A New Budget For A New Year

December 31, 2007
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GRAND RAPIDS — Just because county commissioners recently adopted the general operating budget for next year doesn’t mean they can set the fund on cruise control, as there may be a couple of prominent speed bumps ahead for Kent County.

One could affect the budget of the Health Department. Another could impact funding the county provides for child care through the Department of Human Services.

The federal government is auditing Medicaid payments the Health Department received from the state in 2004 that totaled $2.5 million. If the payments are labeled as inappropriate, the department will have to refund the full amount.

Lower Medicaid reimbursements took a toll on the department earlier this year when 20 employees were let go. At $26.6 million, the department’s 2008 budget is down $1 million from 2007, and that figure doesn’t include a possible refund to Medicaid.

The county will increase its child-care funding to the DHS for troubled youth and for children living in troubled homes by 3.5 percent for 2008. But Kent County Fiscal Services Director Robert White warned the hike may not be enough, as actual spending in 2007 turned out to be 11 percent more than in 2006, and 2008 could present a similar funding dilemma.

“The 3.5 percent funding increase is suspect at this time,” said White.

Since 2003, county spending for DHS child care has risen by more than 63 percent.

All the budget news isn’t negative, though. White said the county may receive revenue from the state liquor tax next year that it was denied this year when lawmakers appropriated all of the revenue for the state’s general fund. That move cost the county $3.2 million.

The county would have distributed half of that amount to its mental health provider — network 180 — and put the other half into the general budget. White said state lawmakers haven’t indicated that they’ll appropriate the tax revenue again in 2008, so the county is hoping it will receive the $3.2 million next year.

The county is also hoping that its Friend of the Court budget will get a boost from the state next year. The state has $9.6 million it has to distribute to counties, and White estimated Kent is in line to get $500,000 to $750,000 from that pot next year.

Other budget factors will play out next year. Union contracts for more than 1,000 county employees expire at the end of this year and agreements will have to be reached. A recent labor estimate from the University of Michigan reported 51,000 workers statewide will lose their jobs in 2008, joining the 70,000 who became unemployed this year.

Property-tax revenue to the general fund next year has been estimated at $89.3 million, an estimate based on property values. But the actual values won’t be known until May, almost halfway through the county’s fiscal year and a month after the county learns how much tax has been captured and abated by the roughly 50 tax-capturing districts in the county.

White estimated that 3.5 percent of the tax roll will be captured next year, up slightly from the 3.4 percent that was captured in 2007. And the inflation multiplier for property values in 2008 is expected to be 2.3 percent, down from 3.7 percent in 2007.

Property taxes account for 64 percent of all revenue to the general fund, which has total revenues of $164 million for 2008. The county has projected a general fund surplus of just over $50,000 for the coming fiscal year, which begins on Jan. 1.

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