As Kent County commissioners get set to review and then adopt a general fund budget for the upcoming year, they’ll be facing a loss of revenue from two sources they have always counted on — but that was before the mortgage mess and the ensuing financial crisis.
A third revenue source, the county’s largest, isn’t likely to deliver the dollars hoped for, either.
County Fiscal Services Director Robert White told the county Finance Committee they could expect a sharp reduction in investment earnings and in revenue from real estate transfers next year.
Earned interest could drop by 28 percent, or $1 million, to $2.8 million in 2009. The real estate transfer tax could fall by as much as 18 percent, or $500,000, to $2.2 million.
On top of potentially losing $1.5 million next year from those sources, commissioners will have to make up for the reduction in daily jail charges the county offered five cities a few weeks ago. The lower per-diem fee is set to go into effect Jan. 1 and is expected to cost the county from $525,000 to $600,000 next year, if commissioners ratify the lower fee. The arrest processing fee will also drop, possibly by as much as 23 percent.
And property-tax revenue — the county’s biggest source of income — will fall next year from an initial indication. At first glance, it looked like the county could count on income from property taxes to rise to $90.3 million next year, up by 2.9 percent from the $88 million that was expected for this year. But last week’s projection has that revenue source only rising by 1.6 percent to $89.1 million, or $1.2 million less than what was forecast a few weeks ago.
Facilities Management is the only department projected to receive a notable budget hike for the coming year. Most of that increase, however, is temporary. The department’s budget has been tentatively set at nearly $13.9 million for 2009, up from this year’s $12.9 million.
But $700,000 of that additional $1 million in the budget will come back to the department next summer when the state begins leasing space for the Department of Human Services in the county’s new Consolidated Human Services Complex, which opens in June.
“As the budget stands, there are no major changes,” said White of funding for other departments.
Total expected revenue to the general fund was projected last week at $167.6 million, with expenditures listed at $169.6 million, resulting in a deficit of just under $2 million. About a month ago, it looked as if the general fund was in line for a shortfall of only $800,000.
At the end of 2009, the fund balance should be around $67 million, a solid amount but much less than what it was Dec. 31, 2001, when the balance was $120.8 million.
“That was the peak of your reserves,” White said to the committee.
Despite having spent more than $50 million from the fund balance since the start of 2002, the county’s financial position is better than that of many counties in the state, as some have gone completely through their reserves.
“A lot of rural counties are facing 15 to 20 percent deficits,” said County Commissioner Harold Mast, also first vice president of the Michigan Association of Counties. “I don’t know how they are going to make it.”