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Commission: Cut Now, Or Cut Later
GRAND RAPIDS — Kent County commissioners will have a painful choice to make soon regarding the upcoming general operating budget.
They’ll be asked to choose between a spending plan that would begin to make cuts next year and possibly continue to do that for two more years, and a plan that would delay those cuts for up to three years. What is behind this “do it now or do it later” choice is the uncertain future of state revenue sharing payments to the county. Kent is supposed to begin receiving those dollars again in 2011, but county officials aren’t convinced the money will be there then.
“What complicates our situation is we have nothing from the state,” said Daryl Delabbio, county administrator and controller, about the state’s general fund.
Revenue sharing would be worth $11 million to the county in 2011, and if those funds aren’t received, county commissioners would have to chop $11 million in one swoop from that year’s general budget. Or they can start making smaller cuts for the three budget years prior to 2011.
“Daryl is recommending that we not wait until we jump off the cliff and hope that our parachute opens. We have to plan for this now,” said Richard Vander Molen, commission vice chairman and chair of the Finance Committee.
Not making the cuts would result in a spending plan of nearly $167.2 million and a deficit of almost $2.6 million. That budget would leave the county with a shortfall $600,000 higher than it targeted earlier this year when officials vowed not to dip into the fund’s reserve for more than $2 million next year.
Making the cuts would result in a smaller spending plan of about $164.4 million and a surplus of $239,000. But that budget would eliminate funding for some services, and 34 employees would likely lose their jobs.
Delabbio said the financial future could get much worse if the detention and corrections millage doesn’t get renewed by voters. He said the county could find itself $26 million short in 2011 without the $15 million from the millage and the $11 million in revenue sharing.
Delabbio said he would have more details on the general operating budget at next week’s meeting of the Finance Committee.
Members of that committee also got a look at a smaller capital improvements budget last week. The original list from department heads had $8.5 million worth of upgrades, but those requests were lessened through an evaluation process to $5.25 million.
The list also contains a first for the county. For the first time since anyone can remember, the county has proposed to use $1 million from its capital improvements budget to finance debt service for work to be done on its Fuller Avenue Campus. That project, which includes a new animal shelter, among other upgrades, is expected to cost about $7 million and will be paid for by an upcoming bond offering.
Normally county debt is serviced through the general fund, and a few committee members questioned if it was a good idea to use improvement dollars to make debt payments.
“My point is, (doing that) takes away from other projects,” said Vander Molen.
“I’d rather see it in the general fund than the CIP budget,” said Commissioner Harold Voorhees.
But Delabbio said using the general fund for the campus’s debt service would reduce the account’s reserve by another $1 million, and he didn’t want that reserve to get as depleted as the one in the lodging excise tax fund. Receipts from the hotel-motel tax haven’t kept up with expenses. For example, the county is giving its annual support of $400,000 to the zoo from the CIP fund next year instead of from the lodging-excise tax account.
“Expenditures continue to exceed revenues in that fund,” said Delabbio. “The zoo society would use those funds for exhibits in the future.”
Twenty-seven projects are on the capital improvements list, including two for the office building at 82 Ionia Ave. NW. One would replace the building’s 27-year-old chiller and tower with a new and more energy-efficient unit at a cost of $400,000. The other would make structural repairs to the building, which is settling, at a cost of $150,000.
“It’s some minor settling that we recognized early on. We’re being proactive,” said Bob Mihos, facilities management director for the county.
Revenue for capital improvements comes from property-tax receipts. The county sets aside .2 mills each year for those projects, and that revenue is expected to total $4.3 million next year. The nearly $1 million difference between expected revenue and planned projects will be covered by three other sources.