NewsRoom
12:00 am
Tue September 18, 2012

Amid Some Skepticism, Lansing Panel Launches Financial Review

In Lansing, a panel of prominent business and civic leaders is diving into an  initiative with far-ranging implications. Last week, Mayor Virg Bernero announced the formation of a ‘Financial Health Team’ to study how the city might--over time--move beyond chronic budget deficits.   Bernero called it his “most serious and important endeavor.” The team--headed by former Mayor Dave Hollister--will explore whether the time has come for a new model of municipal finance. 

Lansing’s vital statistics might be keeping Mayor Virg Bernero awake at night.  Since 2006, dwindling revenues alongside climbing costs have triggered cuts to the city’s budget totaling $60 million.  David Hollister is the chairman of the new 15-member team. He offers perspective by comparing the current city budget under Bernero with his last as Mayor, in 2002.

“The city budget that he is currently operating under is less than the budget that I offered when I left 10 years ago,” he says.

Anyone preferring an upward direction might consider projected pension and healthcare costs for city retirees.  The unfunded segment is estimated at $541 million.  Mayor Bernero clarifies the situation.

“It essentially is a perfect storm,” he says.

So he wants the Financial Health Team—or FHT-- to think big.

“Maybe the model is broken,” he continues. “Maybe we’re trying to fit a square peg into a round hole.  Maybe we need to revolutionize the way we think about local government service provision. Everything’s on the table.  If the model is broken, then they’re gonna recommend a new model.”

The Mayor says the FHT will have access to city data and assistance to help them devise visionary recommendations to address structural deficits.  Bernero and Hollister describe the shortfalls as a “cancer” that will seriously weaken the capital city over time.  Similar moves are happening across Michigan--the result of state government’s new revenue sharing model that ties cash to municipal streamlining and consolidation.

Dr. Eric Scorsone studies municipal finance at Michigan State University.  He’s also a member of the FHT who will analyze the group’s findings early next year and write its recommendations.  Scorsone expects the group to dig into thornier aspects of collaboration and consolidation between Lansing and East Lansing, especially police and fire.

“One of the first things you want to do is (train) firefighters together so they become familiar with each other,” he explains. “More coordinated training among the different departments.  Shared equipment, so buying the same kinds of hoses, the same kind of fire trucks.”

Service sharing appears to be off to a good start between the two cities.  They’ve shared a fire chief for eight months. 

But further consolidation raises a red flag for some.  East Lansing activist and ex-city council member Donald Power points to a recent funding proposal for Lansing-backed initiatives that would have consolidated more of the two city’s fire operations.  He claims it didn’t allow deliberation by the East Lansing city council.

“They were informed by the city manager ‘No, we will not sign on to this because our jurisdiction has not agreed to do this.’  And yet, they went ahead despite that,” he says.

That’s a familiar pattern to any one following Mayor Bernero and his own council. Power says it gives him pause as the financial health team begins its work.

“Because of the way this has been approached by our friends at the Chamber of Commerce and in Lansing, they’re putting a dark cloud over this whole process,” he adds.

When asked whether turf wars can be overcome, Chairman David Hollister offers a terse prescription.

“Call in their finance director in each one of those communities and ask them if property values are going up or down,” he begins. “Are revenue sharing dollars going up or down? Are legacy costs going up or down? Look at the formula.  Put the arrows on the board.  And then they can decide whether they can continue doing business as they’re continuing, or if they’re going to have to change.”

Lansing’s new financial health team will meet every couple of weeks.  It plans to offer recommendations in March in time for consideration in next year’s Lansing budget.  What it prescribes for the longer-term future could draw much greater attention.