2015 General Fund Budget Update

Nearly 60% of East Lansing’s budget is spent on public safety, which is fairly typical for Michigan cities. When municipal leaders talk about cuts to revenue sharing being a threat to public safety, it’s not a rhetorical tactic. It’s a budgetary reality.

Property taxes and intergovernmental revenues (primarily state revenue sharing) make up 67% of total City GF revenue. Both of these revenue sources have seen significant reductions in recent years due to the Great Recession and discretionary cuts made by the state legislature.

In FY01, East Lansing received roughly $7 million in total revenue sharing payments from the state. $3.1 million of that total was constitutional revenue sharing and $3.9 million was statutory revenue sharing. In FY15, East Lansing is projected to receive only $5.2 million in total revenue sharing. That’s $3.7 million from constitutional revenue sharing and only $1.5 from statutory revenue sharing. While constitutional revenue sharing has grown slightly over the course of the last 14 years, today we are receiving less than 40% of what we did in statutory revenue sharing in FY01. In short, the City is now receiving $1.8 million less per year in revenue sharing and that reduction is due entirely to discretionary cuts made by the state legislature.

On the property tax front, East Lansing lost nearly $115 million of taxable value during the Great Recession, resulting in roughly $670,000 less annually in property tax revenue for the City. Taken together, the Great Recession and revenue sharing cuts from the state mean that East Lansing is working with $2.5 million less in revenue annually.

Big Budget Lie #1 is that we can afford to do everything and don't need to make hard choices about our community's investment priorities. We cannot. The aforementioned revenue loses have forced those hard choices on us.

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