally pronouncing Lansing’s commitment to “green” planning, First Ward Councilman Eric Hewitt said it also gives the city an advantage when applying for Michigan Department of Natural Resources and Environment trust fund grants.
In other actions, the Council set two public hearings for its Jan. 10 meeting. One is for the rezoning of 934 Clark St. from “B” residential to “D-1” commercial. The property is a former bakery on Lansing’s east side between Saginaw Street and Grand River Avenue. Developer Ryan Kincaid wants to move his company’s main offices to that location from East Lansing, and also has plans for a business incubator at the same address.
The second public hearing is on amendments to the Employees’ Retirement System ordinance. At-Large Councilwoman Carol Wood said the ordinance’s language needs to be updated to coincide with new collective bargaining agreements that were made with the city.
The Council also unanimously approved four resolutions, including one that transfers funds for homeland security projects in the city. The others approved seven new vehicles to be paid for from the forfeiture fund, police officer training and technology upgrades.
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