Kent County commissioners learned recently that total revenue to this year’s operating budget was down by nearly 5 percent, or $6.6 million, from last year. In contrast, expenditures were up only slightly, three-tenths of 1 percent, at the end of September.
Most significantly, the county’s cost for employee health insurance dropped by 3.7 percent, or $310,000, for the first three quarters compared to last year.
“It’s been a constant battle, but we’ve managed to hold it down for the last three or four years,” said Stephen Duarte, county fiscal services director. Kent self-funds the plan and employees have increased their contributions to it.
This week, commissioners will have the 2013 general fund budget come before them and will likely adopt the $161 million spending plan that goes into effect Jan. 1. The budget covers most of the county’s operational costs.
County Administrator and Controller Daryl Delabbio said revenue from property taxes next year are likely to remain flat at around $83 million, as property values countywide are only expected to rise by seven-one-hundredths of a percent next year.
Delabbio said he expects state revenue sharing for 2013 will be about $9.2 million, not the $12 million the county is entitled to receive according to the distribution formula. But since the payment is statutory, not constitutional, Delabbio feels it could go down even more in the future.
“I think this will be a continual battle,” he said.
Within the property-tax revenue total, the county receives about $10 million from the Personal Property Tax. That’s a levy many Lansing lawmakers have vowed to eliminate or greatly reduce, and a source to replace that revenue still hasn’t been established.
“I know that state will act on this. Not now, though — I think we’re safe in 2013,” said Delabbio.
But Becky Bechler of Public Affairs Associates, the county’s lobbyist, said that may not be the case as lawmakers may take a shot at PPT reform in the lame-duck session. “But if they can’t get what they want, they’ll wait until January,” said Bechler.
A loss of PPT revenue without a replacement would also reduce funding to the county’s corrections and detention and senior millages. Delabbio said he has met with Lt. Gov. Brian Calley on the issue at least five times this year.
“We have provided information to the lieutenant governor on a number of scenarios. We started meeting with him in late June or July,” he said. Joining Delabbio in those meetings were officials from Grand Rapids, Wyoming, Ottawa County and Grand Valley Metro Council.
The single largest expense in the 2013 general fund is for public safety. It’s budgeted at $60 million and accounts for 37 percent of all spending. Kent County Sheriff Larry Stelma told commissioners that his department has lost 73 positions to budget cuts in the last five years and no one has indicated to him that any of those posts will be filled anytime soon.
“We have eliminated $25 million in expenditures the last five or six years,” said Delabbio.
As for other expenses, Delabbio said community and economic development has been budgeted at $150,000 for next year. The Right Place Inc. will get $85,000 from the county, and the Area Community Service Employment and Training Council will receive $65,000.
Another economic development initiative the county supports doesn’t get its funds from general operations. It comes from the county’s lodging excise tax, is incentive based and the biggest allocation Kent annually makes to economic activity in the county. Beginning next year, Experience Grand Rapids, the tourism and convention destination marketer, will get 16.75 percent of all tax revenue to the lodging-excise account, if commissioners approve a new three-year agreement with the organization next week.
The county has projected that Experience GR could receive a record amount of $988,250 next year, if the projected tax collection for 2013 holds up.
Experience GR is expected to share some of its revenue with the West Michigan Sports Commission, which isn’t in line to directly receive county funds next year, after getting $100,000 this year and $250,000 last year.
Tax revenue from the 5 percent hotel-motel tax went up by about 17 percent last year from 2010 and was up by 9.8 percent at the third-quarter mark this year from 2011.
At the same time, commissioners will be asked to transfer $1.3 million from general operations to the lodging excise tax fund to shore up the account’s expenditures. The county transferred $841,000 to the fund this year and $1.4 million in 2011. Experience GR is expected to receive around $855,000 from the account this year, after it collected $783,500 last year.
In contrast, commissioners will be asked to reduce funding to the county’s Purchase of Developments Right program in the general fund for next year to $50,000. In previous years, county funding to help preserve farmland has ranged from $150,000 to $275,000.
The county’s general fund began this year with about $68.5 million in its fund balance. Delabbio pointed out, though, that the reserve was $115.9 million in 2001 — more than $47 million more than it is today.
“We never expected the ‘rainy day’ to last for 11 years, and that’s what it did,” he said. “For 2013, we’ll have a structurally balanced budget. This year we made $1 million in cuts, less than we have in the past.”