Concern for small business makes service fees an issue

June 17, 2011
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Both 1st Ward Grand Rapids city commissioners asked for and were granted a one-week reprieve last week for the board’s vote on the omnibus fee resolution, which contains higher charges for a variety of city services. The vote will be taken this week — the commission’s last scheduled meeting of the fiscal year.

Commissioners will adopt the 2012 general operating budget at the same meeting.

Commissioners Walt Gutowski and Dave Schaffer said they requested the last-minute delay on behalf of the city’s small business owners. Gutowski, who owns Swift Printing Co. on Bridge Street NW, said many businesses are unable to pass on some of the increases to their customers right now because of economic conditions, and he wanted more clarification for some of the higher fees.

Schaffer, a Macatawa Bank branch manager, wanted $268,000 of increases for building inspections and other services removed from the resolution. “The constituency that this will affect is the constituency that we’re interested in: small business,” he said. “We want to be strategic about our small-business sector.”

Mayor George Heartwell countered that the city has been run like a business most of this decade by “drilling down” to make the delivery of services more efficient. He said the city is strongly committed to delivering quality services to its taxpayers. But he added that revenue is needed to accomplish that goal, and service fees are one source of that necessary revenue. “I could argue that we’ve been subsidizing these fees for years, and we can no longer do that,” he said.

City Debt and Authority Finance Officer Jana Wallace said some increases would bring an estimated $92,000 in new revenue to the general operating budget, which is losing $6.6 million in state revenue sharing due to Lansing’s elimination of the statutory portion of the sales-tax distribution for cities. She pointed out that revenue to the city has been declining since 2005, and the city has been forced to charge more for services to close that gap.

Some of the dozens of fees, she said, were optional; others provided ways for some charges to be lowered. Months ago, Wallace gave commissioners a comparison of the city’s fee structure with what other cities charged for similar services. “Some of our fees are in line with other communities and the state,” said Commissioner Rosalynn Bliss.

Wallace also said the commission held two public hearings on the new fee schedule last month. “Nobody came to the public hearings,” she said. “No written comments were made.”

Commissioner Ruth Kelly said she checked with certain departments on the reasoning behind their requests for higher fees and was satisfied with the responses she received. “I just felt their rationale was valid,” said Kelly.

City Manager Greg Sundstrom told commissioners that he is setting up a work session for them on the city’s fee structure and has tentatively scheduled it for Aug. 9. Sundstrom said he could adjust the fee schedule if commissioners choose to change it, but there wasn’t enough time for him to make revenue adjustments to the general operating budget that goes into effect July 1. “I’m not sure we can adjust the budget in time,” he said, adding that the spending plan is balanced.

Commissioners, however, unanimously agreed to delay the fee vote until Tuesday so Gutowski could have more time to get further clarification. “Small businesses will appreciate this,” he said.

But Heartwell told Schaffer that if he wants $268,000 in fee reductions, then he has to make the adjustments to the operations budget. Schaffer accepted the assignment. “Sometimes a fee, set at a certain level, can create a barrier,” he said.

In May, commissioners reduced fees for most business licenses by lowering the charge on 46 first-time licenses and cutting the costs for 20 renewals.

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