County budget appears to be in balance

November 6, 2011
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In a recent in-house survey, nearly three-quarters of Kent County commissioners said they wanted the general operating budget to be balanced. After last week’s Finance Committee meeting, it appears it will be.

“We will have a balanced budget,” said Commissioner Harold Voorhees, who chairs the committee.

Heading into that meeting, the county’s 2012 operational spending plan had a deficit of $158,652. But County Administrator and Controller Daryl Delabbio pulled that amount back from the $1 million that would have gone from the operating budget to the lodging excise tax fund, a move that cut the transfer to $841,348.

The next fiscal year will mark the fourth consecutive year the county has had to subsidize the hotel-motel tax account to cover a projected shortfall, which mainly is due to a $5.8 million bond payment for DeVos Place in 2012.

Of course, taking back those dollars means the deficit in the lodging-tax account will rise by that amount to an expected $238,158. But Delabbio felt the account could handle it because tax revenue to it is projected to go up by 1 percent next year. The county adds 5 percent to every guest’s hotel or motel tab for the tax.

Another reason Delabbio said he felt the move was reasonable was that Experience Grand Rapids President Doug Small also felt revenue from the tax would rise next year.

“If the lodging-tax revenue were to grow 3.7 percent in 2012, the proposed subsidy reduction would be totally offset by additional revenue,” said Delabbio. “The risk is that if the extra revenue growth fails to materialize and fails to cover the loss of the subsidy, the option is to use the reserves within the Lodging Excise Fund to absorb the projected shortfall.”

The account’s reserve is at $554,162, and using it to erase all the red ink would leave a fund balance of $316,000. Delabbio said if the account’s fund balance is lowered to that level next year, he will recommend that commissioners pump it up with a larger subsidy from the general fund in 2013.

“There are some risks associated with this change. However, I believe the risks are manageable and, even if the worst-case scenario materializes, it will not cause the county irreparable harm,” he said.

Delabbio’s faith in making the move was reinforced when County Fiscal Services Director Stephen Duarte reported that tax revenue to the lodging-excise fund was up by 24.5 percent at the end of this year’s third quarter when compared to the same nine-month period last year. The tax total stood at nearly $4 million at the end of September, up by almost $800,000 from the previous September. Delabbio felt the increase was due to the actions taken by Experience GR and the West Michigan Sports Commission, and to ArtPrize.

But one funding move is still somewhat up in the air. Delabbio said his administration budget, which is part of the general fund, has committed $35,000 to the county’s membership fee to the Grand Valley Metro Council. That allocation will cover the county’s membership through GVMC’s 2012 fiscal year and into 2013, but it is well short of the $66,000 the council charges Kent for a full-year’s dues.

“We have had some concerns about what it should be doing,” said Delabbio of GVMC. Delabbio raised those concerns about four years ago when he questioned if the council’s heavy focus on transportation actually benefitted the county, while acknowledging that the Kent County Road Commission does benefit from its GVMC membership. “It’s a wait-and-see for us. I would need another $31,000 in the budget,” he said.

“I don’t know what we get from it. I think we just created another bureaucracy. I’d like to see us get more for our money,” said Commissioner Roger Morgan.

“I guess if they make some significant changes, we stay. If they don’t, we won’t,” added Commissioner Dick Vander Molen.

Delabbio said the council’s Executive Committee, which he sits on, is interviewing the four finalists this week to replace retiring GVMC Executive Director Don Stypula.

“After the new director is in, maybe we’ll see some changes,” said Commissioner Jim Saalfeld.

Delabbio said he has told Stypula that the council has to place more of its focus on helping members share services and collaborate in other ways for the county to reap benefits from its dues. “We have been paying the full dues,” he said, adding the council has been moving toward fulfilling the county’s request.

But Commissioner Harold Voorhees, who is a stickler for transparency and accountability in public spending, said he went to the council’s website a few days before the meeting, and the most recent GVMC financial postings he found were from 2006.

“If the county leaves, the Metro Council could dissolve. I don’t want the county to be known as the one that ended the Metro Council,” said Delabbio.

“If we should pull out of it, then we’re showing the community we’re not interested in collaboration,” said Commissioner Harold Mast.

Kent also belongs to the National Association of Counties and the Michigan Association of Counties. The county’s annual membership dues for both are about $75,000, roughly $10,000 more than its GVMC fee.

The Finance Committee will take one more crack at the $160 million general operating budget next week. Commissioners are expected to adopt the 2012 spending plan Nov. 17.

“We removed more than $5 million from this year to next year,” said Delabbio. “Every department has been affected.”

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