Lansing mayor announces $11 million deficit for next fiscal year

Oct 5, 2012

The city of Lansing faces an $11 million budget deficit in the coming fiscal year.

City officials say the shortfall is due largely to a steep decline in property tax revenues. Rising pension, health care, and salaries are also to blame. The numbers take into account the extra money the city is taking in from a new tax levy voters approved a year ago, but the city has almost reached its constitutional limit on how much money it can raise in new taxes.  In a press release, Mayor Virg Bernero says the funding model for Michigan cities is "broken." 

The grim news comes nearly a month after Bernero appointed a special committee to assess the city’s financial health.

Lindsay VanHulle of the Lansing State Journal reports that the announcement comes as no surprise:

The shortfall for the year that starts July 1, 2013, is due primarily to continued declines in property tax revenue, to the tune of $3.7 million next year, along with more than $5 million in planned cost increases for municipal pensions, health care and contractual wage raises.

Income tax revenue growth has been sluggish in the past year, and it will stay largely flat: Administrators estimate it will increase by less than 1 percent in next year’s budget, said Randy Hannan, Bernero’s executive assistant.

As Michigan Radio’s Steve Carmody reported, the financial health team, headed by former mayor David Hollister, was tasked with finding both short-term and long-term proposals for solving the city’s financial problems.

Hollister said it might not be possible to maintain a good quality of life if things don’t change.

“Maybe we need new models of regional government. Maybe we need a closer working relationship…not just with our regional partners…but formal consolidations,” Hollister said.

With regard to future cuts, Bernero has said that “everything is on the table” reports VanHulle.

- Jordan Wyant, Michigan Radio Newsroom