Kent County commissioners will hold their first work session Thursday on the all-important general fund budget and they will find a proposed spending plan, which covers most county services, that is pretty much in balance for 2011.
County Administrator and Controller Daryl Delabbio presented the nine-member Finance Committee with the administration’s version of a budget last week that has around $7.4 million more in revenue from this year and about $2.8 million less in expenditures. The result is a budget that only digs into the fund’s reserve for $14,000 to be balanced.
“It’s a budget roughly $14,000 out of balance,” he said.
Commissioners gave Delabbio the green light earlier this year to take up to $2 million from the fund balance to cover expenses that exceed revenues in the budget. But at that time the budget’s deficit was $9.5 million and spending would have had to be reduced by $7.5 million from this year.
The biggest reason expenditures won’t be cut so badly is that the state’s revenue-sharing payment for 2011 is much larger than the county thought. The county was counting on receiving $3.4 million from the state for next year, but it will receive double that figure — $6.9 million — because lawmakers approved a retirement program for state employees.
“Revenue sharing will be restored to its full amount, as of last week. We were looking at a return of 50 cents on the dollar,” said Delabbio. “Our revenue sharing reserve fund will be depleted during the first quarter or early in the second quarter next year, when our revenue sharing returns. Otherwise, there would be more cuts proposed.”
Delabbio, though, also noted that balancing the proposed budget didn’t come without any pain. The cuts that are offered will result in the elimination of 56 full-time and four part-time positions. Twenty-eight of the full-time posts are vacant, as are two of the part-time positions. Most of the job losses are slated to come from the Sheriff’s Department. Delabbio also felt at least seven employees will take the county up on its new retirement-incentive program and retire at the end of this year, which also marks the end of the fiscal year.
Total revenue to the budget is estimated at $165.1 million, with $24.2 million of that amount coming from transfers the county will mostly receive from the state for five departments on the state’s fiscal year that began Oct. 1. Receipts from property taxes are at $85.9 million and are expected to make up 61 percent of the budget’s total revenue. The new budget doesn’t increase taxes even though the county can legally take that step, which would add from $750,000 to $800,000 to the revenue side of the ledger.
The general fund’s expenditures have been estimated at $161.5 million, with $33.9 million of that going out as transfers to the five departments on the state’s calendar, as a subsidy to the lodging-excise tax fund, and for the purchase of development rights under the farmland-preservation ordinance.
The general fund’s biggest expense in 2011, $61 million, is for public safety; the figure is down by $1.6 million from this year. Five of the fund’s six expense categories have smaller budgets for next year. The one that doesn’t — cultural and recreation — is up by $330,000 because revenue to it is up.
Bureau of Equalization Director Matt Woolford told the Finance Committee last week that they should expect the county’s taxable property value to fall by about 2.3 percent when he files his annual report next spring. If that happens, it will be the second consecutive year the taxable value for all properties has gone down in the county. Last year, it dropped by 3.76 percent, largely due to the housing crisis.
Woolford said the residential classification, the county’s largest source of property-tax revenue, will decrease either slightly or moderately in value this year. He said the commercial and industrial markets are continuing to experience downward pressure on prices and he added that he will have a clearer picture of where those property groups are headed in early November.
Woolford said his office began following the property markets for the 2012 report at the start of this month. Although it’s early in the process, he said the residential market may stabilize over the coming year. “In terms of the commercial and industrial, I don’t think we’ve seen these bottom out,” he said.
Although Delabbio was pleased with the administrative budget he presented to the committee, he also remained somewhat cautious about what the election will bring to Lansing in the New Year. There are situations where the state could force the county’s general-fund expenditures to go up next year. Those areas include higher costs for defending the impoverished in circuit court and for treating inmates at the jail, payments to cover the state’s legal settlement to a childcare lawsuit, and revenue sharing.
“While revenue sharing has been restored for 2011, it will be an annual battle and will continue to be subject to the appropriations process. Any reductions we can build into this year’s budget will help minimize the impact of the unknown (in 2012),” he wrote in the budget summary he gave to the committee.
“Related to this, I am somewhat concerned that the new governor and Legislature will be, for lack of a better term, ‘saddled’ with some difficult decisions related to its 2011 budget that may result in significant reductions that will affect local units of government.”