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Wednesday, November 25,2009

Kids in the Hall

by Neal McNamara
Kids in the HallAn aggregator of Lansing government happenings

Welcome to what is being called the “new normal” — where our city government, every year seeing reduced revenues, is going to get smaller and smaller. (Or, if you’re an optimist, some of the service will get regionalized.)

“New normal,” it seems, has replaced “structural deficit,” as the term used in city government to describe a downward spiral of increased costs and declining revenue.

On Tuesday, Mayor Virg Bernero announced that because of a $3 million mid-year deficit, the city would institute nine furlough days between Christmas and June (Dec. 28- 30, Jan 15, Feb. 15, March 12, April 1, May 28, and June 11) for non-emergency city employees (those except police, firefighters, 911 dispatchers and plow operators when it´s snowing, which is about 550 employees), a 10 percent reduction in capital and operating expenses, a continued hiring, travel and overtime freeze, and, if their respective unions agree to it, nine furlough days for emergency personnel. All of this is subject to approval by City Council, which will get the deficit elimination plan on Monday.

The largest piece of the city’s revenue pie comes from property taxes; it was $39 million of the 2009-10 fiscal year´s $117 million revenue projections. Property taxes are expected to decline this year across the board between residential, commercial and industrial because of the economy. (The inflation rate, one of the figures used to figure out how much you pay in property taxes, is negative at the moment.) Finance Director Jerry Ambrose said property taxes could decline 5 to 10 percent for next year’s budget — but he stopped short of projecting how much of a revenue gap that could create in the 2010-11 budget. Along with a $2 million loss in state revenue sharing this year, the city lost “a couple hundred thousand” from personal property taxes — taxes charged to businesses for equipment and the like — because of an increased number of bankruptcies, which wipe out penalties and interest on late taxes, Ambrose said.

Bernero said on Tuesday that the $3 million mid-year deficit is a “blip com pared to what’s coming.” Some possibilities for the future, he said, could include a 36-hour workweek in the city, and was “hopeful” that the city could reduce expenditures through attrition and mergers (regionalization). The tax-assessing department, Bernero said, might be ripe for regionalization in the form of a countywide tax assessor, as opposed to each government doing its own.

Underlying all of this, of course, is the harbinger of layoffs. The “L” word was mentioned several at a Tuesday press conference. From the administration’s press release, “… negotiations are continuing with the city’s police and fire unions to identify cost savings that could prevent layoffs,” and, from the mayor, “… we are doing everything in our power to avoid employee layoffs.”

—Neal McNamara

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