Through June 30, the county had received $45.4 million in property-tax receipts. Last year at this time, the county had taken in nearly $68.4 million. The $23 million drop in revenue is due to the shift in property-tax collection dates enacted by state lawmakers last year.
“This is where you start to see the long-range impact of the tax shift,” said Robert White,
The shift will have an even bigger impact on the county’s financial plans in a few years when property tax revenue won’t start rolling in until the county is eight months into its fiscal year. Property taxes go into the county’s general operating fund.
Overall revenue to that fund was down by 15.4 percent at the end of June compared to last year. But the fiscal year forecast projects that total revenue would match last year’s mark and revenue from property taxes would be nearly 7 percent higher than last year by Dec. 31, the end of the fiscal year.
At the halfway point, general fund operating expenses were up by almost 6 percent from June 30 of last year. A 9-percent gain in wages paid was one reason for the increase, but the hike was largely due to having more payroll periods this year from last year. Adjusting those periods show wages only rose by 2 percent from year to year.
The biggest increase in expenses for the first six months was in the county’s pension plan, which jumped by 73 percent from last year. White said low returns from investments were why the county contributed about $800,000 more to the plan so far this year than last year.
In 2001, the plan was funded at 130 percent. In 2004, it was 106 percent. White said a 7 percent return would mean the county wouldn’t have to raise its contribution rate, but he didn’t think the interest earned would reach that number. Still, White said the contribution the county makes to the employee retirement plan is lower than most municipalities.
“Right now, you’re at 8 percent, but that could go higher,” he said.
The county also saw a 36 percent increase in its group health insurance plan from last year, a hike that added about $1.3 million to the expense side of the ledger through the first six months of the fiscal year. All fund expenses were up by 6 percent through June.
The general operating fund is expected to have $143.8 million in revenue this year and $148.1 million in expenses, meaning the county is facing a deficit of $4.3 million for the year.
“We’re running slightly over budget for the first six months,” said White.
Revenue to the county from the lodging excise tax was up by 4.5 percent at the end of June from last year to $1.76 million. But the tax receipts were up by 7.1 percent at the end of March, meaning that business at hotels and motels in the county fell off during the second quarter.
“It’s gaining, but it’s not gaining substantially,” said White of the tax revenue that funds the bond payments for DeVos Place and makes up a large share of the Convention and Visitors Bureau budget.
This year, revenue from the tax is expected to be $4.2 million, up from the $4.17 million the county received last year. But expenditures have been projected to grow by 11 percent to slightly more than $6 million, which would leave the fund short by $1.63 million, a deficit that would be covered by the fund balance.
“You do have a significant amount of fund balance, but you’re rapidly depleting it,” said White.
The fund balance stood at $5.7 million at the start of the fiscal year and would drop to $4.06 million if the projected deficit held true.