The city of Ann Arbor will be making a series of tough decisions in the coming months as the city administration will most likely be reorganized, and the budgets of several departments may have to be cut.
The effects of these cuts on University students and other city residents is unclear. Officials have given contrasting statements as to how students will be affected.
The city currently faces a budget deficit of $1.6 million for the present fiscal year and needs to cut $3 million from the budget of the coming fiscal year, which begins July 1.
Councilman Michael Reid (R-2nd Ward) offered a somewhat pessimistic spin on the budget woes. Reid said he doesn”t “think it”s responsible to say we can deliver the same level of service for $3 million less.”
However, interim City Administrator Ronald Olson said structural changes in city government and improved efficiency may dampen the effects of budget cuts.
“We might be able to deliver the services in a more efficient manner, which means (the budget cuts) may not have a lot of impact on what we do,” he said.
The reason for the shortages is not the expansion of city bureaucracy, rather the growth of expenditures that the city cannot control, such as medical insurance for city employees as well as liability insurance, which are expected to face increases of more than 20 percent, Olson said. Another reason is an expected $218,000 reduction in revenue sharing funds from the state, which is also making cuts as it tries to balance its own budget, he added.
Like all other cities, Ann Arbor is required by state law to have a balanced budget. Plans for the next fiscal year do not include dipping into its rainy day fund or raise taxes, the interim city administrator said.
Instead, the city is trying to reduce the equivalent of 60 to 70 more fulltime employees using incentives for early retirement 130 people have already taken those incentives.
“We”re doing it in a very humane way. But we came down to the question of “do we want to lower full-time equivalency or raise taxes?” and we chose to lower full-time equivalency,” said Mayor John Hieftje, a Democrat.
Administrators and department heads are also trying to find a way to prioritize city services. They will attend a retreat in early February to figure out how to reduce their budgets.
The city also is asking for citizen and student feedback on the issue of budget cuts.
“Clearly we need to be responsible to all students,” Hieftje said. The budget is expected to be presented to the council on April 15.