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Yes, that's correct. As an East Lansing resident, you pay 1% on all of your income.
Since you work in Lansing, you pay 1/2% nonresident tax on the money you earned in Lansing. Follow this link for more details.
You may want to check with the city before doing that. I think, but don't know for sure, that it works the same in Michigan as it does in Ohio.
You do not have to file a city return for the city you work in. You only file for the city you live in. The city you live in may (usually) give you a credit for some of the tax withheld for the workplace city.
You would only file a workplace city return if there was an error, in the amount of withholding and that's unusual.
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