Capital Projects Likely To Shrink

July 23, 2007
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GRAND RAPIDS — Not only may county commissioners have to cut $2.7 million from their upcoming 2008 general operating fund, board members may also have to chop next year's budget for capital improvements in half.

The county's Finance Committee got its first look last week at the initial list of capital improvement requests submitted by department managers. Forty-five projects were listed at a cost of $9.1 million, with $8.5 million of that total to come from the general tax levy.

But as County Fiscal Services Director Robert White pointed out, the levy generates two-tenths of a mill for capital improvements and it should only yield $4.3 million for projects next year.

"We have about twice as much in projects as we have in funding," he said.

White said a committee that includes the department heads who made the requests began meeting last week to either get the list more in line with the funding that will be available or suggest other sources of funding.

A revised list will come before the Finance Committee next month, a month before commissioners are expected to adopt the 2008 operating budget.

"This will be back on August 21," said White.

The 2008 general operating budget currently stands at $169.1 million, or $4.7 million above the revenue expected next year. Kent doesn't want the 2008 deficit to exceed $2 million, so $2.7 million has to be sliced from the budget by September.

County commissioners, though, will have a couple of financial decisions to make this week. One involves giving the Convention and Visitors Bureau more money from the county's lodging excise tax reserve fund.

In its ongoing contract with the bureau, the county awarded the CVB $853,383 in 2006. But a clause in that agreement stipulated that if revenue to the tax fund grew by more than 5 percent that year, then the bureau was entitled to a funding increase equal to the CPI. Revenue to the fund grew by that percentage, and the funding adjustment means the CVB should get an additional $29,015 for 2006, bringing the county's total bureau funding for 2006 to $882,398.

The additional dollars will come from the account's reserve, which stood at $1.9 million at the end of last year. White said the fund's deficit for this year will be around $1.5 million, which will almost deplete the reserve.

"You will not have enough money to meet all of your obligations next year," he told the Finance Committee last week.

The committee approved the reserve-fund allocation.

The county will fund the bureau with $900,000 this year, which is the final year of its current contract with the CVB. County Administrator and Controller Daryl Delabbio said he expects to have a new multi-year agreement in place with the bureau in September.

The bureau uses the lodging-excise dollars to draw conventions here. CVB President Steve Wilson said his sales staff has $1.2 million of new business coming to DeVos Place, the city's convention center. He also said the bureau would return in a few weeks to update commissioners on the progress the CVB has made in the convention business.

County commissioners will also decide this week whether to enter into an option to buy the development rights to 61 acres of farmland in Lowell. The option will cost the county $150 and the agreement will be good through the end of 2009. The purchase price is $284,000, or $4,655 per acre.

County Assistant Administrator Mary Swanson said the property owners, Joseph and Susan Merriman, qualified for a federal grant and those dollars will go toward buying the rights. But the grant is only for $76,800, well short of the price.

MSU Extension Agent Kendra Wills, who is a consultant for the county on purchase of development rights matters, said area foundations have contributed $134,000 to the local portion of the price. She added that another $167,000 needs to be raised before the county can close on the transaction.

The Finance Committee approved the option agreement last week.

When commissioners approved the Purchase of Development Rights Program nearly five years ago, they stopped short of committing tax dollars to it. When the county buys the rights from a property owner it means the land can't be commercially developed.

  • Initial requests from Kent County department managers for capital improvement projects next year total 45 and would cost almost $9.1 million to complete.

Of that amount, $8.5 million would come from a general tax levy of two-tenths of a mill. But the levy is only expected to produce $4.3 million in revenue next year, so the county has to trim the list.

What follows is the number of projects by department, the amount requested to complete the projects, and the amount that would come from the general tax levy.

County Department

Number of Projects

Requested Amount

General Tax Levy

Facilities Management

15

$3,648,000

$3,648,000

Parks Department

13

$2,684,996

$2,565,446

John Ball Zoo

$1,137,630

$987,159

Information Technology

$1,100,043

$819,043

Sheriff's Department

$488,400

$488,400

Health Department

$26,744

$26,744

Total

45

$9,085,813

$8,534,792

Note: The difference between the requested amount and the amount to come from the general tax levy is $551,021. Various grants totaling $339,125 and various departmental funds totaling $211,896 account for that funding difference


Source: Kent County Fiscal Services Department, July 2007 

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