GR city to restructure in big way

November 7, 2009
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Cutting 150 jobs from the payroll is the biggest and most agonizing step Grand Rapids City Manager Greg Sundstrom will take to balance the 2010 general fund budget, but it’s not the only one.

Sundstrom said consolidating services with other municipalities and privatizing some services were also on his to-do list. And he said he is counting on the business community, especially owners of small businesses, to help the city get through one of its all-time darkest eras.

“Without a strong business community, we don’t have a chance to come out of this economy,” said Sundstrom at last Friday’s annual meeting of the Downtown Alliance, an association of business owners. “We will not go bankrupt, but our balance sheet is looking very, very sad.”

Sundstrom said the budget deficit for next year’s general fund recently grew from an estimated $20.8 million to what is likely a record-high $27.4 million because the revenue projection has fallen. Instead of the $110 million in revenue the city expected to receive, he said the current figure is $105 million.

City income-tax revenue is likely to be down by 25 percent from just two years ago, while the state’s business tax is off by 37 percent and the sales tax is down by 19 percent. The city’s state revenue-sharing payments originate from the sales tax.

“We have to balance our budget. We will not have a stimulus plan,” he said.

Sundstrom said small businesses will lead the city out of its economic doldrums, and he will work to mend the corporate portion of the city. The first step of that mending process is to lay off 150 of the city’s 800 workers, quite likely the largest layoff in city history. The city has already eliminated 350 jobs over the last seven years.

“Almost all 150 layoffs will come from the general fund. It will create a balanced budget for the next 19 months,” he said.

Sundstrom said he wants the city to ultimately become a platform, like ArtPrize did earlier this fall. He said the event’s founder, Rick DeVos, didn’t enter an art piece into the competition, and he probably didn’t directly recruit any of the artists who entered, but nonetheless he created a successful event.

The first platform Sundstrom will likely create is for the city’s park system, which will probably absorb a good portion of the job losses. “This is really dangerous and risky, and I don’t know if it’s going to work. But we have to make changes,” he said.

Sundstrom said his staff has come up with ideas for additional revenue, without raising taxes, but the receipts aren’t large enough to fill the budget gap. He also said he is committed to running the city like a business, but he just can’t eliminate an entire “widget” division that is losing money because the city is required by law to perform certain functions. Nor can he raise “prices” on his own like a CEO can, as any proposed tax increase needs approval from the city’s ‘shareholders.’

Sundstrom said that when he is finished directing the city in a business-like manner by matching service outlays with incoming revenue, he knows many people won’t like the result. “As a corporation we are very weak right now and we’re going to become weaker,” he said, adding he would provide details of his budget plan Nov. 10.

Sundstrom said there still are things going on in the city that give him hope for the future, such as the construction of all the new medical facilities on Michigan Street.

“This is still a good place to live and work,” he said. “The city can’t create the excitement needed to keep young people from leaving, but the private sector can, and we want to be your partner.”

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