Although the city already eliminated $1.9 million from the projected two-year, $5 million shortfall, Staton said he will serve a well-mixed fiscal cocktail with the 2010-11 budget. He said it will include about a half-millage property tax increase, using about $600,000 of the city’s rainy-day fund, greater employee pension and health care contribution, reduction of organization fees and departmental budget slashing.

Councilmember Kevin Beard said the city will have to make difficult decisions to mitigate its financial woes.

“The cuts have been pretty much invisible to average residents of this community,” he said. “But now the types of cuts that have to be made will be noticed and felt by citizens.”

Of the measures considered, the half-millage property tax increase might be the least detrimental to residents. Although the tax represents about $50 to $75 in annual increases for the average East Lansing homeowner, property values — and therefore, taxable values — have declined by more than the half-millage increase, resulting in a net decrease in property taxes.

The city also might look to its reserves to create revenue by using $600,000 of the $3.1 million rainy day fund. Although that represents 19 percent of the city’s reserves, Councilmember Roger Peters said the remaining $2.5 million still would hover near the city’s target of 8 percent to 15 percent of the city’s general fund.

More money could be saved by increasing pension and health care contributions by city staff, and Councilmember Nathan Triplett said progress has been made between city and labor union negotiators. City staff already took voluntary furlough days during the current fiscal year to save money, but more might be asked of city employees. Beard said such changes might be temporary, at least until the economy rebounds.

“I think in the short term, people are willing to make those type of sacrifices with the assurances of job security and longevity in the long term,” Beard said. “If the alternative is laying people off, I don’t think city staff would find that a palatable alternative.”

Arts and cultural events, such as the East Lansing Art Festival and Great Lakes Folk Festival, also will go under the budget cutting knife. Triplett said although it’s unfortunate funding for such initiatives are targeted during economic hardship, virtually every department will have less with which to work.

Beard said he hopes other entities that benefit from summer festivals — such as local merchants and restaurants — can step in to fill the gap left by city cuts.

“(The East Lansing Art Festival) is an institution in this area, and it’s frustrating where we have to be in the position where we have to cut some support for that,” he said.

Staton and other city staff members have presented the plan in more than two dozen meetings with community members and commissions, and a majority of respondents to an Internet survey on the city’s Web site indicate people support raising taxes or raising taxes while cutting services.

“We start out by saying, ‘Anybody been following what’s going on in Michigan? Anybody see what’s happening to the state budget? You know, we rely on the state budget for a fair amount of our resources — and oh, by the way, it’s been going down for about 10 years,’” Staton said. “There are these nods from people in the audience.”

Revenue sharing ­— in which cities receive a refund from the state in exchange for letting the state collect sales, weight and gas taxes — has declined for 10 years, and East Lansing eliminated about $8 million from its general fund in the past decade to accommodate. Triplett said the city is “dealing with imperfect information” when setting the 2010-11 fiscal budget, but it decided to not include the $2.4 million in statutory revenue sharing the city would receive, as city officials believe the state Legislature will axe the funding to balance its own budget.

Triplett said the city would restore cuts partially or completely if the state maintain sits obligation through revenue sharing— although he isn’t counting on the state coming through.

“Everyone recognizes we’re in this together and sacrifices need to be made by all parties to balance the city budget,” he said. “There’s been no sign thus far that the Legislature has been willing to take on that role of protecting communities.”