Kent County To Stop The Budget Bleeding

November 12, 2007
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GRAND RAPIDS — For the first time in years, Kent County expects that revenues to its general fund will match the account’s expenditures in 2008.

But County Administrator and Controller Daryl Delabbio told the Finance Committee to expect another $13 million shortfall for all its funds in the coming year.

The general fund has been pegged at $164 million for 2008, down $1.4 million from this year. Half of that difference, about $720,000, will come from eliminating the equivalent of 15 full-time jobs and the benefits costs that were tied to some of those positions.

Delabbio said a portion of those positions targeted for elimination are already vacant and won’t be refilled, while others are part-time jobs that won’t be renewed. Most departments will have smaller budgets next year, some with double-digit cuts from this year.

“I’m not saying these are painless; it’s just as painless as we can get,” he said of the lost jobs.

County Fiscal Services Director Robert White said property-tax revenue to the general fund, which accounts for 54 percent of all the account’s income, is expected to rise by only 2.2 percent in 2008 to $89.3 million. He said a smaller inflation multiplier, a smaller net value of new construction, and a slightly higher percentage of tax captures by other agencies next year from this year’s figures will limit the revenue increase to $1.8 million.

Another factor that will affect property-tax revenue to the general fund next year is that the tax rate will remain at 4.28 mills, even though the county could raise it to the legal limit of 4.32 mills. Raising the millage to that rate would give the county an additional $776,000 in property-tax revenue next year.

“In the last 12 years, we haven’t levied the total amount,” said Delabbio.

The 2007 general fund deficit is expected to reach $2.8 million and become the sixth consecutive year the account has had a shortfall. The last year the general fund recorded a surplus was in 2001, and it was a big one at $22.8 million. Since that year, though, the fund’s reserve has bled more than $50 million worth of red ink — from $120.8 million to an expected $69.3 million for the current year.

All the county’s funds are expected to total $372 million in 2008, or about $800,000 more than this year. But all the revenues to those funds are expected to stop at $359 million and leave Kent $13 million short next year. That deficit, though, is similar to the one the county expects to see at the end of its current fiscal year on Dec. 31.

Delabbio said he expects that putting together the 2009 general fund will be a harder task than was compiling the 2008 budget, as property values are likely to drop next year. But he said the most difficult budgeting year in the county’s history may arrive in 2011, the year the county is supposed to begin receiving state revenue sharing again. If lawmakers, though, fail to restore those payments, it will mean a loss of $11 million to the general fund.

“And most of the people that are there now won’t be there in 2009,” said County Vice Chairman Richard Vander Molen of the current roster of state lawmakers. He added that new ones might not be knowledgeable of the commitment or committed to restoring the payments.

And if the corrections millage isn’t renewed by 2011, Kent will lose another big chunk of revenue to the fund. Right now, the county can only count on that revenue until 2010. “If the millage is not renewed, $16 million worth of cuts will have to be made to the general fund,” said Delabbio. He said cuts would likely have to be made to the discretionary services the county provides each year. Some of those are the John Ball Zoo, the parks, the Kent/MSU Cooperative Extension and economic development initiatives.

County General Fund Outcomes, 2001-08

Fiscal
Year

                Surplus/               
(Deficit)

2008

$50,654

2007

($2,802,000)

2006

($1,599,802)

2005

($3,370,899)

2004

($4,782,592)

2003

($1,615,288)

2002

($1,738,670)

       2001       

$22,796,221

Note: 2008 surplus is a projection.
Source: Kent County Fiscal Services, November 2007

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