GRAND RAPIDS — While the deficit is down, the spending is up and so is the hope.
When City Manager Kurt Kimball presented his proposed 2007 budget for the general operating fund to city commissioners, it carried a deficit of $3.2 million. That shortfall is 64 percent below the $8.9 million deficit Kimball said he was facing when he began putting the budget together and diagramming his reorganization of city positions and departments.
Kimball proposes to cover the deficit by drawing the necessary funds from the reserve account. He expects revenue to the general fund will total about $115 million, with about 58 percent of that amount coming from property and income taxes.
He hasn’t recommended hikes for the coming fiscal year, but Kimball has laid out a plan to raise revenue to the city.
“I am proposing a series of certain user-fee increases, to continue to sell excess city property for economic development, and to take action to reauthorize the Property Tax Administration fee before its sunset in 2007,” he said.
“This recommendation is to not consider asking voters for increases to property or income taxes at this time.”
Kimball expects that city income-tax receipts will rise by 3 percent over the coming fiscal year from the current one, as the local economy improves. But he also expects that the city’s slice of state revenue-sharing dollars will fall by 0.3 percent over that same period. Kimball reported that the city lost about $21 million in revenue-sharing funds over the last five years and he figures the city will lose another $9 million during the coming fiscal year.
“While the Legislature debates the repeal of the Single Business Tax without providing a source of replacement revenue, that same Legislature fails to meet its state-shared revenue payment commitments to the city of Grand Rapids and many other local governments,” he said.
As for general fund spending, Kimball proposed an increase of 5.6 percent for next year from the current figure of $111.8 million to $118.1 million. Almost all of that increase goes to public safety, as his 2007 budget adds $8.1 million to that category from 2006. (See related chart for how general fund spending has been assigned.)
Kimball wants to give the police $43.1 million next year, or 12.6 percent more than the current allotment, which accounts for 36.5 percent of the total 2007 budget. He also wants to give $23.3 million to the fire department in 2007, which is 11.3 percent more than the 2006 figure and 19.7 percent of the total budget. So police and fire account for roughly six of every 10 dollars in the spending proposal.
While some may see a general operating fund of $118 million as being high, it isn’t when compared to the budget four years ago. In FY2003, the budget was $131 million and almost $79 million was spent on public safety. Since then, the city has eliminated 233 positions and 43 more are proposed to be cut from the work force in Kimball’s budget.
City commissioners began their series of budget meetings with Kimball and his staff last week. They will continue to meet each week until June 15 when commissioners are expected to vote on the budget.
Kimball called 2007 a “watershed year” for city finances. Although next year only carries a deficit of $3.2 million, his five-year forecast has the city facing a seemingly insurmountable $19.9 million shortfall in 2011.
“We have a very small window of time to reinvent Grand Rapids into a sustainable city of the future. It will take all of us to accomplish this task in the short time we have left. We are no longer the large, self-sufficient institution we all remember. Those days are gone, just like they are for General Motors, Steelcase, Ford and IBM,” said Kimball.
“Over the next five years, we must evolve rapidly into a lean and nimble city that competes in a global environment and delivers a balanced and sustainable future for everyone.”