Lansing has been getting more than its fair share of rain over the past few days, but the city's "rainy day fund" is shrinking.
The fund, which consists of money the city has saved during prosperous times, can be used to bridge budget deficits during an economic downturn to ensure continuous government services. It is also used for emergency relief.
On Monday night, the Lansing City Council approved a $111.2 million city budget by a 7-1 vote in an attempt to balance an $11 million budget deficit.
Mayor Virg Bernero said he will veto the City Council-approved budget.
"The mayor has said since the beginning that he would not accept a budget that uses reserves," said Jerry Ambrose, the mayor's chief of staff.
In recent years, the city has been struggling to balance its budget using money from the fund.
An analysis of city data shows that:
• The fund will shrink by one-third, from $17.2 million in 2001 to a projected $11.3 million by June — the end of the 2006 fiscal year.
• The biggest withdrawal from the fund was almost $3.1 million, during the 2005-2006 fiscal year.
Councilmember Carol Wood said the fund is being used according to its intended purpose.
"We can use the rainy day fund, but we must use it prudently," Wood said. "It is a problem only if we were not looking for avenues to save and continued dipping into the rainy day fund without making any adjustments.
"We have taken little steps in saving money that will add up to a big difference."
Kathie Dunbar, the only councilmember who voted against the budget, said the city must curb spending to preserve the fund.
"We have a pattern of behavior of dipping into our savings to balance our budget when we have not changed our spending habits," Dunbar said.
Wood said that because the City Council has created certain measures — such as eliminating vacant government positions last year — only $1.1 million of the $3 million allocated from the fund will be spent for the 2006 fiscal year. A portion of the balance will carry over to the 2006-2007 budget. Wood also said the City Council will be transferring about $360,000 back into the fund this June.
Dunbar said that the city has no incentive to save because it can continue dipping into the fund.
