State of affairs

One of the issues surrounding the city’s fiscal year 2012 budget is a continued decrease of statutory revenue sharing, a process through which the state reimburses money to city governments and municipalities in exchange for tax collection.

The decrease in state funding has been a trend during the past few years as statutory revenue sharing is cut on the state level more and more, East Lansing Finance Director Mary Haskell said. She said the city has made cuts in prior years to accommodate for decreased funding by implementing an automated phone system, freezing wage increases and implemented layoffs in some departments.

“We’re still trying to maintain services the best we can, but it’s bound to impact how we do our jobs, so we’re still trying to evaluate that right now,” Haskell said.

The budget, as drafted by city officials, assumes total elimination of statutory revenue sharing, even though the city might acquire funding from the state when its budget is finalized, East Lansing City Manager Ted Staton said.

Staton said the cuts necessary to make the budget work for the city, under the assumption of no statutory revenue, roughly equates cutting of seven full-time positions but said at this point he is fairly confident the cuts can be made without many layoffs. He said the effects of the cuts likely will be felt throughout all departments of the city.

“There won’t be an area of city services that won’t be affected by this budget,” Staton said.

Coping with difficulty

Of all the city departments affected by decreased state funding and subsequent city budget cuts, those offering public services to the city, including the East Lansing Police Department and the Department of Public Works and Environmental Services, are some of the hardest hit.

East Lansing police Capt. Kim Johnson said the police department has shrunk in numbers during the past 10 years because of a decline in federal, state and local funding. He said the department went from having 67 to 60 active personnel during that time period as officers retired and the department was unable to fill those positions.

Johnson said the department has not been forced to lay off any of its personnel at this point in time, but said many police programs, including school initiatives and investigative operations, have been reduced significantly.

“From a day-to-day operation standpoint, the community has not been affected to a great extent … but some of the extra functions that the police department has been doing in previous years have been reduced or eliminated,” Johnson said.

The public works department has adapted to budgetary changes over the years by reducing the number of employees by more than 10 percent, or seven people, from 2008 to 2011, Department of Public Works and Environmental Services Director Todd Sneathen said in an email.

“At this time, we plan to further reduce employees through attrition,” Sneathen said. “We will also look to reduce parks maintenance, mowing and street maintenance as we have done in the previous years.”

Another department possibly affected is the East Lansing Fire Department, which will not fill an open position once one of the city’s firefighters retires this year, Haskell said.

Signs of hope

Even with the onset of budget cuts and an uncertain future as far as state funding is concerned, the city’s bond ratings continue to remain stable, according to a national bond rating agency.

In a recent analysis conducted by Fitch Ratings, East Lansing received a rating of AAA — the highest rating available — for its tax bonds.

East Lansing was one of eight Michigan cities to receive that rating from the company, joining Birmingham, Canton, Delta Township, East Grand Rapids, Rochester Hills, Sterling Heights and Troy, said Cindy Stoller, director of corporate communications at Fitch Ratings.

Stoller said the ratings done by the company primarily were decided not only by the numbers, but also by determining factors within the municipality.

According to the press release issued by Fitch Ratings, East Lansing received the rating in part because of city officials’ ability to limit spending and maintaining reserves throughout the economic crisis.

Staton said the positive rating was a testament to the strength of the underlying economy within the city, even in a difficult economic climate. He said it might be difficult to keep the rating at its current level, considering the continued decline of state funding and property taxes, but said he hoped they would continue.

“(The rating) says quite a bit of our ability to manage even in these tough economic times,” Staton said. “It’ll be a challenge to continue this rating under current set of declining revenue from the state … but we’re going to give it our best shot.”

Room for change

Though the budget has been presented to council and now is available to the public, the process of creating a workable budget for this fiscal year only just has begun.

Council will continue to discuss the budget in a series of sessions taking place before regularly scheduled council work sessions and meetings, the first of which will be held Tuesday.

After these discussions, a public hearing is scheduled to be held on April 19 to offer an opportunity for residents to make known their perspectives and voice any opinions or concerns they might have with the budget as currently presented to the public.

Councilmember Nathan Triplett said he viewed this year’s budget as a continuation of budgets over the past few years as city officials attempt to cope with loss of state funding.

“Our task is to do the best we can with the resources that we have,” Triplett said.

Triplett said he felt the current budget plan was reasonable and likely would go a long way toward providing necessary services to the community in the best way possible under the fiscal constraint but said council will continue to learn more about the situation as time goes on.

“We’re only at the beginning stages of this budget review process, and there’s a long way to go yet,” Triplett said.