Another possible budget cutback looming for Kent

September 27, 2009
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As if facing cuts up to $15 million to its general operating budget for the coming year and possibly having to fund its child care budget with an additional $4 million due to a settlement by the state aren’t enough, Kent County also may have to adjust its revenue-sharing reserve fund downward by $1.7 million.

The county has used money from that account to replace the revenue it would normally have received from state revenue-sharing payments over the past four years, after Lansing lawmakers temporarily stopped making those disbursements to counties and authorized the reserve system that was built from the change in property-tax payments dates.

Kent transferred $12 million from the reserve to its general fund this year, an amount county officials considered to be what they would have received from the state had revenue sharing been in effect. But they just recently learned the transfer was too big. Instead of the $12 million the county transferred in January, state lawmakers in August felt it should have been $10.3 million.

“There was a two-bill package that went to a (House) appropriations committee that said we were limited to the 2004 allocation, which means we would have had to reimburse our own fund for this current year. We’ve already drawn out of that fund and transferred it the general fund,” said County Administrator and Controller Daryl Delabbio.

“We would have to reimburse that account $1.7 million for 2009 and we could not budget what we were planning to budget out of that fund for 2010 to the tune of $1.7 million,” he added.

Having to make both reimbursements would have set the county back another $3.4 million. Returning half that amount to the reserve fund this year meant it would have had to come from a general fund that is looking at a $2 million shortfall. Not allocating the other half for next year would add to the double-digit million-dollar deficit in 2010. And the state had its financial interest in the forefront when the package was sent to appropriations.

“What that would have done is added $3.4 million to our revenue-sharing reserve fund so that it would not be depleted as quickly as we thought it would be. In other words, instead of (the fund running out in) April or May of 2011, it would be August or September 2011,” said Delabbio of a possible delay the state could use to restart the revenue-sharing payments.

“Or we would get less money from the state in 2011 than we were entitled to get, if we were to continue to draw as we have.”

Delabbio said the provision that would have required the county to reimburse the reserve fund for this year was dropped. So an adjustment to this year’s fund won’t have to be made. But the one requiring a reimbursement for 2010 is still in play. If it passes, the county will have to reduce general-fund expenditures by another $1.7 million, on top of the planned cuts for the 2010 budget, or find $1.7 million from some other revenue source.

“It just defers the need for the state to provide revenue sharing to the counties,” said Delabbio.

The county is scheduled to begin receiving revenue-sharing payments again in 2011.

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