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Budget Forecast Has No Silver Lining
GRAND RAPIDS — The five-year fiscal outlook for Kent County’s general fund budget isn’t all gloom and doom, even though deficits are projected for each of those years.
But there are two very dark clouds hovering over the forecast, and county officials have little control over either.
One is next week’s corrections and detention millage renewal proposal, which is worth $16 million to the jail’s $36 million budget. The other is the state revenue-sharing payment the county is supposed to begin fully receiving again in 2011, which will be worth $12 million to the general fund the following year.
The general fund pays for most of the county’s services.
Not having both revenue sources would mean a loss of $28 million for the county in 2012. But having both revenue sources that year would still leave the general fund with a shortfall, albeit a much smaller one.
The five-year forecast that Finance Committee members recently reviewed was based on the millage being renewed and the state making a full revenue-sharing payment to the county.
“While it is not unreasonable to assume voter renewal of the existing millage levy, it is becoming more unlikely every day that state revenue sharing will be fully restored to its previous levels,” said Daryl Delabbio, county administrator and controller.
“It’s unlikely that you will get full restoration,” said County Fiscal Services Director Robert White to committee members.
Delabbio and White both agree that the revenue-sharing litmus test will take place in February when Gov. Jennifer Granholm releases her spending plan for 2010, the year Wayne County is to begin receiving a full payment.
If the governor fully restores Wayne County’s revenue sharing, then Kent has the right to expect the same the following year. But if Granholm doesn’t, then the county will likely have to make cuts to the general fund, dig deeply into the reserve, or increase revenue in another manner.
The five-year forecast shows a $1.9 million deficit in 2009 that grows to a $10.3 million shortfall in 2013, even with the corrections millage and full revenue-sharing payments.
“I think this is the best you can expect in the next five years,” said White.
White said annual increases in property-tax revenue will likely be limited to gains of 2 or 3 percent, not the 5 and 6 percent hikes the county has enjoyed in recent years.
White also said revenue will drop if the per-diem fee the county charges five cities to house their ordinance offenders is lowered. If the county agrees to the mayors’ proposal, revenue will fall by $1 million a year. If the mayors agree to the county’s offer, revenue will fall by $400,000 annually.
“If any proposal were to be accepted, the county will be required to make additional reductions in existing services and programs or utilize our reserves to make up the difference,” said Delabbio.
Commissioners had to dig into the reserve last week because the Department of Human Services Child Care budget for the current fiscal year was short nearly $1.5 million. DHS social workers have had to remove more children from their Kent County homes this year due to neglect and abuse than they did last year.
The agency increased its focus this year on child safety, especially for those age 3 and younger. The state’s bad economy has put families under more stress, which has resulted in more agency investigations into child abuse and neglect.
The county is splitting the extra $1.5 million with the state by transferring $750,000 from the undesignated portion of the general fund reserve and the circuit court child care budget.