Even though 18 department managers cut their spending for next year by as much as 14.4 percent from 2008 levels, the proposed 2010 budget for the Kent County general fund has a deficit of $2.4 million.
Budget deficits fluctuate, though, and these days the shortfalls have a distinct tendency to get larger.
For instance, the county’s current general fund had a deficit of $1.8 million at the end of August. But by the end of September, it grew to $2.6 million — an $800,000 increase in just one month, or almost $27,000 per day for the 30 days of September.
“Our departments have done a good job of staying within budget constraints,” said Robert White, county fiscal services director.
So why did the deficit go up? Because revenue went down.
Kent County Administrator and Controller Daryl Delabbio said the biggest income lapses are coming from lower property taxes, investment income and register-of-deeds fees — all directly related to the mortgage crisis and collapse of the financial industry.
“There have always been more needs than we’ve been able to accommodate,” said Delabbio.
Also, reimbursements from the state have slowed and Gov. Jennifer Granholm vetoed a payment to the county for housing felons in the jail instead of locking them up in a state prison. The retention program cuts the state’s cost in half for each inmate the county holds, but the state hasn’t paid the county for doing that since June.
And the 2010 general fund contains a $10.3 million transfer from the county’s revenue sharing reserve fund. For the past two years, that transfer has been $12 million. But $1.7 million was cut from the general fund because legislation in the House calls for a retroactive return to the revenue-sharing level of 2004 — which, for the county, was $10.3 million.
After the 2010 budget year, the revenue-sharing reserve fund will be down to $6 million.
When the revenue-sharing reserve is exhausted, which is expected to occur in 2011, and with property-tax revenue not arriving at the county until the fiscal year’s third quarter, the county is on track to spend all $34.2 million of its cash-flow reserve just to pay its bills.
“You will use up all your cash-flow reserve,” said White to the Finance Committee. “I don’t think things will come back quickly. I don’t think things will come back in two, three, or four years.”
White said the state is leaning toward restoring revenue-sharing payments to counties, but is considering only sending 89 cents for each dollar a county is owed. Lawmakers scheduled Kent to begin receiving those payments again in 2011.
There is more bad news for the county, but it’s also good news for property owners in the county. Inflation for next summer’s property-tax bills will be a negative three-tenths of one percent, meaning taxes will drop for the vast majority of owners. But revenue from the tax to the county’s general fund is expected to fall by $250,000. The inflation figure used for last summer’s bills was 4.4 percent.
The proposed 2010 general fund has revenues at $165.4 million and expenditures at $167.8 million. Roughly $33 million has already been allocated to county departments that are on the state’s fiscal year, which began Oct. 1. At the end of 2010, the fund’s unreserved balance is projected to be $5 million. At the end of 2007, that reserve was $14.4 million.
County departments are expected to trim 145 positions from the work force by the end of the year. The equivalent of 82 full-time employees should lose their jobs and another 40 positions will remain vacant. Part-time personnel also will be let go.
“Keep in mind this is a proposed budget created by staff and we can make changes,” said Commissioner Dean Agee, chairman of the Finance Committee, to committee members.
The Finance Committee has three more budget meetings scheduled and is set to adopt a spending plan Dec. 1. That budget then goes to the full commission Dec. 10. The county’s fiscal year begins Jan. 1.