With up to a $15 million deficit for the 2010 general operating budget hanging over their heads, Kent County administrators unveiled a new budgeting process last week that county Finance Committee members agreed to follow, at least for the time being.
A shortfall for the 2010 budget would mark the ninth straight year that general-fund revenue won’t met expenses.
The new process offered by County Administrator and Controller Daryl Delabbio and his staff sets preliminary budget targets that department heads must follow when they submit their budgets. These targets are based on a set percentage of the 2008 actual, not budgeted, spending plan — which normally is the lower of the two.
“These are guidelines I will use in working with departments,” said Delabbio.
“We need to make some cuts to have expenditures meet revenue. We need to know what programs will be affected,” he added.
The process places most of the county departments into three broader categories and each category has been assigned an overall expenditure percentage. For health, public safety and the judiciary, it’s 103 percent of 2008 spending. For general government, it’s 95 percent, and 90 percent for culture and recreation. Delabbio told the committee the percentages likely mean spending will drop.
“It’s not actually adding 3 percent to this year’s budget,” he said of the health, public safety and court budgets. “In all likelihood, it’s a reduction.”
Delabbio estimated that the new budget-planning targets would reduce spending by roughly $10 million. Actual spending in 2008 was nearly $165.5 million or about $500,000 less than the budgeted amount.
“Remember, these targets are just starting points,” said County Fiscal Services Director Robert White to committee members.
“I can assure you there wasn’t a department head who was happy with the targets,” said White, who added that even more spending cuts would be needed in 2011.
In addition to the targets, the new process requires department heads to use zero-based budgeting, meaning their budgets have to roll back to zero at the end of the fiscal year. Also, the 0.2 mill the county sets aside each year for capital improvements will be lowered to 0.15 mill. White said that change would give the general fund an additional $1 million.
White also said the current capital improvements tab is $7 million and the Finance Committee will have to trim that list to $3 million beginning Aug. 4.
In May, 15 of the 19 commissioners said the 0.2 mills for capital expenditures should be maintained rather than reduced. But a month later, the consensus was to lower the set-aside amount instead of cutting staff, increasing user fees or charging fees to local governments.
“We’re in new territory,” said Commissioner Dean Agee, chairman of the committee.
Commissioner Gary Rolls was the only committee member who voted against using the new budgeting process.
“It’s too broad based to work with those target numbers. This, I struggle with,” he said.
“We’ve basically taken I don’t know how many departments and put them into three categories,” Rolls added.
Delabbio said the county needs to use the process for informational purposes.
One budgeting difficulty the county faces, regardless of the type of planning process it uses, is that many of the services it provides are mandatory and some of those services are directly linked to state funding. One of those is the Department of Human Services Child Care Fund, which is split evenly between Lansing and the county.
DHS recently requested an additional $1.37 million for the current fiscal year, which, at the state level, is in its final quarter. That request meant that the county had to dig into its unreserved general fund balance for $684,550 last week to meet its funding share. The DHS budget for this year in Kent County is now $12.4 million, up by 6 percent from last year, and is expected to be $13.7 million next year or up by 17 percent from 2008.
Rolls said the latest DHS appropriation was 9 percent of the fund’s total unreserved balance. “This just can’t continue to escalate when we are trimming and cutting everywhere else. It’s just frustrating,” he said.
“They’ve got to know the well is running dry,” added Commissioner Art Tanis.
Commissioner Richard Vander Molen said the county had committed 19 percent of the fund’s reserve at last week’s committee meeting. At the beginning of this fiscal year, the unreserved fund balance was about $7 million.
Commissioner Jim Talen said new funding requests are likely to come to the commission for the 2010 budget, possibly money for the Purchase of Development Rights program, and he wondered how those requests would fit in the new planning process.
“I think it’s fair to say that this is a process that we haven’t dealt with before,” said Agee of the new preliminary budgeting plan. “I don’t think this is a perfect start, but it is a start.”