Creating a new model

November 14, 2009
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City Manager Greg Sundstrom said last week that time was running out for Grand Rapids to become a sustainable city, indicating that restructuring how the city does its business was not only inevitable but also mandatory.

“The city can no longer provide city services in the traditional manner. The key to our thinking must be sustainable,” he said.

“We are currently working with businesses and citizens to create a new Grand Rapids.”

The creating is expected to get underway next week. Sundstrom said last week that he would go before city commissioners and ask them to cut the personal income tax exemption from $750 per person to $600, the state’s required minimum amount. Doing so would bring the city an additional $400,000 in revenue for the upcoming fiscal year and cost a resident about $1.95 more for each exemption and 98 cents more per exemption for a nonresident who works in the city.

Another revenue source Sundstrom unveiled was selling the Government Center parking ramp to Parking Services, which would give the general fund an extra $1 million a year for roughly 14 years. More of his revenue enhancements included:

**Eliminating the $2.8 million subsidy for street lighting and establishing a new fund that would assess residents a fee to keep the lights on.

**Consolidating the emergency dispatch system with Wyoming’s and saving $1 million, a partnership that would also qualify for $775,000 from the Kent County Dispatch Authority.

**Reducing the $3.4 million subsidy to the street fund by $1.5 million.

**Eliminating the $750,000 subsidy to the city’s district court.

**Saving $337,490 from a new pharmacy benefits contract.

**Reducing the contingent account by $500,000 to $1 million.

**Collecting parking fines after three unpaid tickets instead of six, once the new state law goes into effect. The earlier collection would raise $300,000 a year.

“The good news is our health care costs will remain flat for the next year,” said Sundstrom.

A lack of revenue due to the mortgage crisis, high unemployment and lower state funding has forced the city to restructure. Sundstrom said revenue from city income taxes was down by 10.6 percent last year and is off by another 14 percent so far this year. State revenue sharing is down by $3.8 million this year and by $2.3 million for next year.

Sundstrom said the current general operating budget had a $3 million deficit in June, but since then the shortfall has risen to $9.2 million. An early forecast for next year’s general fund showed a deficit of $20.8 million, but now has climbed to $27.4 million.

A cut of 125 jobs from the city’s payroll Dec. 31 will reduce expenses from this year’s general operating fund by $3.4 million, and by $7.7 million from next year’s budget because 119 of those positions were paid through the general fund. The fire department will lose 25 positions, while 44 police will be laid off. These layoffs bring the number of job cuts at the city to 477 since 2002, a 23 percent reduction of the work force in the last eight years.

“The latest staffing reduction is a clarion call that time is running out for the city to transform our finances and service delivery to become sustainable,” said Sundstrom.

“We need to become a government that relies even more on collaboration and partnerships with residents, businesses, citizens and customers to aid in and assume significant roles in the provision of services they feel are important for quality of life.”

The city will hold eight more community budget meetings through Dec. 3 and is asking residents to tell city officials what services they want to keep and what tax increases they can live with, if any.

“I know that this is a very difficult environment in which to ask people to pay more taxes. We want to work closely with our citizens to ensure that the need aligns with the ask, and the ask aligns with citizen demand for services,” said Mayor George Heartwell.

Sundstrom said city departments would be reduced from 24 to 15 and consolidated into five service groups from the current eight, and a leaner city would create “platforms” that would bring other groups into the fold to transform the city’s future.

“Apple’s iPhone is an example of a platform. Apple designed the platform: the iPhone. Others made it viable by developing 80,000 applications for the iPhone. Without the applications, the iPhone is not the powerful device it is with the applications,” he said.

“City government needs to establish the platform — the public’s streets, parks, governance, laws, equipment and employees — and citizens need to provide the applications to enhance the platform and our quality of life.”

City officials feel that making these and other changes will likely balance the general fund for this year and next year. But Heartwell said two years down the road, there will be more changes coming: more service and work-force cuts, more concessions made by city employees, more revenue needed by the city, and more services consolidated by municipalities.

“Not everybody sitting at this table will agree with everything I have said. But this is a legislative body whose members want only what is best for Grand Rapids and its people,” Heartwell said.

“I assure you that, through our own deliberations and debate — and with competent and thoughtful city staff to aid us — we will, in the end, do the right thing. And Grand Rapids will come through this time of painful realignment a stronger, better, fairer and more prosperous city.”

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