Stew, the $2.4 million shortfall — which is the basis of the 2.5% reduction targets the city is using — assumes: (1) The city will receive around $2 million in parking revenue from the Ann Arbor Downtown Development Authority; (2) shared sales tax revenue from the state will continue at the same levels as last year; and (3) unresolved labor contracts will settle in a way that results in no increases to the wage structure, plus additional reductions equivalent to the cost savings the city would see if all employees were on the new health care plan.

The possibility that (3) is wrong is being dealt with through reduction targets of greater than 2.5% for particular departments depending on the number of employees whose unions have not adopted the new benefits plan — in the case of police and fire, it’s close to 4.0% reduction target.

Regarding (2), last year the city received $1.959 million in statutory state shared revenue. Under Snyder’s proposal –- which is to eliminate the statewide statutory state shared revenue pot of roughly $300 million and replace it with a $200 million pot to be distributed competitively among around 500 local units — each unit currently receiving statutory revenue can expect to see an average decrease by 1/3. If Ann Arbor received the average reduction, that would mean a $660,000 cut, which translates into about six additional police/firefighters — if that additional shortfall (due to reduced state shared revenue) were addressed just by looking at police and fire. But the revenue cut would be a reduction across the entire general fund, so if police and fire were given a proportional burden — they’re about half the general fund budget — that would work out to three additional police/firefighters.

The competition for the $200 million is supposed to involve how well local units are addressing control of health care costs and how well they’ve implemented initiatives to consolidate and cooperate with other units of government. On the first criterion, the city’s overt alignment of the budget strategy with the labor strategy could be seen as an attempt to convince the state that Ann Arbor is doing everything it can under the constraints of Act 312 to reduce health care costs to the city. Put bluntly, the message to the unions is this: Make concessions on health care, or face more layoffs than you would otherwise.

On the second criterion, Tony Derezinski (Ward 2) appears to have embraced this talking point of cooperation and consolidation with a bear hug — since December on nearly every occasion when there’s any discussion of the budget, he’s found a way to mention some aspect of cooperation with other units of government already in place or else to suggest an area where collaboration might be fruitful.

So I think Ann Arbor has got its “application” for its share of the the $200 million already drafted.