Budget cut isnt so deep this time
The Kent County Finance Committee learned last week that $955,740 worth of expenses have to be cut to balance the fiscal year 2013 operating budget because county administrators can’t dig into the fund’s reserve to make projected expenditures meet expected revenues.
“I think that’s a very good policy,” said Commissioner Jim Saalfeld, a member of the committee. The county transferred about $140,000 from the fund balance to meet expenses for this year’s budget.
Still, that spending reduction will be the lowest the county has had to make to its general fund in quite a while.
“Compared to the last five years, the reduction is modest,” said County Administrator and Controller Daryl Delabbio.
“It’s a modest number compared to previous years,” echoed Marvin Van Nortwick, county budget manager.
Over the past five budgets, Delabbio said $25 million has been chopped from the expense side of the ledger. Van Nortwick pointed out that spending reductions to the operating budget have ranged from a low of $4.9 million to a high of $7.7 million over the last three years.
Delabbio also told the committee that the county isn’t likely to see a marked increase in revenue for the coming year. But he added he detected a few signs that the bad times may be bottoming out. “We’ll be talking about the budget again at our next meeting,” he said to committee members.
Van Nortwick said revenues are expected to be $160.7 million in 2013, while the projected expenditures currently stand at $161.7 million for a shortfall of $955,740. Property-tax revenues, which comprise 52 percent of the budget’s total income, are at $83.6 million — or $115,000 more than this year.
The projected amount is largely based on an estimate on what the county’s taxable value will be next year, a forecast that County Equalization Director Matt Woolford makes each year. Woolford is looking for a slight hike of a tenth of 1 percent in taxable value, which would translate to $14.5 million more in the overall value. Van Nortwick said if that figure holds true, it would be the first increase in taxable value across the county since 2009.
“Matt’s projections have generally been very good,” said Delabbio.
A portion of that tax revenue, though, includes the Personal Property Tax, a levy state lawmakers seem inclined to eliminate but haven’t yet, which leaves the county guessing at how much those receipts will be worth next year. Delabbio said PPT revenue has been projected at $559,000 less than this year’s figure, just to be on the safe side. The revenue has been lowered because the tax has a $40,000 exemption that goes into effect Jan. 1.
Delabbio said he didn’t think lawmakers would take any further action on the PPT this year, but he also said the tax “has a target on its back” and could have a greater effect on county revenue in 2014, even more so if lawmakers don’t come up with replacement revenues. “I know the Personal Property Tax is going to be addressed sometime in the Legislature,” he said.
The county receives about $10 million annually from the PPT.
As for expenditures, Van Nortwick said wages are up slightly for next year but health-insurance costs are projected to be lower in 2013 than this year. Total wages are expected to rise by $1 million, while health care costs should fall by $820,000, a dip of 7 percent. The county’s pension cost, though, is expected to rise by 16 percent or $900,000. Personnel costs account for 53 percent of the budget’s expenses.
Van Nortwick also said the county likely will transfer $1.3 million from operations to the lodging excise tax account for next year to make sure the fund has enough money to make the payment on the bonds that helped build DeVos Place. That bond payment rises by more than 3 percent each year. Next year’s subsidy would top the $840,000 the county made this year, but would be less than the $1.4 million the county put into the account in 2011.
The county has established a budget review committee that is working with department heads to find ways to reduce expenses for the coming year. The committee began meeting earlier this month and the county’s fiscal year begins Jan. 1.
In the meantime, the Finance Committee approved an agreement with the state that allows Lansing to use the excess capacity in the county’s broadband network at no cost. The contract is for a year and is renewable. County Information Technology Director Craig Paull said Kent gets free access to the state’s network so the agreement is reciprocal.
Committee members also eliminated a 99-year lease the county made with Plainfield Township in 2003 for 151 acres of property along Ten Mile Road, just east of the North Kent landfill, and agreed to transfer the property outright to the township. The property is also east of the site where the West Michigan Sports Commission plans to build a baseball and softball complex.
Department of Public Works Director Doug Wood said the land was worth about $2.4 million before property values fell and was the state’s first lined landfill. The agreement calls for the township to use the land for public recreational purposes. Wood said Plainfield officials plan to construct an archery center and a mountain bike trail on the acreage.
Assistant County Corporate Counsel Linda Howell said the township would be responsible for any environmental concerns that may surface. Wood said none have come up during the 40 years the county has owned the property.
“Plainfield counts it in their Master Plan, but we don’t count it in ours,” said County Parks Director Roger Sabine.
Commissioners will have the final say on the IT agreement and the land transfer Sept. 13.