A budget halftime report and a dwindling reserves reminder
Posted
Andy Balaskovitz
Monday, Feb. 13 — The Lansing City Council spent most of its Monday night being briefed on the past year and a half of the city’s finances.
City Council President Brian Jeffries called a special Committee of the Whole meeting at 5:30 tonight to go over this fiscal year’s second quarter report and also the previous fiscal year’s audit.
The “general fund status report” is basically an overview of how the city’s collected and spent money as it predicted it would from July 1 through Dec. 31. Some areas of the budget brought in more revenue than anticipated, others brought in less. Figures are compared to the last three fiscal years up to this point.
Let’s start with the bad news. General Fund revenues are slightly less (1.3 percent) than they’ve been for the past three years. Income tax revenues are down slightly and even though property tax revenues are up by nearly 3 percent at the midway point, the city anticipates several commercial property tax appeals, which could lower anticipated property tax revenues.
Jeffries asked city Finance Director Angela Bennett if a majority of these appeals are in downtown, but she didn’t have an answer.
Revenue sharing was also down 3 1/2 percent compared to the past three years, but the state’s new Economic Vitality Program, which the city plans to fully comply with by May 1, may impact this portion of revenue for the better, Bennett said. EVIP makes a portion of revenue sharing contingent on creating a financial “dashboard,” regionalism efforts and “compensation intent.”
The good news is that the city’s annual return on equity payment from the Lansing Board of Water and Light is projected to come in $400,000 more than what was budgeted. However, this payment isn’t made until the end of the fiscal year in June.
While expenditures are on track as budgeted, revenues are slightly below what was anticipated at this point in the fiscal year. If at fiscal year’s end the budget doesn’t balance out, the administration brings a budget amendment before Council. …
Which is a nice segue into a portion of the next presentation: the city’s dwindling reserves. Last July, the Council approved 6-2 a resolution to use $1 million from the city’s Budget Stabilization Fund, or 12.6 percent of the fund, to balance last year’s budget after it had expired. This was largely due to increased health care costs and Fire Department overtime, city officials said. About $50,000 also paid for the special millage election in May.
Reserves were at $12.96 million in fiscal year 2009. In the adopted 2010 budget, reserves were at $10.8 million. In FY11’s adopted budget, reserves were at $7.93 million. Reserves over that time were taken from the General Fund. The Budget Stabilization Fund remained unchanged at $5,728,059 over the period.
Bennett said the percentage of reserves compared to the General Fund is about 4.9 percent — “We want that to be between 10 percent and 15 percent. Obviously it’s a great concern we are down to very low levels of reserves.” And Mayor Bernero's deputy chief of staff, Randy Hannan, said this to City Pulse eight months ago: “Absolutely it’s a concern. Piece by piece it’s been whittled away."
The 166-page Comprehensive Annual Financial Report is the annual audit of the city’s finances in the fiscal year that ended June 30, 2011. The City Charter requires the audit to be completed by Oct. 15 of each year, but this year’s was issued in December. Steven Bland from the outside auditing firm Rehmann Robson said it’s typical for cities to run later than October to have completed audits.
Meanwhile, three of eight scheduled business items during Council's regular meeting were pulled from the agenda because not enough members were present. Of five resolutions and two ordinances, three required at least six yes-votes for approval. Because only five members were present, they’ll likely be voted on next week. Council members Kathie Dunbar, Jessica Yorko and Jody Washington were absent.
One ordinance was adopted, another was introduced and two resolutions passed unanimously:
An ordinance to rezone two downtown parcels from professional office district to business district for renovations to the old YMCA building, which includes 244 residential units and first floor retail use;
An ordinance was introduced and a public hearing was set for March 12 on rezoning three parcels at the corner of Liberty and Cedar Streets in Old Town from residential to commercial to accommodate a planned expansion by Speedway;
A resolution scheduling a public hearing for March 12 on a request from Redeemed Christian Church of God, Freedom Hall to use 4312 S. Martin Luther King, Jr. Boulevard for a church; and
A resolution approving the transfer of all stock in a business license from the late Robert W. Corey to Corey Holdings, LLC for Corey’s Restaurant at 1511 S. Cedar St.
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