Kent Showing Shortfall
GRAND RAPIDS — Less than two months into the fiscal year, Kent County’s general operating fund is off-kilter.
Revenue to the fund could fall $1.1 million short of expectations, while expenditures from it could grow by more than $1 million. So instead of the $71,000 deficit that was forecast for this year, the fund could end up with a $2.2 million deficit if the current conditions continue for the remainder of the year.
Higher costs for health care and less revenue from parks and deed registrations are the main reasons for the early imbalance. The fund has time to recover. But the county won’t be getting most of its property tax revenue this year until October because of the shift state lawmakers made to the collection date.
For the first time in four years, full property tax bills will go out in July and the county won’t get its receipts until months later. Until then, county commissioners will have little in the way of new tax revenue to work with and will likely have to make withdrawals from the revenue-sharing reserve account that has $48 million in it.
The general operating fund is at $165 million this year.
Members of the county’s Finance Committee got their first peek at an early forecast for the 2008 general operating fund and they didn’t exactly like what they saw — a potential $5 million deficit and $174 million worth of expenses.
Kent County Fiscal Services Director Robert White told the committee that next year’s spending may have to rise by $6.5 million, or 3.9 percent, from this year’s figure. In fact, funding for the Friend of the Court office and the Convention and Visitors Bureau may have to be added to an already burdened general fund. Those two expenditures would add more than $1 million to it.
“It’s the first overview. As we move through the year, we’ll make some refinements,” said White of next year’s budget.
As for the just-completed fiscal year, revenue to the general fund topped $151 million and was up by 5.7 percent from 2005. But a hike of 7.5 percent to $153 million was expected.
“We came in about $2.5 million short of expectation,” said White.
Spending from the general fund rose by 4.7 percent to $153 million. That was good news because the fund’s expenditures were expected to grow by 6.1 percent to $155 million.
“The departments came in under spending expectations by about $2 million,” said White.
Still, the general operating fund should have a deficit of almost $2.4 million for 2006. The audited figures are expected to be available in June.
“On a short-term basis, you still are financially healthy,” said White.
White said the general fund has a balance of $71 million. About $67 million of that total is cash, while the rest are account receivables from federal and state grants the county was awarded last year. He said the county has a cash reserve that should be good for 142 days.
“We can’t go through next year thinking we’ve got all kinds of money,” said Richard Vander Molen, chairman of the Finance Committee.
White said he expects 2006 revenue from the county’s lodging excise tax to top receipts from 2005 by 6.3 percent and reach $4.7 million. The final deposit for the year is expected to come later this week. But even with the increase, the fund will be at least $1 million short of meeting all its expenditures and the reserve will have to be tapped again.
“It’s not a gangbusters increase, but it’s a healthy growth. You will run out of reserve in this fund this year,” said White.
The account’s annual expenses total over $6 million. The largest expenditure is a $4.7 million bond payment for the construction of DeVos Place, which has more than $84 million of debt left.
The CVB, John Ball Zoo, the annual Festival of the Arts and, beginning this year, the West Michigan Sports Commission are funded from the lodging excise tax.