Budget outlook becoming more grim

December 2, 2008
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When Kent County commissioners meet next week for the final time this fiscal year, they will adopt a handful of budgets worth a total of $383 million in revenue for the next fiscal year that starts Jan. 1.

Thirty-five percent of that, about $134 million, will be added to another $33 million coming from other revenue sources that will go into the county’s general fund, which pays for most of the services the county offers.

Adopting the 2009 spending plan will be a painful experience for commissioners, but likely not as excruciating as next year.

The 2009 general fund is expecting $167.6 million in revenue and anticipating $169.6 million in expenditures, which will leave the county with a deficit of $2 million.

“It’s close to being balanced, probably as close as we can get,” said Richard Vander Molen, county vice chairman.

“The proposed budget, as it stands, does not cut services,” said Daryl Delabbio, county administrator and controller.

Next year, though, may hold a different story. Delabbio said County Fiscal Services Director Robert White doesn’t like to forecast the county’s financial condition more than a year at a time, which seems logical considering the current economic situation and how it affected the 2009 budget.

But Delabbio added that he and White peeked into 2010 and saw the general-fund deficit growing by five times in just a year, to $10 million. Compare that outlook to this year when the county expects a surplus of $500,000 on a similar-sized 2008 budget.

Commissioner Harold Mast, who lost his bid for a seventh term in last month’s election, said the criticism he and other board members received during the campaign for having a $68 million budget reserve was wrong. Mast said having that much in reserve is a good thing for the county, as it keeps services flowing when revenues are down and keeps the county from drowning in a sea of red ink.

“There are very few counties that can say what we can say,” he said.

The gloomy 2010 fiscal year will also mark the last year the county will be able to fully dip into its revenue-sharing reserve fund. The state is supposed to reinstate the county’s revenue sharing in 2011, a payment that should be worth between $11 million and $12 million.

Delabbio said the county will have a clearer idea of whether it can count on getting those funds when Gov. Jennifer Granholm releases her 2010 budget in February. Wayne County is in line to begin receiving revenue sharing in 2010, about $48 million worth. Delabbio said if Wayne County is in the governor’s budget for that amount, then Kent County has a decent chance of getting its share the following year.

“I think, realistically, that is not going to happen. This will be devastating for Wayne County. The Legislature will not be able to support this,” said Mast of the state resuming revenue-sharing payments.

“I don’t see our unemployment rate going down anytime soon. I don’t see the state budget getting better anytime soon,” said Commissioner David Morren, who also lost his bid for re-election.

Vander Molen pointed out that the deficit for next year’s general fund comes from a number of sources, including lower property-tax receipts than initially expected and higher costs for child care — which he said were exploding.

Investment earnings will also be down next year, as well as income from the real estate transfer tax. Then there is the reduction the county gave five cities on the charge for housing their ordinance offenders in the county jail.

Commissioners will adopt the new budgets on Dec. 11.

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