Although East Lansing's 2008 budget is on par, Michigan's financial troubles may cause headaches for city officials in the near future.

For the 2008 fiscal year, slightly more than 21 percent of the city's revenue is expected to come from intergovernmental sources — money that could be cut before the state passes its final budget.

The state provides East Lansing with two major sources of revenue — revenue sharing and Act 289, which grants municipalities fire protection.

"Because the state has been irresponsible in their budgeting process and not yet passed their budget, we may see cuts in those areas," East Lansing Mayor Sam Singh said.

The city expects to receive about $7 million from these two sources.

Revenue sharing has steadily decreased because of Michigan's lackluster economy.

The East Lansing City Council is slated to vote Tuesday on the $65.2 million budget.

Singh said if the state makes cuts in either of these sources, the council may revise the budget later in the summer because the city is required to operate with a balanced budget.

It only looks smaller

The final budget appears to have a $2.8 million, or 4 percent, decrease from the 2007 fiscal year. But the decrease can be attributed to a new accounting process, said Mary Haskell, East Lansing's finance director.

After factoring out the change, the difference between the 2007 and 2008 budgets is less than a 1 percent decrease, according to the city's budget report.

For the eighth year in a row, the city's millage remained steady, meaning taxpayers won't see an increase when their bills are due.

A millage is based on property value and is divided into operating, debt and solid waste mills.

A new way of distributing this tax revenue caused the slight decrease in city's budget. Previously, the city put all of this revenue into the general fund, then transferred the debt millage to the debt service fund.

"That inflates the size of the budget," Haskell said.

Now, revenue from debt millage will go directly into the debt service fund.

Capital improvements took the largest hit, dropping nearly 58 percent, from $7.4 million to $3.1 million.

Last year's budget for capital improvements included the Virginia Avenue project and several other redevelopment projects. This year's budget doesn't need to accommodate those projects to the same extent, said Connie Larkin, East Lansing's assistant finance director.

Fee increases

To accommodate changes in city policy and budget practice, housing, sewer and water fees were raised.

Housing licensing fees, which are paid once a year by property owners, were increased by $35 from $197 to $232.

Housing fees have not been increased in two years, said Howard Asch, director of Code Enforcement and Neighborhood Conservation, during a May 8 council work session.

Residents will pay about $15 more for water and sewage fees because of a 3 percent increase. Water fees were raised by 9.4 percent in the 2007 fiscal year.

Parking changes

The council plans to streamline the parking rates in a downtown lot. Singh proposed the change, which will lower the parking rates in Lot 4, near Dublin Square, 327 Abbott Road, in accordance with other city parking facilities.

The new fee either will be 55 cents before 8 p.m. and 60 cents after, or a flat rate of 60 cents.

Singh also engaged the council in a discussion about further changes to downtown parking, including the possibility of deferring the cost of parking to businesses.

"We have to reevaluate the whole concept of parking assessment in our downtown," he said. "Malls spread out the cost (of parking) to all of the people who own businesses, instead of making the customer pay. I'd like to see a similar type of approach."

Sarah Norris can be reached at norriss3@msu.edu.