East Lansing City Manager Ted Staton said he likely will have to ask city employees to make more sacrifices this year as the city’s financial situation worsened.

“We’ve never had a deficit budget in the past 15 years,” he said. “Sometimes we’ve started the budget process with projected deficit between half a million dollars or a quarter million dollars, but we’ve usually eliminated it. I think we’re going to have to ask our employees to help us solve the problem.”

During fiscal year 2009-10, city employees experienced increased deductibles and co-payments on health insurance and took furlough days. Virtually every department left vacant positions unfilled, capital repairs were postponed and vehicle and computer equipment upgrades were delayed, said East Lansing Director of Public Works Todd Sneathen.

In 2009, the state approved cutting a vital source of local government funding when it reduced total revenue sharing by 11 percent. Those funds come from sales tax revenues, which have declined in the contracted economy.

Councilmember Kevin Beard said much of that money is used to fund police and fire departments, as well as road maintenance and other public works projects. He said the city brings in about $15 million annually in property taxes, but police and fire departments cost that much. With revenue sharing diminished, there is little other money to go around, he said.

Beard said about 130 city employees voluntarily took five furlough days, which offset the 2 percent salary increase given to them at the beginning of the fiscal year. He said departments likely will have to slash their budgets and extra stress will be put on the Department of Public Works to cut overtime and reduce park and street maintenance costs.

Sneathen said he expects his department will have less money to work with, and as a result it has suspended its sidewalk maintenance program and has left several positions unfilled.

But with roads still needing repairs, the city sold $1.5 million in bonds for improvements. While Sneathen said selling bonds is not a sustainable budgetary strategy, decreased revenues from gas and weight taxes have forced more radical financing measures.

“This is a short-term solution to get us through the next three years,” he said.

“Hopefully the Legislature makes some changes to the current system.”

Local government funding will be even more difficult in the 2010-11 fiscal year when federal stimulus money expires. Although tax revenues are expected to increase
during the coming year, the Michigan House Fiscal Agency and Senate Fiscal Agency reported it will not be enough to offset the loss of federal support and could create a $1.7 billion state shortfall.

“We’re much more likely to see longer grass in the parks and streets won’t be plowed the second snow is there,” Beard said. “We can’t encourage to pay overtime for that anymore.”