GRAND RAPIDS — While the state Senate plans to cut statutory revenue sharing by $22.4 million, House Republicans have decided to add another $4.2 million to the entire pot of money that goes to cities, townships and villages.
While the House budget strips $21.9 million from the statutory side of revenue sharing, it also adds $26.1 million to the constitutional side to bring the total to $1.115 billion for the fiscal year — up from the $1.110 billion on the books from last year.
“I will remain cautiously optimistic on that news and reserve the balance of my glee for two things. One, when I see what the numbers are for Grand Rapids with certainty. And two, when I see where else they may have trimmed things to enable them to do that,” said City Manager Kurt Kimball.
Kimball told the Business Journal that a hike in revenue sharing, whether constitutional or statutory, would be welcomed and would mark the first time an increase has been offered in at least three fiscal years. The city is expecting to receive $23.6 million in revenue-sharing funds from both sources in the coming fiscal year.
But how does a $26.6 million difference emerge for one budget item from two chambers? At least a portion of the disparity in revenue sharing figures can be tied to the method each chamber used to develop its respective 2006 budget.
State senators used the traditional department-by-department mechanism. The House, in contrast, took the approach suggested by the book “Price of Government.” That method calls for spending categories to be ranked on a four-point basis in order to determine budget priorities. In that priority ranking, revenue sharing payments got the highest rating of the 54 programs that were ranked; receiving a 3.8 on a scale of 4.
“The House will pass two budget bills. One will be the school-aid fund and the other is one omnibus budget bill, which will have everything else in it,” said Rep. Jerry Kooiman, a Grand Rapids Republican, Speaker Pro Tempore, and Appropriations Committee member.
“There are some differences between the bills going through the Senate and the ones going through the House. There will be some major differences in terms of how we get there. The key is that we get there,” added Kooiman.
When Kooiman spoke with the Business Journal, he said he hadn’t seen the entire budget proposed by the Senate, but said that it wasn’t balanced. He said the House budget, at $39.5 billion, was balanced without raising taxes.
“All 58 members of the House Republican Party have agreed to support a balanced budget without tax increases,” he said, before it was approved Thursday.
Grand Valley Metro Council Executive Director Don Stypula added that the Senate may not be done with revenue sharing. He said he has been told that Senate leaders are using the statutory cut as a bargaining chip with Gov. Jennifer Granholm on overall budget issues.
“And the governor, while calling for continued support for a ‘freeze’ on revenue sharing payments, may have to keep this proposed cut in play through the summer and early fall to reach a final budget deal with legislative leaders,” wrote Stypula in a legislative update to Metro Council members.
Statutory revenue sharing, money that comes from the state sales tax, was $443.3 million in FY05. Statutory drops to $421.4 million in the House budget next year, but constitutional revenue sharing rises from $667.4 million in FY05 to $693.5 million in FY06. Cities get 67 percent of those dollars, townships get 30 percent and villages receive 3 percent. The state’s counties no longer receive revenue-sharing money.