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Lansing brings rainy day funds back to target and other takeaways from the city's next budget

exterior of Lansing City Hall

Lansing's City Council adopted a nearly $242 million budget Monday night, and, according to one metric, the city's financial forecast is looking sunnier.

After making deep cuts to its reserves, the city has brought its rainy day funds back up to a target goal in the budget which takes effect July 1st.

Governments store unallocated money in the funds to guard against lean times like recessions or natural disasters.

Financial experts say being able to pad them out is a key barometer of overall financial health.

Under a Lansing policy, the city is supposed to dedicate between 12% and 15% percent of its general fund spending to reserves. If Lansing doesn't meet that target, the City Council is required to allocate $500,000 to them to start building back that balance.

By 2018, Lansing had socked away more than $17 million in reserves, about 13% of general fund spending, after years of stocking up those fundsin the aftermath of the Great Recession.

But, the city dipped into its fund balance in 2019 and early 2020 to cover financial errors and budget shortfalls, then slashed those those rainy day funds even further because of the coronavirus pandemic.

When City Council adopted a budget in 2020, reserves dipped to less than 5% of general fund spending, and the credit analysis agency Standard & Poors cited those dwindling funds as one reason for downgrading the city's bond rating.

Now, as City Council President Adam Hussain explains, in part because of COVID aid, Lansing has built back its reserves to target levels.

"I liken it to somebody's personal finances and, if somebody has their house in order financially, they have three to six months of essentially expenses in some type of reserve fund," he said. "For the past few years we’ve been dangerously low but thankfully we’ve had some infusion of cash from the federal government."

When the city approved a budget last spring, Lansing added several million dollars back to reserves, although the city was still below target at about $10 million or 7% of general fund spending. The newly adopted budget is over the 12% goal with $17.6 million in reserves.

If Lansing exceeds 15% of general fund spending in reserves, the excess money must go to pre-funding pensions and health care for retirees, according to the city policy.

Here are other takeaways from Lansing's next budget, which is just over a 1% total increase from the current fiscal year.

  • Lansing is adding new positions, including another code compliance officer and a third social worker who works with the police department to assist people dealing with issues like homelessness and addiction.
  • Officials want to speed up hiring and improve employee retention by adding a deputy director, a health and wellness specialist and a hiring specialist to the human resources department. Mayor Andy Schor hopes the changes will help the city fill vacancies faster. "We’ve had had issues with our public safety," he said. "We've had issues with our public services, you know, we weren't able to pick up yard waste for an extra week or two last year because we couldn't find drivers.”
  • About $9.5 million in federal pandemic aid will go to the more than $154 million general fund to offset revenue losses.
  • More than one fifth of the total budget, over $54 million dollars, will go to pension and retiree health care costs to offset some of Lansing's long-term unfunded liabilities
Sarah Lehr is a politics and civics reporter for WKAR News.
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