County Looking At Losses

May 8, 2008
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GRAND RAPIDS — Forecasting finances can often be more of an art than a science. Still, Kent County Fiscal Services Director Robert White recently told commissioners they’ll likely have to make some difficult spending decisions beginning in 2010.

That’s because the county’s general operating fund, the account that provides most of the county’s services, has been projected to have four consecutive years of deficits starting that year. The forecasted red ink ranges from nearly $416,000 in 2010 to the nearly doubled figure of $806,000 in 2013.

“It will be difficult to sustain existing services,” White said to board members.

White told commissioners that the 2008 general fund should see a surplus of $500,000 and revenue should top expenses by almost $209,000 next year. Starting in 2010, though, expenses are expected to rise a bit faster than revenues.

Total revenues to the general fund are expected to increase by 3.2 percent in 2010, 3.5 percent in 2011, 3.5 percent in 2012 and 3.4 percent in 2013. The steadiest rise in income to the fund will come from property taxes, which have been projected to go up by 4.5 percent in 2010 and by 5 percent in the following three years. Fees and reimbursements the county receives are projected to increase only by 2 percent each year.

The revenue forecasts for 2010 and 2011 do not include any receipts from the state’s sales tax, a levy that is supposed to make up state revenue sharing to the county. Kent is scheduled to begin receiving those payments again in 2011.

Total expenses to the general fund are expected to rise by 3.6 percent in 2010, by 3.5 percent in 2011 and 2012, and by 3.6 percent in 2013. Projected wages and benefits show the biggest increase in expenses those years, running about 4.1 percent each year. Outlays for capital improvements have been targeted to go up by just 2 percent for each of those years.

The projected shortfalls are expected to bring the account’s reserve down from $75.1 million at the start of 2010 to $72.8 million by the end of 2013.

But as many already know, stuff happens, and that’s why forecasting is as much an art as a science.

For instance, last year’s general fund was projected to have a deficit of $3.1 million. But the account ended the year with a surplus of $900,000, marking the first year since at least 2004 that the fund closed in the black. The main reason behind the $4-million swing was property-tax receipts were higher than projections due to the shift in payment dates that gave the county 15 months worth of revenue over a 12-month period.

From 2004 through 2006, general fund expenses topped revenues by a total of roughly $13 million.

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