Grand Ledge officials expect budget reductions due to COVID-19

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Grand Ledge city officials expect COVID-19 to adversely affect the financial health of the city by cutting into expected revenue and increasing expenses.

The largest reductions come from areas of the budget that rely on state funding and from the lack of city-sponsored events due to social distancing restrictions.

“The city of Grand Ledge has seen reductions in most areas of revenue,” said City Treasurer David Pawley said. “The city submits a balanced budget, so the reductions in revenue had to see a comparable reduction in our expenses.”

City officials had expected income from sales tax revenue sharing to increase by 3% over the next three years. However, funding has been cut from this program by 7% this year alone. 

Additionally, money from the Michigan Department of Transportation that goes toward local road maintenance was also reduced by 9% due to a statewide decrease in gas tax collection.

Income generated from the city through state-approved investments has also seen significant reductions due to the economic instability caused by the pandemic. Interest from federal bonds, certificates of deposits and mutual funds has dropped 92% over the last 12 months.

Revenue from community rentals, event admissions and parking also saw an 80% decline due to restrictions on indoor and outdoor gatherings put in place to help stop the spread of COVID-19.

Similarly, because of bars being shut down and the decrease in travelers on the road, income collected for the city by the police department from traffic citations, court-approved fees and Breathalyzer tests dropped 65% from what the city had measured at this point last year.   

The cuts from these revenue sources are expected to impact all areas of city operations with expected cuts coming for the city’s Parks and Recreation Department, Street Operation and General Fund Department.

City officials are also concerned that the increase in costs they’ve seen associated with the virus might burden the already stretched budget.   

“We have experienced large increases in personnel costs associated with the pandemic including workflow/workspace redesign, technological needs, PPE and sanitization,” Pawley said.

Like many other organizations around the country, figuring out how to transition their staff from the office to remote work provided unique challenges, City Manager Adam Smith said.

“The ability to work and meet remotely without a shared physical space has been the greatest technological need we’ve had to address,” Smith said. “Because of network security issues, there are some things you need to go into the office to do.”

For workers who did need to go into the office, Plexiglas barriers, 6-foot markings on floors and temperature checks reminded staff that this was anything but business as usual.

“All aspects of the city operations that were classified as an essential service like public safety, public works and administration needed to be redesigned to allow workers to socially distance themselves,” Smith said.

City officials have been able to recoup some of their losses tied to the pandemic by securing federal funding to help out cities across the country feeling a similar sting from COVID-19.

“We were fortunate in receiving grant funding from various federal programs to offset our current COVID-19 related impacts,” Smith said.

Part of those grants come from the nearly $4 billion in relief funding that Michigan received from the federal CARES Act earlier this year.

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