City manager is bullish about the budget future

November 8, 2010
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When Grand Rapids City Manager Greg Sundstrom addressed the annual meeting of the Downtown Alliance last year, the gathering was stunned when he told them the city’s general operating budget was facing a $27 million deficit for the coming fiscal year and up to 250 employees would have to be let go.

Recently, Sundstrom made a repeat appearance at an even-larger alliance gathering, but this time he didn’t shock anyone. “Last year, I told you the city’s finances were precarious,” he said. “This year, I am bullish.”

Sundstrom explained that the $27 million operational shortfall he revealed at last year’s meeting actually grew to a $33 million deficit a short time later. But after months of budget meetings, his staff, department managers and city commissioners turned that huge glob of red ink into a $33,000 surplus for a spending plan that totaled about $110 million.

“And that was just beautiful,” he said, with an emphasis on the final word.

The city got into the black by shrinking 24 departments into 17, laying off 175 workers and reducing compensation for employees by 4 percent. Sundstrom said he expects the 2012 general fund to have a surplus of $175,000 and the 2013 budget to be balanced. But as for 2014 and beyond — including 2016 when the city income tax is rolled back to lower rates — he wasn’t certain.

Two things Sundstrom was sure of is that city workers need to accept a further compensation reduction of 10 percent and then double their pension contributions. “And that includes rolling back increases they’ve received,” he said.

On the revenue side, Sundstrom said income-tax receipts were beginning to stabilize. He said income-tax revenue fell by 9 percent in 2009, and the budget forecast projected an 8 percent dip this year. But through three-quarters of 2010, that revenue source was down by only 1 percent.

Also at last year’s alliance meeting, Sundstrom delivered the news that the city would transform the way it delivers its services. This year, he outlined a few of those transformations.

One has 14 neighborhood associations handling complaints made to the city about unkempt properties. He said the city pays these associations a “small sum” to investigate the complaints, and nearly six of 10 have been resolved since the effort began in April. Another change is that persons convicted of minor crimes serve their time as workers who maintain the city’s cemeteries.

Sundstrom said the city ultimately will be transformed by being used as a platform rather than strictly as a provider, and by looking for the best outcomes and then prioritizing them. He said privatizing some services and partnering on others are both on the table, depending on the resulting outcomes.

“Then we will allocate our resources to match that (outcome),” he said. “We will transform our service delivery models and we will become more sustainable.”

Sundstrom said he is also keen on transforming the city’s relationship with its customers. He mentioned that a new city app will soon allow customers to request services via cell phone, and a new 311 phone number that is in the works will link someone directly to the city. “I think this will be a huge step ahead for our customer services,” he said.

Sundstrom said he knows that residents don’t want their services cut, businesses don’t want to pay more taxes, and the city’s bargaining units don’t want to make more concessions. He admitted that he isn’t pleasing anyone when he recommends doing these types of things. But he said it’s his job to make the city more sustainable, and he can’t do that by just cutting expenses.

“There aren’t fewer fires, fewer crimes, or fewer streets to maintain during an economic crisis,” he said.

What will tip Sundstrom off when the city’s transformation process is complete? “When people and businesses want to pay a premium to come here,” he said, “and they don’t have to.”

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