If Kent County continues to provide services at its current level, expenditures from the general fund will rise by more than 7 percent three years from now.
Expenses from the general fund, which pays for most of the services the county offers, total $169.9 million this year. But at the current pace, those same expenditures will cost the county $181.2 million in 2012 and require a spending cut of $16.7 million, according to a budget forecast released by the county’s Fiscal Services Department last week.
The largest increase facing the county over the next three years is its contribution to the pension plan, a hike that has been projected to rise by 34.9 percent next year, 41.7 percent in 2011 and 37.6 percent in 2012.
“So you’re looking at some significant increases over the next few years, as most public employers are,” said County Fiscal Services Director Robert White to members of the Finance Committee.
Over those years, the county will see its contribution rate leap from the 5.12 percent it is this year to 13.3 percent in 2012. Employees will contribute 6.5 percent starting next year through 2012. Their rate this year was 5.52 percent, which was slightly higher than the county’s.
Driving the county’s increase is the financial loss the pension plan took last year when the securities market nearly collapsed following the mortgage crisis.
The plan’s market value fell by more than $136 million in 2008, ending the year at $467.7 million and funded at 105 percent. At the beginning of 2008, the plan was valued at $604.1 million and funded at 111 percent.
The county’s contribution to its retirement plan was $3.28 million this year. The forecast pegs that contribution at $8.63 million in 2012.
“What can we do to lessen this without more layoffs?” asked Commissioner Harold Voorhees, who also serves on the county’s seven-member pension board.
Voorhees noted the county will be making larger payments to the pension plan with fewer employees contributing due to past and upcoming layoffs, like the 83 full-time workers that are expected to be let go at the end of this year.
To make matters worse, the county’s contribution to the plan is expected to reach $10.4 million in 2013, up by roughly $1.8 million from 2012. Cutting services to meet the future contribution costs will likely result in more layoffs and fewer employees paying into the plan.
“We need to have a solid retirement plan for years to come. But where are we going to come up with those dollars?” he asked.
Voorhees said maybe the county should start looking for outside help. But Commissioner Art Tanis felt differently. “I think we ought to start in-house before we go outside,” he said.
Commissioner Dean Agee said it was time for the county to take some action, and the direction that action needs to take should be mapped out by the commission.
“I think we’re really going to have to drive it,” said Agee, also chairman of the Finance Committee. “I think it has to be board driven.”