Morgan, who chairs the Finance and Physical Resources Committee, learned that revenue for the current fiscal year could be as much as $6.5 million below the projection that county commissioners carried into the fiscal year, which began on Jan. 1.
County Fiscal Services Director Robert White told committee members last week that three revenue sources are likely to fall short of projections, and his announcement didn’t exactly come as a surprise considering the condition of the economy.
Revenue-sharing funds from the state could drop from $11 million to $10 million this year, leaving the county $1 million short from that source. Interest payments to the county on its investments could be as much as $3 million less than projected, as rates have fallen dramatically since the budget was prepared last June.
“That is going to come in significantly under budget,” said White.
And because the county didn’t exercise its option to buy the building at 82 Ionia Ave. NW, where it leases space, Kent won’t be getting the rent revenue from it that was included in the budget.
Property tax revenue was down by 10.6 percent for the first three months of the fiscal year when compared to the first quarter of last year. But White added that all tax collections and delinquent tax notices would be posted this month and that revenue should look better by the end of June.
“You’re running a little behind,” said White. “But you’ll see a big bump in the second quarter.”
Revenue from property taxes has been budgeted at $69.5 million, or 6 percent higher than last year’s take of $65.5 million.
Total revenue for the first quarter was just over $11 million and that figure is 4.3 percent higher than last year’s number. Total revenue for the fiscal year has been pegged at $138.4 million, a figure that White said looked a little weak right now.
As for the expense side of the ledger, expenditures are up 12.5 percent from last year for the first quarter. White, however, said that expenses could come in under the $145 million that has been budgeted for the fiscal year.
“You’re running generally at budget for the first quarter,” said White.
But White cautioned committee members not to count on extra tax revenue this year if the economy begins to rebound soon. He pointed out that an economic gain this year might not have a positive impact on tax revenue until 2005 or 2006 due to a timeline built into the county’s property tax structure.
White also noted that the county’s lodging excise tax, a 5 percent charge added to hotel and motel rooms, was down for the first quarter by 2.4 percent from last year as occupancy is down at local hotels and motels. Revenue from the tax has been projected to rise by 4.6 percent from last year and is expected to total $4.3 million for the year.
Those tax dollars support the marketing efforts of the tourism and convention business, and have been pledged to retire an $86 million bond package for the construction of DeVos Place. White said he hopes the new convention center will boost the occupancy rate at hotels and motels in the area.
Morgan said the county’s undesignated fund balance stood at nearly $36.7 million for the year. He felt the county may have to dip into it to cover any red ink this year, and possibly again next year. Kent County had a revenue surplus in the General Fund for the last fiscal year of nearly $3.3 million.