‘Smoke and mirrors’ budgeting keeps Lansing’s spending in balance

There are going to need to be frank conversations in coming years. There is a gap. We will have to address that. I like to think we can’t just continue down this path where we can just pull it out of the rainy day fund.”

First Ward Councilman Ryan Kost

In 2022, the FBI listed Lansing as the 17th most violent city in the nation. The city saw a 3% increase in violence overall and a 50% increase in homicides.

The city put four new officers to work last week and expects to deploy another four by the end of the month. But there are still 14 sworn officer positions and 13 other posts in the department that are vacant.

Filling those vacancies and others in the city, which is the city’s goal, will improve policing and services — but there’s a Catch-22: Doing so could contribute to throwing the city budget out of balance, resulting in potential layoffs or a reduction in other city services.

That’s what City Council member Patricia Spitzley calls “smoke and mirrors” budgeting, whereby the city balances its budget because it counts on not filling budgeted vacancies.

The Council said no on Monday  night to tapping the city’s rainy day fund, as Mayor Andy Schor sought to do. But yes to more smoke and mirrors.

It adopted a budget that slashed operational spending for nine of the city’s 12 departments. Police, fire and public services were exempt, and no positions were eliminated or cut in any department. 

Operational budgets fund things like fuel for code compliance vehicles or the paper and ink necessary for the city’s day-to-day operations. 

The Council cut Schor’s proposed General Fund budget almost $5 million to $159 million. At-large member Peter Spadafore was the only dissenting vote (although at his request the Council broke out the Police, Fire and Public Services department budgets so he could vote yes on them).

He opposed the way the Council had addressed the budget with cuts to operations. 

“I’ve never believed that a hammer is a way to approach a problem that requires a scalpel,” Spadafore said. Instead, members looked at the budgets from this current budget year, determined what was not spent — mostly dollars allocated for positions that went unfilled — and eliminated that amount from the operational budgets of the departments. 

“That was incongruent to me from a budgeting philosophy,” Spadafore said. 

“Our goal was to make sure we live within our means,” said Council President Carol Wood. “We are estimating we’ll have about $161 million in revenues. This budget is $159 million and it doesn’t dip into the rainy day fund. In fact, it adds back to it.”

Schor’s budget proposal called for tapping the rainy day fund for about $2.6 million out of a projected $23.3 million.

The total budget proposal, including restricted dollars like grants, was around $275 million total. The General Fund comprises unrestricted dollars that can be used by the administration as appropriated by City Council for city operations. 

“I would not have supported that budget as it was presented,” Wood said of Schor’s March proposal. Making the cuts was necessary to prevent the city from once again dipping into the rainy day fund, she said. The fund is essentially the city’s savings account. “I was here when Mayor Hollister created that fund. It was supposed to be for rainy days. It’s not raining.” 

But residents may be feeling the rain in the quality and frequency of services delivered due to the number of vacancies in the city. 

“We’re hearing this work is getting done, but I am boots on the ground, and that’s not what I am hearing,” said First Ward Councilman Ryan Kost. “Constituents are reaching out to me. I am getting calls about housing issues, code issues, trash bin issues, trash not being picked up issues, street light problems. Neighborhood issues, constituent issues. All of those are executive branch jobs that are not getting done.”

Schor said the city is struggling to fill all the vacant positions.

“Nobody can hire these days, and we’re actually doing OK,” relatively speaking, Schor said.

The Fire Department has 14 positions open, nine of which are firefighters. Kost said if there were a crisis, the city’s fire units “would not have the human resources or the equipment that it needs to respond.” 

The Public Services Department has 50 vacancies, while Economic Planning and Development, which houses the city’s beleaguered Code Compliance Office, has 10 vacancies.

In all, administration spokesperson Scott Bean was able to identify 131 vacancies funded by either general fund or restricted fund dollars. 

Second Ward Councilmember Jeremy Garza proposed a budget amendment to create $5,000 signing bonuses, using $300,000 in interest from $49 million in federal COVID relief dollars. The amendment was adopted Monday night. The bonuses are contingent on whether the city’s unions approve of the spending. If rejected, the money goes into the rainy day fund, Wood said.

Spitzley said the city has been avoiding a structural deficit for years. 

“It’s all smoke and mirrors,” she said of the plans to use rollover cash from unfilled positions to plug budget holes in coming months. “The fact is, we are spending more than we are bringing in. How are we going to fix that?”

Until Spitzley sees a plan to address the structural issues, she will not vote in favor of any budget resolutions. That includes the resolutions to close out the current fiscal year, and the rollover windfall other elected officials hope will surgically repair the damage in the budget as it currently stands. 

“My administration will put together some options and share them with Council, our employee unions, and the public,” said Schor. “We invite our City Council partners, the public and our unions to also provide their ideas for long-term structural change, as well as review the ideas that we come up with so we can focus on solutions together. Many solutions will take legislative changes, so I look forward to working with City Council as they legislate long-term policy for structural changes.”

Said Kost, “There are going to need to be frank conversations in coming years. There is a gap. We will have to address that. I like to think we can’t just continue down this path where we can just pull it out of the rainy day fund.”