With the city of Grand Rapids facing a budget deficit of $2.4 million for its 2010 general operating fund, members of the Downtown Development Authority agreed last week to give the city $500,000 to help cover expenses within the district.
The DDA dollars will come from the reserve in its non-tax fund and be used to cover police, fire and parks expenditures within the board’s boundary. The bulk of that income comes from parking receipts and interest on investments.
“The $500,000 is essential to our plan,” said Eric DeLong, interim city manager.
DDA Executive Director Jay Fowler said the fire and parks departments are likely to get $150,000 each, with the remaining $200,000 probably going to the police budget.
The city’s expenditure for public safety, which includes fire and police, is pegged at $75.5 million in 2010 — roughly $4 million more than this year. The parks department has a budget of $2 million, which is down by more than $7 million from 2008.
“Their budget has shrunk by two-thirds,” said Kayem Dunn, DDA chairwoman.
Board members also agreed to consider making a similar contribution to the city’s general operating fund for the 2011 and 2012 budgets. But they didn’t agree on requiring the DDA to meet with Kent County officials regarding how the board spends its revenue, as most felt they already communicate frequently with the county.
“The county feels very strongly that the use of these dollars is inappropriate,” said Jim Talen, a county commissioner and the county’s representative on the DDA.
“The county says let’s go with it for one year and then we’ll talk about it,” he added.
Although Talen voted to allow the DDA to hand over the dollars, the board defeated his request to compel the DDA to meet with the county, which has previously said the DDA should only spend revenue on items that directly impact the economic development of the district.
Still, the county and DDA will talk about the issue. “I’m trying to get a meeting together with (County Treasurer) Ken Parrish and (County Administrator) Daryl Delabbio and the leadership of the DDA,” said Roger Morgan, county commission chairman.
The DDA is expected to receive nearly $4.5 million during the upcoming fiscal year in property-tax revenue within the district. A portion of those dollars will be captured from the county’s share of that tax and its two millages, which makes the county a stakeholder in the DDA. The DDA was expected to capture $1.2 million in county property-tax revenue in 2008, according to a forecast the city gave the county last year, and has regularly captured at least $1 million each year since 2005.
Even though Mayor George Heartwell reminded Talen that the DDA money going to the city will come from the non-tax fund, Talen said the revenue the board gets from that fund is largely generated by the property taxes the DDA collects.
Talen said that without the tax-increment revenue the DDA gets from properties that have been improved in the district, the board wouldn’t have nearly the amount of parking income it will receive in FY 2010, which is projected at $169,000, and the $5.4 million in reserve the non-tax fund has heading into the new fiscal year.
“Grand Rapids is in a very difficult financial situation,” said Talen, who represents the city’s southeast side on the county commission. “The county is looking at a $10 million deficit (for FY2010). I think we’re in unusual circumstances right now.”
The city’s unusual circumstance for its general operating fund is because income- and property-tax revenues are less than expected, and fewer revenue-sharing dollars are coming to the city from the state.
“The state is under-funding us by more than $10 million, according to the statutory formula,” said Heartwell. “We’re not alone in that.”