- change ups
Grand Rapids cuts operating budget
Acting on recommendations from Grand Rapids Interim City Manager Eric DeLong and Chief Financial Officer Scott Buhrer, city commissioners cut $3.4 million worth of expenses last week from the general operating budget to avoid a projected $4.4 million deficit for the current fiscal year that ends June 30.
The city will reach into the budget’s fund balance to fill the shortfall of $1 million after the reductions are enacted. The fund balance, the account’s reserve, will fall to slightly below $10.5 million after the withdrawal.
“It is clear that we need to reduce spending in the remainder of FY2009 to achieve the best possible positioning for FY2010. If we are to preserve our core capabilities and position ourselves for future success, we must take action now,” said DeLong.
Buhrer said the city’s general fund deficit could reach $8.4 million for the next fiscal year.
Officials felt the expenditure cuts were necessary because revenue to the city has fallen short of expectations by nearly $3.3 million.
Revenue from income and property taxes, statutory state revenue sharing, charges for services, income from fines and forfeitures, and interest earned from investments are all down. Income-tax revenue alone looks to be $2.1 million short of projections. (See related chart.)
Buhrer said, on a year-to-date basis, revenue to the city from incomes taxes has fallen by 10.4 percent over the last 12 months.
“We’ll have to take harder looks at reductions in other areas until we get increases on the revenue side,” said James Jendrasiak, 1st Ward commissioner.
Jendrasiak noted that revenue to the city has dropped despite all the business incentives the city has granted over the years in return for jobs. He hopes the recent investments made by the city into the medical and bio-science fields will lead to more revenue in the future.
The cuts will affect every item in the general operating budget. The largest reduction of $3.1 million will be made to public safety, lowering its budget to $71.3 million.
Of the $3.1 million, police department expenditures will be reduced by $2.2 million, the fire department by $792,541 and the city attorney’s office by $127,779.
“We preserved the fire department recruit class and authorized a police department recruit class to fill eight of the 17 officer vacancies, while eliminating the remaining nine officer vacancies,” said DeLong.
Most of the reductions to the general fund will come from not filling 14 vacant positions, from delaying some previously planned expenditures and from generating new savings at department levels.
“We’ve been very careful that we don’t have to lay off anyone today,” said Mayor George Heartwell.
DeLong told commissioners the city would save $244,000 a year from the 25 percent reduction the city is getting from Kent County on the daily housing charge and one-time processing fee for its ordinance offenders that are booked at the jail.
“It couldn’t come at a better time,” said DeLong. “It’s a good move.”
Heartwell said it looks like the city will get $4 million for street repairs and about $1 million more in Community Block Development Grant funds from the federal stimulus package. He said the city received $4.3 million in CBDG money last year. The mayor also said the city will compete for other funds in the package and has put together a team to identify which federal dollars to pursue.
“Because this is moving so rapidly, I don’t think we’ve had the time to compute the number of jobs this means,” he added.