City Council shares ideas to eliminate $5M deficit
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The East Lansing City Council faced a grim reality as it walked away from its preliminary budget planning meeting at Eagle Eye Golf Club Saturday with proposals to eliminate a combined 2010 and 2011 fiscal year deficit of nearly $5 million.
Among the ideas to eradicate the city’s shortfall is increasing property taxes by a half millage — a $4 to $6 monthly hike for the average East Lansing home — which will offset the anticipated $500,000 loss in property taxes incurred by declining home values. The city also is concerned it will not receive any statutory revenue sharing from the state this year, and has included the loss of $2.4 million of such funds in its budget projections.
Continuous cuts to revenue sharing represents the most significant loss for local government, as the Legislature has scrounged every scrap it can to balance the state budget.
Council member Roger Peters said the state has not lived up to its agreement with local governments regarding revenue sharing. In exchange for letting the state levy and collect sales, gas and weight taxes, cities were supposed to receive a refund from the state. Peters said the state has fallen short of meeting this requirement because of legislative cuts to revenue sharing, which he said has led to nearly $11 million in unfulfilled revenue sharing pledges for East Lansing in the past decade.
“We always thought there was a compact between the local units of government and the state that some of that money would be returned,” Peters said.
East Lansing Mayor Vic Loomis said the deficit likely will be solved by a combination of two or three factors: a property tax increase, tapping into the city’s nearly $3.2 million rainy-day fund and reducing city expenditures.
“I want to underscore if we do vote to put that tax increase through that it would be done in conjunction with two other fairly significant occurrences,” Loomis said.
Loomis said the city is prepared to use between $700,000 and $800,000 — or 21.8 percent to 25 percent — of its reserves.
Adding to expenses, the city must contribute 20 percent more into its pension fund to accommodate its depleted value, which will hit the city for $580,000.
The city could take other cost-saving measures, such as consolidating various positions, as the city continues to leave vacant posts open. Also, it will likely impose furlough days for city officials.
Councilmember Nathan Triplett said many of the methods discussed Saturday and cost savings from the current fiscal year would help erase $2.1 million of the $5 million deficit.
“I’m quite serious when I say literally everything is on the table,” he said. “With a deficit of this size we can’t afford not to think about everything.”
East Lansing City Manager Ted Staton said $2 million was saved this year from not replacing police officers, delaying computer and vehicle upgrades, furlough days, postponing sidewalk maintenance and other measures.
The city will engage in talks with the community during the coming months as it prepares its budget for the coming fiscal year by the end of May. Staton will make a presentation similar to Saturday’s before every commission and city staff will address neighborhood boards and other entities, resulting in about 40 to 50 meetings. The city also launched www.cityofeastlansing.com/fiscalchallenges, a new Web site devoted to budget issues.
Commentary
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Bert Seyfarth
(02/08/10 8:06am)Report
Yet council was able to find about $6 million for the purchase of and removal of commercial, tax paying properties for construction of a CC2 parking garage, that could have been built on an adjacent, non tax paying parking lot that could have cost less than $300,000.
re: Bert
(02/08/10 8:49am)Report
and wasnt one of those properties yours? Didnt you pocket near $3million?
re: Bert
(02/08/10 9:40am)Report
Give it a rest Bert. You know full well that the money used to purchase those properties didn’t come from the city’s general fund, nor would any of the money for the CC2 project. It came from the downtown development authority which the city council has no control over. Stop trying to mislead people to serve your own agenda.
Bert Seyfarth
(02/08/10 10:00am)Report
No, I didn’t pocket nearly $3m. and just where do you think the DDA gets it’s money? The tooth fairy perhaps? It’s tax money plain and simple.
My agenda is simple – a better plan that would cost us tax payers less.
Darko
(02/08/10 10:47am)Report
Bert Seyfarth is a loser.
re: Bert
(02/08/10 11:16am)Report
There’s nothing “plain and simple” about it. You are intentionally misleading people. The DDA is funded by tax capture. The City Council has no control over that money. Even if they wanted to that couldn’t take that money and spend it on something else. Pretending it’s the same thing is like saying you and your neighbor both have income so you can use your neighbors money anytime you want when you need to pay a bill. It’s just dishonest.
Bert Seyfarth
(02/08/10 1:00pm)Report
“The DDA is funded by tax capture” – CORRECT. However, it seems to me that your contention that “The City Council has no control over that money.” glosses over reality. Council sets property tax rates and so determines the amount of money the DDA gets. Council authorized the creation of the DDA. Council has to approve any project the DDA wants to see go forward. East Lansing tax payers stand behind DDA bonds. Of course the DDA can make recommendations for how they will spend money. ie: the DDA COULD RESELL the Evergreen properties to Strathmore or whomever, take the procedes, buy the parking lot next to Peoples Church (for a lot less than they would get from resale $), and use the remaining $ for other purposes. You seem pretty upset by my suggestion that money is being ill used and that I’m “dishonest” and that I’m “misleading people” because of some hidden agenda. I’m not sure why and I’d suggest you get facts before you make such statements.
re: Bert
(02/08/10 2:46pm)Report
You’re doing it again.
You should get your facts straight.
The DDA does far more than make recommendations. Show me the minutes where the City Council approved the purchase of those properties. You won’t be able to because the DDA committee did it, because only they had the power to. You’re right that the council created the DDA, but once it was created it was governed by it’s own board.
The bottom line is that to suggest that the DDA spending money on a development project (which is of course its purpose) is at all related to the city’s general fund is dishonest and uninformed.
If you want to talk about what the DDA could do, that’s fine. But stop pretending like this has anything to do with the council or the budget.
bert seyfarth
(02/08/10 5:01pm)Report
I never said the DDA didn’t approved the purchase of these properties. However, without the approvals of the planning commission and city council, the DDA would have had no authorization to do such a project. You still want to contest that taxes only come to the DDA by approval of elected officials? Show me their taxing authority. To suggest that the DDA acts without the council’s input and blessing just isn’t true. Council created the DDA and council appoints the members. When council, by ordinance, created the DDA and allowed redirection of downtown development tax $ to the DDA, then the general fund was affected.
from my previous post – the DDA COULD RESELL the Evergreen properties to Strathmore or whomever, take the procedes, buy the parking lot next to Peoples Church (for a lot less than they would get from resale $), and use the remaining $ for other purposes. Where here did I say anything about the general fund?
Eric Petrie
(02/08/10 5:22pm)Report
In my twelve years knowing Bert Seyfarth as an architect, he strikes me as the consummate professional who cares about the community he lives in.
The personal attacks are what is meant to mislead the public. Stick to the issues and the facts, and leave the accusations aside.
Phil Bellfy
(02/08/10 8:11pm)Report
OK —everyone —lay off the name-calling. Here’s the truth: the DDA now owns those buildings on Evergreen, but the DDA did NOT buy them —the city DID by selling Bond Anticipation Notes.
That is, the city “anticipates” that CCII will go forward within the next two years, or so, and then they’ll float the entire $30 bond issue (that is if we don’t run another referendum against it), and use that money to pay off the BANs.
There’s a few problems with this plan, though.
First, the BANs are supposed to be paid back from DDA funds —and they’re not renting half the units on Evergreen. Low rent income = a shortfall in their payments to the city.
Second, the city has pledged the “full faith and credit” of the taxpayers to pick up any slack in DDA “reimbursements.”
And, of course, #3, CCII will never be built —then what happens to that $5.5m “investment” in those Evergreen Road properties?
So, no the DDA didn’t approve the purchase of those buildings, even though they now “own” them. And. yes, the city council will point to their authorization of the $30 bond issue as their OK of that purchase —what a mess.
Yet, now the city wants to raise our taxes. Can anybody spell r-e-c-a-l-l?
BAILING OUT STRATHMORE CAUSES DEFICITS!
(02/10/10 5:26pm)Report
It is a fact that the City government has spent several million dollars on property acquisition for the City Center II projects. Who is the attorney structuring the deals? Who is the City Manager pulling the Strings? These properties are mostly out of service and no longer generate property tax revenues. Furthermore, the property tax revenue generated from City Center II will NOT go to the general revenue fund. It is a fact that the City has pledged $30 million of property tax backed dollars, essentially bailing out Strathmore Developments City Center II project. Therefore, in this recession, where the housing market bubble has burst, it is obvious that the City is squandering money, while intending to raise property tax rates. Crony Capitalism is alive and well under Loomis, Staton, and Chappelle, while the rest of the citizens pay the price. It is pointless to quibble over whether or not the DDA is public money or not. The fact is that it takes money that would otherwise be going into the GENERAL REVENUE fund, and it funnels that money into its own pot. The DDA and the Brownfield Redevelopment Authority are supposed to be separate organizations, but they do not meet without Staton and Loomis, and they are comprised of all of the same members: Rosekrans, Potvin, Newberry, Mansfield, Ballein, Cronin, Sudol, and Vic Loomis and Ted Staton present too. So there is NO checks and balances, just a well greased shoot of crony capitalism, diverting what would otherwise be public tax revenue, and funneling it into their own buddies pet projects.