City’s good budget news tempered by long-term outlook

Sunday Times Newspapers

LINCOLN PARK –– Unlike in many surrounding communities, officials here have entered the current fiscal year not only without a budget deficit, but with a surplus.

And adding to that surplus is a little more than $600,000 the city was able to leave unspent in 2009-10 by coming in under budget.

City Manager Steve Duchane said officials had anticipated using $1.3 million in reserves in the last fiscal year, which ended June 30, but instead was able to contribute $616,000 to the 2010-11 fund balance, bringing it to just over $4.8 million. Because this year’s budget anticipates a deficit of $1.4 million, money from the fund balance might have to be used, he said. Revenue currently is pegged at $22.3 million, expenditures at $23.7 million.

Of the pessimistic, optimistic and realistic estimates officials looked at for 2009-10, the $616,000 amount is “more toward optimistic” than anticipated, Duchane said.

And while that’s certainly good news in bad economic times, he said it comes as a result of moves that have been going on since he arrived on the job in 2004 — starting with early retirements — and greatly accelerated by the economic meltdown of the recent past.

“It’s only because we started before most people and we were honest about it,” Duchane said of coming in under budget in 2009-10.

During the past year officials have reduced staff and pared overtime, supplies and emergency repairs, among other things. Less-than-expected police overtime saved some $260,000, and another approximately $96,000 was saved partly by changing the departments of Buildings and Grounds, Parks and Forestry to an emergency operation mode.

Despite the anticipated 2010-11 deficit, however, Duchane hopes to avoid dipping into the surplus by next June 30 and said this year’s better-than-expected savings “only helps us narrow the gap for next year.”

“Starting this year, we still need to reduce expenditures by another $700,000,” he said. “That will bring us again that much closer only to using renewed revenues and not reserves to go forward.

Toward that end, officials recently reached a two-year agreement on concessions with the Governmental Employees Labor Council, which represents the foremen in the Department of Public Services and administrative assistant staff members citywide. The concessions will involve switching from a health maintenance organization to a preferred provider, increasing co-pays and adding one of $150 for emergency room visits, which previously were covered by the city.

Members of American Federation of State, County and Municipal Employees Local 628, which represents crossing guards, agreed to continue their current contract while altering some nonmonetary benefits.

Further cost-cutting moves, Duchane said, will involve exploring further investment in technology that reduces actual personnel service, reviewing contracts and collaboration with other cities.

He cautioned, however, that all of the five-year budgeting figures officials have posted on the city’s Website are based on “proper funding” of state revenue sharing, which could change if the state runs into budget problems of its own — possibly dramatically.

A strategic fiscal analysis done the city in February 2009 estimates that even if new millages are established to replace revenue expected to be lost, Lincoln Park is looking at finishing $413,000 in the red at the end of 2012-13.

For now, however, officials are enjoying the moment.

“It’s a little better than we expected, and we’ll say, ‘good’ and move on from there,” Duchane said. “The result of our restructuring is going to be a very lean workforce and changed pension programs.”

He warned, however, that without major funding changes at the state level, the long-term picture for municipalities — including Lincoln Park — is not good.

“Incrementally, we are meeting our performance benchmarks,” Duchane said, “but on the whole spectrum of the scale, we are coming to the conclusion that the Michigan municipal financing system is broken.”