Some won't be hurt by loss of revenue sharing

April 15, 2011
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While Gov. Rick Snyder’s general operating budget calls for the elimination of statutory revenue sharing for cities, townships and villages, his recommendation may not have a negative monetary effect on quite a few of the 21 townships in Kent County.

Cascade Township Trustee Cindy Fox and Grand Rapids Township Supervisor Michael DeVries said the state did away with the statutory portion of revenue sharing for their respective townships about five years ago, and both townships have been operating without that revenue source since then.

“We do not receive (statutory) revenue sharing from the state of Michigan and we haven’t for a bit, so we’re not impacted by it,” said Fox of the governor’s revenue-sharing plan.

“Grand Rapids Township lost all of that back in 2005. We haven’t received any since 2006. We just get constitutional revenue sharing, so we had to make adjustments a long time ago for that,” DeVries said. “We will pick up a little bit more in constitutional revenue sharing based on our increase in census population, so that will be helpful for us.”

Grand Rapids Township grew by 18.5 percent to 16,661, according to the latest U.S. Census figures. Cascade Township also grew, by 13.4 percent to 17,134, and should receive a hike in constitutional revenue sharing, too.

DeVries said most townships lost statutory revenue sharing when the units fell out of the formula the state uses to distribute the sales-tax revenue to the various municipalities. Although both townships would certainly rather get those state-distributed dollars, at least the governor’s budget won’t interfere with their budgeting process if the Legislature goes along with his request.

It’s a different story for the city of Grand Rapids, which is expected to lose more than $6 million if statutory revenue sharing goes away. City Manager Greg Sundstrom said the city’s 2012 general operating budget was balanced until Snyder revealed his budget. Sundstrom held a budget meeting with city commissioners last week to get them up to speed on where he and his staff stood in the budgeting process, and he has a longer session planned for next week.

Another city that is losing revenue sharing money is Grandville, but the loss won’t affect its operating budget. Grandville Mayor Jim Buck, who also chairs the Grand Valley Metro Council, said his city stands to lose $60,000 in state money if statutory revenue sharing for his city is extinguished. But that money didn’t have an impact on this year’s operating budget and won’t on next year’s. The city council didn’t include the money in this year’s budget and hadn’t planned to include it in next year’s budget, either.

“We did not budget statutory last year nor this coming year, which will be the 2011-12 year budget. We should have received $60,000,” said Buck.

Although the governor’s budget doesn’t wipe out statutory revenue sharing for counties, his plan does cut it back by about 40 percent. Kent County Administrator and Controller Daryl Delabbio estimated the county would lose between $4 million and $4.5 million from that revenue source for the next fiscal year, and possibly $1 million yet this year because the county and state are on different fiscal years. The state begins its fiscal year on Oct. 1, which marks the start of the county’s fourth quarter. Delabbio has been going over the budgeting process with the county’s Finance Committee since February. The county doesn’t collect constitutional revenue sharing.

DeVries said Grand Rapids Township largely overcame the statutory revenue-sharing loss because it is “extremely conservative in its spending” and it made a few timely changes.

In fact, one change the township made quite a while ago is one that other municipalities have just begun to explore.

“Our employees have been paying part of their health care premiums for 10 years. We have put together a high deductible health savings account program that was initiated four years ago for our employees, so we had to make a lot of adjustments,” he said.

“Were these difficult? I guess they were because you’re dealing with changes in people’s lives. But I think that we were able to do so at a time when it was affordable to do that and soften the impact on our people, and find more efficient ways to do things,” added DeVries.

As for the governor’s budget, GVMC Executive Director Don Stypula said the report he received has Republicans in the state House completely supporting the plan. But he said Republicans in the state Senate don’t share that view. “They’re not comfortable in taxing pensions,” he said. “As you can imagine, there is a lot of talk going back and forth.”

The governor has proposed to pay for about half his $1.8 billion business tax cut by taxing pensions to the tune of $900 million. But he reportedly agreed with House Republicans to stop collecting the tax when a retiree reaches 67. Stypula also said Senate Republicans were considering raising the governor’s 6 percent tax on C corporations to 6.75 percent and applying the tax to all classes of businesses. The plan Snyder submitted exempts S corporations, partnerships and sole proprietorships from the business tax.

Stypula said the state House passed four bills GOP representatives believe will make intergovernmental consolidation among local units easier to accomplish. The bills amend three Public Acts from 1967 that many local officials have long felt have hindered a sharing of services and one Public Act from 1988. In summary, three bills make it easier to transfer public employees and their responsibilities from one unit to another and give governments the power to revise labor contracts. House Democrats see the bills as attacking the collective bargaining right. The fourth allows for a transfer of functions. The bills have been sent to the Senate.

“I think that is a huge victory for all of us at the Metro Council,” said DeVries.

A bill has been introduced in the state Senate that would prohibit personal property from being taxed beginning next year. But Stypula said supporters of the bill said they would work with the Metro Council to find a way that counties could replace that revenue. Delabbio estimated that Kent County would lose about $9 million a year if the tax is done away with. Stypula said he is talking with the Grand Rapids Chamber of Commerce about creating a special task force to work with Senate Republicans on this issue.

He also said Snyder is likely to address the Legislature on state funding for transportation sometime in September. “I think it’s time for the governor and the Legislature to look at that and act on it.”

GVMC Senior Transportation Planner Jim Snell said roughly 20 percent of all funding in the region comes from the state, with 80 percent coming from the federal government. State transportation funds come from the gas tax, which many have said isn’t adequate. A transportation task force put together by former Gov. Jennifer Granholm years ago came up with 13 ways to pay for roads, bridges, runways and transit systems, but none were acted on by the Legislature.

Snell said about $33 million must be invested annually in the GVMC metropolitan planning region to bring 90 percent of the roads up to a good rating. The annual investment must be $21.5 million just to maintain current conditions in the region, and those roads don’t include neighborhood streets.

Snell said $30 million was invested in 2010, but the region’s roads lost $45 million in actual value last year. “This is a trend that unfortunately is going to continue,” said Snell. “We’re on a down slope now. We’re going to lose 7 or 8 percent this year.”

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