City finishes Herculean budget task

June 26, 2010
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After 10 months of seemingly endless charts, graphs and financial forecasts and an untold amount of angst, Grand Rapids city commissioners adopted a 2011 general operating budget last week that has been projected to post a surplus of $33,000 at the end of the year — a far cry from the $27.4 million worth of red ink the budget was drowning in last fall.

Work on the budget process began in September. Commissioners met six times in September and October to have a better grasp of departmental budgets. The city held nine meetings with leaders in the community and ordinary residents to get their input. Then commissioners and administrators met for 11 budget review sessions, which ended this month. The result is an operating budget of $110.7 million.

"We all knew on this day that we would have a balanced budget, but I don't think anyone knew how we would get from where we were six months ago to here. We did accomplish it. We have a balanced budget. Our fund balance is even more than we thought. It's still below what we would have hoped for, but it's in a good position, and it's only really through the good work, the courage and the consistency to push forward by our City Commission and our city staff," said City Manager Greg Sundstrom.

"About $33 million totally had to come out of a budget of about $110 million. So it was a Herculean task but we accomplished it. All in all, we're still a strong public-service provider here in this community," he added.

The largest revenue source for general operations is income taxes at $54.4 million, and the largest expense is the police department at $43.7 million. Forty-six city employees will be laid off when the budget goes into effect on Thursday. The city also cut 125 jobs from its work force in January.

So when will work begin on the 2012 operating budget? "Tomorrow," said Sundstrom.

In addition to the general operating budget, the City Commission adopted five other budgets that may be of interest to the business community. Here are the highlights:

  • Downtown Development Authority: A $17.5 million budget. The largest source of revenue is property taxes, from the debt and local tax increments, at $12.4 million; the largest expenditure is support for developments at $6.3 million.

  • Brownfield Redevelopment Authority: A $2.6 million budget. The largest revenue source is $2.5 million from a portion of property taxes; the largest expenditure is $2.3 million in tax-increment reimbursements to developers.

  • SmartZone Finance Authority: A $1.9 million budget. The largest source of revenue is taxes from the developments on Michigan Street at $907,723; the largest expense is $453,862 for reimbursements to developments on Michigan Street.

  • Monroe North TIFA: A budget of $876,687. The largest source of revenue is property taxes at $448,566; the largest expenditure is for infrastructure improvements of $380,000.

  • Economic Development Corp.: A budget of $101,400. The largest revenue source is the fund balance of $66,600; the largest expense is for staff at $54,000.

Besides adopting budgets last week, city commissioners also authorized the millage rate for property taxes. The 2010 rate is 8.3711 mills, slightly higher from the 8.3709 mills commissioners set for 2009. That means property owners in the city will pay an additional $16.74 in taxes, if their taxable value for 2010 is the same as last year's.

But City CFO Scott Buhrer reported the average home in the city has a 2010 taxable value of $49,161, which is down from the 2009 average of $51,255. Buhrer said the average tax bill for a homeowner in the city this year would be $411.53, also down from last year's $429.05. Homeowners will receive their tax bills in July.

Grand Rapids city commissioners adopted six fiscal-year budgets last week that go into effect Thursday and are worth a total of $133.7 million.


Budget

General Operating Fund
Downtown Development
     Authority
Brownfield Redevelopment
SmartZone Finance Authority
Monroe North TIFA
Economic Development Corp.

 

FY2011
Revenue
$110,699,436

$17,532,805
$2,628,435
$1,912,625
$876,687
$101,400

 

FY2011
Expenditures
$110,666,233

$17,532,803
$2,628,435
$1,912,625
$876,687
$101,400

 

Surplus/
(Deficit)
$33,203

$0
$0
$0
$0
$0

Source: City of Grand Rapids, June 2010

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