GRAND RAPIDS, Mich. — The Grand Rapids City Commission on Thursday approved a $546 million spending plan for fiscal year 2022, which continues current municipal service levels and meets financial obligations for existing contractual agreements.
Watch the City Commission meeting here:
The recommended “continuation” budget also includes pandemic response and local recovery aid, according to a news release.
General operating expenses in the budget are just shy of $156 million – 29% of the total budget.
Funding through the American Rescue Plan will enable the city to sustain current services and supports future budgets through fiscal year 2025.
City officials expect to receive about $92 million in relief over two fiscal years, with the first payment of about $46 million expected this summer and the remaining payment arriving one year later.
Just over $36 million of American Rescue Plan funding is allocated to backfill the income tax revenue shortfall for the next two fiscal years.
And when the city’s full five-year fiscal plan is taken into consideration, City Manager Mark Washington recommends that $60 million be used for revenue replacement, which accounts for 65% of all American Rescue Plan funding.
Drastic cost reduction measures – like service reductions, significant increases to fees and staff layoffs – were avoided thanks to federal relief funding, along with the city’s financial position before the pandemic.
Washington says the city’s main financial challenge going forward will be to manage lagging revenue from financial challenges that continue in the current 2021 fiscal year.
While all funds will be impacted, Washington says the general fund has been impacted the most severely due to the loss of income taxes resulting from increased unemployment and decreased non-resident withholding.
“We are still coming out of this pandemic and out of a recession,” Mayor Rosalynn Bliss said during the budget deliberation process. “Hopefully, this next year will be more positive than we are currently projecting, but we are still in the midst of recovery. Having been around this table for the last 15 years and having been here during the last recession, I recall very clearly being part of conversations on how we were going to cut millions from our budget and hundreds of positions from this organization. Fortunately, we are not in that position today.”
In addition to revenue replacement, Washington’s budget recommends the following $2.15 million of American Rescue Plan investments for fiscal year 2022:
- Master plan funding: $250,000
- Housing Practice Leader contract: $100,000
- Funding for local special events: $300,000
- Homeless outreach staffing: $1,500,000
A budget amendment will also soon be prepared for the City Commission to finalize how another $10.2 million in American Rescue Plan funding will be used.
Washington recommends reserving the remaining $19.31 million of the $92 million in American Rescue Plan funds for investments beyond fiscal year 2022.
Nearly all those funds are proposed to be reserved in anticipation of more revenue loss or needed recovery investments.
The only other specific investment recommended as of now for future years is an additional $500,000 for the Master Plan.
The fiscal year 2022 plan dedicates more than $25.62 million in direct investments meant to contribute to more equitable policies, practices and outcomes.
In regard to police department spending, sworn staffing levels will be maintained for the Grand Rapids police and fire departments.
Three non-sworn positions have been reassigned from GRPD to other community services, such as lead home programming, communications and neighborhood engagement.
Police spending is 35.8% of general fund expenditures, down from 38.6% of the fiscal year 2021 plan.
Property taxes will increase because of the voter-approved parks millage, which increased to 1.25 mills. The overall property tax millage only increased by 0.1880 mills due to decreases in other components of the millage, including city operations, library and refuse.
More details on the fiscal year 2022 plan can be found here.