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The city’s state lobbyist brought Ypsilanti City Council some sobering news at Tuesday evening’s council meeting.
Kirk Profit, with Government Consulting Services Inc., told city council Tuesday not to expect lost state-shared revenue to be restored any time soon, if ever, as the state grapples with its own budgetary quagmire.
“It’s very unsettled in Lansing at this point in time,” Profit said speaking to council. “And in the near future I don’t see a lot of revenue coming to replace the lost programs and the lost revenue sharing that you see now in this current year budget.
Profit said in order to make some improvements on next year’s budget picture the state is going to have to come to grips with its revenue structure, which he said doesn’t keep pace with spending pressures.
The state is faced with a general fund budget that has decreased dramatically over the past year from $9.8 billion to $6.9 billion. It’s expected Ypsilanti will feel the sting of that cut with an estimated loss of $330,000 in state-shared revenue for the 2009-10 fiscal year.
Explaining the loss in revenue, Kenneth Cole, also with GCSI, said 100 percent of all constitutional and statutory revenue sharing comes out of the first four cents of the state’s 6 percent sales tax. The additional two cents in sales tax are allocated specifically for schools. He said a natural cut in state-shared revenue was realized this year as sales tax revenue saw a drop of approximately 13 percent.
Constitutional revenue sharing requires 15 percent of all the money generated by the first four cents of the sales tax be distributed on a per capita basis. Cole explained, up to 21.3 percent of the first four cents of the state sales tax funds can be allotted for statutory revenue sharing. However, he said the last time statutory revenue sharing was fully funded was in 2001, and in recent years it has hovered around 9 percent.
Profit said he is disappointed in state government and its performance. He said he is working on putting together a group to respond but he said the debate of revenue structure and structural reform is just beginning.
“I personally refuse to accept they are going to have this kind of a revenue structure,” he said. “The impacts are so dramatic it’s hard to believe.”
As he was condemning the state, Profit commended the city at the same time.
“This city does an incredible job with almost no resources,” he said. “I think you're down like 35 or 40 percent of your employment from where it was 10 years ago and that’s just incredible what you guys have been able to do.”
To balance its own budget in recent years, Ypsilanti has made several cuts and left many municipal employee positions unfilled.
City Manager Ed Koryzno said his staff has been preparing city council for the loss in revenue all summer in the way of strategic budgeting sessions - the last of which wrapped up last week.
“We knew further reductions were going to be necessary,” Koryzno said this afternoon. “Those reductions will be determined as council goes through the goal setting sessions in November.”
Although Koryzno said he couldn’t guess as to what would be cut, he said cuts would be equivalent to the loss of approximately three police officers or four fire fighters. He said not funding a capital improvement project could also save the city money, but he said ongoing savings in the way of personnel cuts are more realistic as the city expects additional cuts from the state the following year.
“Where those personnel come from is the question,” Koryzno said.
The city’s first goal setting session is scheduled for Nov. 9. Additional goal setting sessions are scheduled for Dec. 7 and Jan. 11. All meetings are scheduled at 6 p.m. in council chambers.