East Lansing City Council approves $512K income tax processing contract and budget cuts

The East Lansing City Council convened on May 13, 2025, to address critical financial matters, including a proposed contract for income tax processing and a general fund deficit reduction plan for the upcoming fiscal year.

During the meeting, the council discussed the city’s income tax collections, which reached approximately $16 million for the last tax year. The council unanimously approved a motion to authorize the City Manager to sign a contract with Innovative Software Services for income tax processing, with an annual cost not exceeding $512,675 through 2027.

The primary focus of the meeting was the consideration of a resolution to adopt a deficit reduction plan for the fiscal year 2026. City Manager Robert Bellamy presented a series of recommendations aimed at addressing a projected deficit of over $3 million. Key proposals included recognizing additional revenue from lease payments, reducing expenditures by eliminating certain positions, and placing a dedicated parks and recreation millage on the November 2025 ballot.

Council members expressed varying opinions on the proposed budget cuts, particularly concerning the Parks and Recreation Department. Some members voiced concerns about the potential impact of these cuts on community services, emphasizing the importance of maintaining funding for public safety and recreational programs. Discussions also included the possibility of establishing a recreational authority in collaboration with the local school district to alleviate financial pressures on the general fund.

The council acknowledged the budget as a dynamic document, allowing for adjustments throughout the fiscal year. However, members cautioned against making premature changes without a complete understanding of the city's financial landscape, particularly in light of pending litigation that could affect future revenues.

The meeting concluded with a commitment to further evaluate the proposed budget adjustments and explore alternative funding strategies to ensure the sustainability of essential city services.