Practical approach guides city’s budget determinations

June 7, 2010
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City Manager Greg Sundstrom is impressive in his budget assumptions and directives as Grand Rapids — and every other city in Michigan — continues to chart multi-million dollar losses directly related to the economic downturn.

Sundstrom and the city commission are undoubtedly up against the proverbial brick wall, but his budget directives show respect for the citizens of the community and consideration of suggestions from business leaders.

Residents in May approved an income tax increase from 1.3 to 1.5 percent for the stated purpose of hiring more police and fire employees. The city has been under intense scrutiny not only by citizens but business owners and community leaders who have advocated and suggested basic changes in city pay and services, many of which already are well established in the business world. Sundstrom’s most recent budget projections with the income tax increase also assumes concessions by the city’s police and fire unions, for all intents and purposes beginning immediately but which would not impact the city budget until June 30, 2011.

The most significant aspect as the timeline counts down, however, is Sundstrom’s acknowledgement to the community. If concessions are not negotiated, police and fire layoffs are necessary. If the city lays off police and fire personnel, Sundstrom notes, “the city would be compelled to roll back the city income tax rate to 1.3 percent and lay off up to 75 police officers and 40 firefighters.” If concessions are still not obtained in 2011, another 40 police and/or fire personnel would be laid off in 2012.

Sundstrom also acknowledges the pension and retirement changes suggested by business leaders prior to the referendum on the tax rate and is negotiating those suggestions.

Sundstrom sets a new tone for collaboration between government, its citizens and the private sector — one which should be emulated by state legislators who continue to mire themselves in politics rather than leadership. Many major campaign contributors are choosing not to back incumbents in various races for lack of action in regard to grave state issues. That, too, is leadership.

Sundstrom also has recommended to the city commission wage reductions of 10 percent for all city “general fund” employees. He has negotiated city service consolidations with neighboring cities, and has proposed increasing privatization of some services. Even with all of the cuts proposed or projected, the city’s fund balance will decline to 3.3 percent, and that is likely to reduce its bond rating, raising the cost to borrow money.

Even as governments work through the economic downturn, the business community has negotiated the worst of the Great Recession. Indicators in employment levels, productivity, exports and small revenue gains are measures of progress. This, too, will eventually be reflected in city revenue gains, but government need not grow again to its previous bureaucratic weight.

The lessons of the last few years provide a new era for the cost of government.

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