The city of East Lansing's financial future is still up in the air, as it continues the struggle to find at least $3 million to fund pensions.
The city has held one community engagement meeting – another is planned for Jan. 18 – to gather community input on the budget issues, and more input will probably be solicited online, Mayor Pro Tem Erik Altmann said.
A new budget must be approved by city council and in place for the upcoming fiscal year beginning July 1.
The plan is to have a budget presented to council during the first business meeting in April, giving the council time to review it and then have the final version approved the third week of May, City Manager George Lahanas said.
But, there are questions that must be answered before a budget can be drafted, Lahanas said.
“A big picture question is, ‘do people prefer all reductions and no revenue? All revenue and no reductions? Or a combination?’ So going forward, what would you have us do?" Lahanas said.
Which is why the community engagement meetings are important, Altmann said.
“We need to draw the community into the decision process so that they’re making the choices," Altmann said. "We don’t want to make those choices for them, we want them to tell us what they want us to do.”
After that input is gathered, it'll be translated into cuts the council will make. And from there, those slashes will likely be substantial, Altmann said.
“Then it will be very clear for everyone what the trajectory is," Altmann said. "You can expect in the next three years, here’s how things are going to chance with police and fire or amenities like the community center.
“Once that blueprint is out and people know exactly what to expect, then we will probably try to do another round where we ask people in some way, ‘are you OK with this?’ We’ll give them a chance to say, ‘no we actually want to hang on to all this stuff and here’s how we’re willing to pay for it.’ How exactly that’s going to work, we’ll find out, but that will be some kind of election at some point.”
Long-term thinking is essential to making this process worthwhile, councilmember Shanna Draheim said.
“I want to be thinking long term," Draheim said. "We’re not trying to solve a long-term crisis in one fiscal year. What do we need to be doing? And then if we’re not successful in the future with some revenue options, then we’re sort of move into phase two of what reallocations and cuts would look like.”
If the pensions are not paid, the city will more than likely be sued by the unions, Altmann said.
Then, the judge will make the city find the money to pay the pensions. While the exact process depends on the judge, assets such as the Hannah Community Center will probably be sold off first, then the judge could increase property taxes to cover the pensions, Altmann said.
“The court will first probably want to tell us to sell off a bunch of our assets … and then the court is deciding what our community is going to be rather than the people deciding," Altmann said.
Finding the extra $3 million will stabilize pension payments during the next 20 years, meaning less money will be paid by the city in the long run, Altmann said.
Informed community members will be a key indicator the budget process was successful, Draheim said.
“I will declare success if we are able to take a look at all of our programs and really ask ourselves the question, ‘is this still a service that we should be providing? Does it make sense? Can we provide it well? Is it a high priority for our residents?’ And find places where we can make at least some cuts to in order to be tackling some of these pension payments," Draheim said. “I will also think success is if our community understands those challenges and is playing a big part in helping us put values on where we want to spend our dollars."
While finding the money to pay pensions is important, making sure infrastructure is in good shape is important too, Altmann said.
“I think a successful budget is one that finds $3 million in cuts to put toward our pension obligations and half a million for roads and sidewalks because we need to move some money to those because it’s becoming a public health issue with the roads the way they are," Altmann said.
Investing in more city staff members to make sure all the necessary jobs can be done is also important, Altmann said.
“If we don’t reinvest and hire some more people in select places, then we’re going to lose people because they’re overworked or the jobs aren’t going to get done," Altmann said.