Kent County reduced general fund spending last year

February 19, 2011
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According to a preliminary report given last week by Kent County Fiscal Services Director Stephen Duarte, revenue to the general operating budget for the past fiscal year was off by 4.4 percent from the previous year. Duarte said he felt the final revenue figure in 2010 would eventually decline a bit further from 2009 and reach a dip of 4.7 percent.

At the same time, he noted that the budget’s expenditures were down by 4.1 percent in 2010. He thought the budget’s final version would unveil a larger spending decrease, as much as 4.5 percent, from 2009.

“We made some tough decisions on expenditures,” he said. “We should end up with cuts of 4.5 percent, or $7.8 million.”

Revenue to the operations budget, which pays for most county services, stood at $155.5 million at the end of the fourth quarter. The county ended the 2009 fiscal year with revenue of $162.7 million, or $7.2 million more than the county has collected so far for last year’s budget.

The biggest percentage drop in revenue came from investment interest, as it was down by nearly 123 percent from 2009, when it was $945,522. The budget shows a negative amount of $215,000 in that category for 2010. Duarte said the county changed the way it computed interest last year.

“In addition, current investment rates have fallen so low that the interest-income estimate in the budget is not attainable. It is estimated that interest income may be between $0.9 (million) and $1.7 million short of budget,” he said. The budget called for interest income of nearly $1.9 million.

The largest monetary drop in revenue came from the correction and detention millage. It only brought the general budget $12.6 million in 2010, which was $3.9 million less than the $16.5 million the county transferred from the millage in 2009. Property taxes were down by 1.8 percent, or $1.5 million, in 2010 from 2009. Tax revenue last year was $83.3 million.

Less property-tax revenue and a decline in interest income were two reasons Duarte said revenue from the millage was less. County Administrator and Controller Daryl Delabbio said fewer millage dollars were sent to the general fund in order to boost the Sheriff’s budget. “We are going to take what we need and no more,” he said.

Duarte said he sees declining revenue coming from property taxes for a few more years. In fact, he felt the county could be facing $2.1 million less in property-tax receipts this fiscal year.

“I have seen the downward pressure on values slow down, but not increase,” said Matt Woolford, who directs the county’s equalization bureau. He felt new construction was needed to get the county’s property-tax revenue headed in the other direction.

The budget’s expenditures totaled $156.9 million for the last fiscal year, which ended Dec. 31. Spending reached $163.7 million for all of 2009, or $6.8 million more than the county spent in 2010.

The largest single monetary spending increase last year was for the pension plan, which rose from $3.2 million in 2009 to $4.2 million, for a one-year increase of 33 percent.

“In terms of the pension, this is always a two-year lack, and 2008 was not a banner year,” said Delabbio.

The largest spending declines on a percentage basis in 2010 were 62 percent for workers compensation, 30 percent for commodity purchases and 26 percent for capital outlays. Wages were down last year by 2.8 percent; premium payments for the employee insurance plan were down by 6.8 percent from 2009. The county eliminated about 80 positions prior to the 2010 fiscal year.

As it now stands, the 2010 general operating budget has a deficit of $1.4 million — roughly $400,000 more than the $1 million shortfall in 2009.

Tax revenue to another key county budget, the Lodging Excise Tax Fund, was up by 3.9 percent from 2009 on Dec. 31. Revenue collected from the 5 percent tax that hotel operators add to a guest’s bill was at $4.5 million, and the budget showed a surplus of $9,737. It’s the first increase in tax revenue since 2007. In 2009, $4.4 million in tax revenue went into the fund, and it had a shortfall of $965,500 for that year.

But the current surplus is deceptive because the revenue total includes a county transfer of $1.78 million from the general budget to the account. And without the transfer, the hotel-motel tax fund would be $1.77 million in the red.

“Most of the (revenue) growth is due to the $1.8 million transfer,” said Duarte. “But because of the tax revenue we won’t have to transfer as much (next year).”

On top of that, the $4.5 million in tax revenue that has been collected so far doesn’t cover the fund’s largest expenditure: the $5.4 million payment made by the county last year on the bond package that helped build DeVos Place.

The lodging-excise tax fund has an unusual fiscal year that runs from Feb. 1-Jan. 31. So last week’s report contained 11 months worth of tax collections, rather than 12, as the December receipts usually come to the county in January.

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