Lansing Mayor proposes placeholder budget amid pandemic 

Schor: Expect ‘significant’ budget proposal revisions after COVID-19 

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MONDAY, March 23 — As the capital city continues to grapple with a budget shortfall, now amid a growing global pandemic, a budget proposal from Mayor Andy Schor aims to make “strategic investment” in Lansing. But he warns that his latest proposal is merely a placeholder during the coronavirus outbreak. 

Schor — as required by city charter — released a budget proposal for next fiscal year (July 2020 through June 2021) earlier this afternoon, though warning that “significant revisions” may be required in order to respond to the rapidly changing circumstances as the number of confirmed coronavirus cases in Michigan surge past 1,000. 

“This spending plan does not yet factor in new economic realities throughout the city,” Schor said in a statement. “I recognize our national economic realities are changing rapidly due to the COVID-19 pandemic.” 

Plans call for modest revenue and spending increases, including a $500,000 injection into the city’s dwindling reserve funds, hiring three new police officers and a new finance director, purchasing new equipment for first responders, additional street and bridge repairs, installing new sidewalks and trails, arts funding and more. 

“This proposed budget reflects the priorities of the city of Lansing,” Schor said. “Lansing will continue to make key investments toward infrastructure, neighborhoods, corridors, small businesses and public safety efforts. We will also face financial challenges head-on to ensure that the city of Lansing is financially sound into the future.” 

A city budget amendment passed this month leaves only about $6.8 million in the city’s reserve funds — about $10 million below guidelines from the city’s Financial Health Team that recommend that fund balance always remain at about $16.89 million, or about 12% of the city’s $140.7 million in expenditures budgeted for this year. 

Under Schor’s latest proposal, the fund would climb to about $7.3 million, or about 5.1% of annual expenses. 

The city continues to negotiate about $2.5 million in federal fines triggered, in part, by the failure of the city’s Finance Department to file paperwork required by the federal government under the Affordable Care Act. 

Schor also noted a $1.25 million settlement recently paid by the city over a lawsuit involving sewage-flooded homes will likely be able to head back to the fund balance and instead be siphoned from the city’s sewer fund. 

The city also faced revenue shortfalls this year after it received a return on equity from the Lansing Board of Water & Light far lower than expected and income tax revenues fell nearly $2.5 million below projections. 

“While it is critical that we view the budget from the perspective of those challenges, it is equally important that we make strategic investments in the services we provide in order to continue to grow the city’s economy and strengthen the quality of life for our current and prospective residents, business owners, and visitors,” he said. 

Schor said the city will also continue to experience financial challenges in addressing its unfunded pension and retiree health care obligations, which would only be exacerbated amid the looming potential for a recession.   

The three new patrol officers proposed in the latest budget would be funded entirely through decreased overtime spending, according to Schor’s proposal. Additionally, the proposal affords the purchase of heart monitors for the emergency personnel, among other equipment upgrades at the Lansing Fire Department. 

Also proposed: $2.8 million for major street and bridge work, $3.3 million for local street repairs, $425,000 for new sidewalks and trailways, $300,000 for sidewalk repairs and $162,500 each for arts funding and facade grants. 

“While recession may be coming, we still need to maintain place-making and show the pride of the artistic culture of our community,” Schor said in his budget statement. “We’re also continuing the facade improvement program to ensure that we can continue to assist small businesses as they improve their properties.” 

Additionally, while Chief Strategy Officer Shelbi Frayer has been also serving simultaneously as the city’s finance director following the resignation of Angie Bennett, Schor plans to hire a permanent replacement this year. 

The City Council, under charter, has until May 18 to adopt a city budget plan for next fiscal year. No meetings are scheduled until at least April 13, but City Council, under its new rules, can meet virtually for any meetings. 

“It has been received by the City Council, satisfying the charter requirement,” said Council President Peter Spadafore. “Obviously, the COVID-19 situation will impact our budget and we’re going to have to respond accordingly.”

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