Update: Bernero budget plan rejected

Friday, May 17 — Instead of charging city Board of Water and Light customers fees for streetlights and fire hydrants, the Lansing City Council wants to increase the publicly owned utility’s payment in lieu of taxes to balance next fiscal year’s budget.

The Council approved budget amendments 7-1 at a Committee of the Whole meeting this morning that make changes to Mayor Virg Bernero’s budget proposal from late March. Councilwoman Jessica Yorko voted against the amendments.

The city faces a $5 million deficit for the budget starting July 1. The Council must vote on a final budget on Monday.

At the start of the meeting, the Council had planned to raise $1.7 million from a 0.5 percent increase to BWL’s annual Return on Equity payment, which it makes instead of property taxes to the tune of roughly $15 million a year. And while the Council had proposed eliminating the street light fee, increasing expenditures by $3.7 million, the Council was prepared to ask voter permission to charge a hydrant fee to raise $1.5 million. That expense would have been removed from the General Fund. If voters turned that down in an August election, the Council’s plan B was calling for a 1.3 percent reduction to all departments’ non-personnel budgets.

Instead, Councilwoman Kathie Dunbar proposed increasing the return on equity payment from 0.5 percent to 1.2 percent, which is anticipated to generate about $4.1 million. Last year, Bernero vetoed the Council’s attempt to increase the annual payment by 1.5 percent after he proposed raising it .5 percent.

“I don’t want to be nave about this: If we do this, it’s going to affect bills,” Dunbar said. She was referring to the original option of asking voters to pay a fee or the higher return on equity payment, which could result in higher rates for all BWL customers. But with the latter: “It’s going to be passed along to every user, not just property owners” in Lansing, she said. “I am agreeing with Council member (Brian) Jeffries: We’re at a point where if this is the way we have to do it, I’d rather spread it over everybody.”

While the Council appears amenable to the increased BWL payment, that still leaves about $800,000 that needs to be raised or cut to eliminate the deficit. This is where there will likely be sticking points among Council members.

As drafted, the Council’s deficit elimination plan would create a $1.2 million surplus that would be placed in an account controlled by the Council. Here’s how:

• Eliminate Bernero’s proposed cold case detective ($100,000);
• Eliminate a proposed cabinet-level IT employee and setting aside money in a control account to share the position with the school district ($150,000);
• Eliminate a form-based code project ($70,000);
• Eliminate the Sister Cities program from “city supported services” ($20,000);
• Eliminate part-time positions for Sister Cities and the Office of Faith-Based Initiatives ($43,000);
• Reduce the appropriation for the city’s TIFA fund from $1.4 million to $1 million and having the city’s Economic Development Corp. use its revolving loan fund to make that up ($400,000). The proposal also calls for the EDC and the Tax Increment Finance Authority to repay the city $1 million for a loan similar to the brownfield repayment loan at the Boys Training School;
• Eliminate General Fund dollars for vehicles and equipment and pay for that with the Fleet Fund’s reserves ($250,000); and
• Bond for local street repairs rather than paying for that out of the General Fund ($1,300,000).

Reached by phone Tuesday, Bernero declined to comment much on the Council’s proposal until after details are finalized at Monday’s meeting. But he’s skeptical: “We’re gonna have to wait and see and hope it gets better.”

Those combined savings and the revenue from a 1.2 percent return on equity payment total $6,413,000. After reinstating costs for streetlights and fire hydrants to the General Fund ($5,200,000) the Council’s amendment leaves a balance of $1,213,000.

A surplus, you say? Well, not exactly. The Council’s amendment sets aside $400,000 for technology debt service to be placed in a “control account,” Council President Carol Wood said, “Until an adequate (technology) plan is brought to Council.”

The remaining $800,000 would also be put in a control account. Wood said money in a control account can only be appropriated by a majority vote of the Council. It’s possible there may be a motion at Monday’s meeting to devote that to the city’s retiree health care fund, she said.

While Dunbar supports the higher BWL payment, she’s against eliminating the proposal for a cold-case detective and the EDC’s $1 million repayment back to the city as a loan.

Jeffries defended the loan and decreased General Fund payment into the TIFA because “this is the first time we’re going to have public tax dollars go to pay for economic development. This is a big check we’re handing out.” Basically, the Council is asking the EDC to pay $400,000 out of its revolving loan fund and creating a loan package that reimburses the city $1 million over time.

He also defended eliminating the city’s full funding of a cabinet-level IT director so that it could share costs with the Lansing School District — a move he said was prompted by the Financial Health Team earlier this year.

Meanwhile, 4^th Ward Councilwoman Jessica Yorko caught flak from colleague Jody Washington when she asked if the committee vote could be held on Monday so she could take this information back to constituents.

“Procedurally, the fact that we have taken such great care in our process since April to confer on the budget with the public and discuss all the large points and fine points, this is the first time I’m seeing and hearing this information,” she said.

“I can’t tell you how much this enrages me,” Washington shot back. “If you think for one minute that my suggestions came last night when we got an email, well guess what? Ya shoulda been doing this for weeks getting your suggestions in. To say this is a surprise, engage in the process truly rather than just take up time on TV.”

“I appreciate all of your engagement in the process,” Yorko responded. “I would like to take this information to my constituents. I don’t think it’s unreasonable to make that request.”