Ottawa County waiting for answers from state

August 22, 2010
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GRAND HAVEN — Like most counties in Michigan, Ottawa County is wrestling to eliminate a deficit to its general fund for the 2011 fiscal year that begins Jan. 1. The spending plan, which is projected at $62 million for next year, has an estimated shortfall of $3.7 million.

The good news is that the red-ink figure isn’t quite as crimson as county officials thought it would be just a few months ago.

“Where we’re at is a good question, because we simply don’t know. We’re tracking our tax projections monthly and right now we’re predicting we’re going to be down 3.5 percent on Jan. 1. We were down 4.05 percent in 2010. We had been predicting 5 to 8 percent, so we’re feeling pretty good about hemorrhaging less, I guess, than what we originally predicted,” said Al Vanderberg, Ottawa County administrator.

“But the big question mark is about the state, as $4.7 million of our $62 million comes from state revenue sharing,” he said.

The condition of revenue sharing isn’t the only question Vanderberg and his staff are waiting for the state to answer. In county government, the health department is supposed to get half of its funding from the state. Mental health is funded almost completely by the state, and Vanderberg said that service is facing a potential 20 percent cut. State revenue also goes to the jail, the sheriff’s department, the court system and into child care programs.

“So there are a lot of question marks regarding that funding,” he said.

“We continually do brown-bag luncheons with our employees to try to keep good communications. And there is a lot of concern and fear on the part of employees about the future. Unfortunately, all we can do is adopt a budget this year based on what we know, and have a Plan B and a Plan C, as well, for what the state might or might not do.”

Normally, those questions are answered by the end of October, when county commissioners usually adopt the coming year’s general fund budget. But that date may get pushed back if Lansing lawmakers haven’t completed the state budget, or if a completed budget contains an unexpected surprise or two that would require county officials to rework their spending plan.

“There just aren’t any easy answers, or answers at all, at this point,” he said.

As in most counties, the toughest expenses to control are for employee health insurance and retirement. Vanderberg said the county has hired a consultant to review how the county handles health care, and that report is due any day now. The county’s goal, of course, is to reduce that cost and still provide sufficient coverage.

As for the retirement cost, the county currently offers a defined-benefit plan. However, county commissioners have indicated that future employees will be offered a defined-contribution plan along the line of a 401(k) savings program. But voters will have to add at least a 10th of a mill to the operating millage to allow the county to make the change.

“When you do that kind of break off the pipeline, you create some short-term costs. But for the long term, it’s an awesome decision. These are tight times, so we have yet to see how we might pull that off in the shorter term. But if the economy turned around, we’d be right there and ready to implement that,” said Vanderberg.

The county surveyed residents this year to ask their thoughts about making the switch; 44 percent said they would support a 10th of a mill increase to fund such a move. “That’s the best response we’ve ever gotten on a tax question, and that’s something the board will probably debate during the budget sessions,” he said.

“If 30 years from now we can be $30 million-plus to the good, do they go through the firestorm that I’m sure they would go through today to raise the millage a 10th of a mill to pull that off? I don’t know what the answer to that is.”

Vanderberg said there isn’t a big capital improvement project in the works for next year because the county just wrapped up a 15-year building program that produced new facilities in all four Ottawa County quadrants. The program was topped off last year with a new county courthouse in Grand Haven.

“About three years ago, we opened a new district court in Holland. The year before that it was a new court in Hudsonville, and we expanded the jail in that timeframe. We kind of had an aggressive program over the last 15 years that we finished, so we actually have a breather right now,” he said.

Vanderberg felt that the fiscal healing at the county level can’t really begin until the state changes its tax structure. He said the current system is based on a 40-year-old manufacturing model that doesn’t exist today. He also said the state has to change the way it finances local government because it isn’t actually meeting its funding requirements, even though it is compelled by state statute to do so.

“As long as we continue to follow that way of thinking, I think we’re in big trouble because we’re living like we’re our former selves, and we’re not. So I think we have to dial things down. We have to make things smaller, and that could mean the state mandates less for counties to do,” he said.

“Before the economic crisis, the state only passed along about 55 percent of the revenue needed to pay for the mandates it required counties to do. If the state paid for what it mandates Ottawa County to do, I would not have a budget problem.”

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