GRAND RAPIDS, Mich. — Grand Rapids City Manager Mark Washington presented the draft fiscal year 2022 budget to the city commission on Tuesday.
Watch the City Commission meeting here:
The proposed $546 million spending plan aims to continue essential services and meet existing financial obligations, like capital improvement projects. In a news release, the city said the budget also prioritizes pandemic response and local economic recovery.
The general operating fund portion of the proposed budget is roughly $156 million.
Local income taxes, on average, account for 70 percent of general fund revenues, which were impacted by the COVID-19 pandemic’s impact on unemployment, business closures, and non-residents withholding payment due to working from home.
The city estimates $36 million in lost general fund income tax revenues between FY2021 and FY 2022, with a total of $60 million lost through December 2024.
According to the city, growth projections do not indicate immediate or rapid recovery. It’s predicted income tax revenues will not recover to pre-pandemic levels until after FY2026.
Despite the local income tax shortfalls, funding from the American Rescue Plan Act, which was passed by Congress earlier this year and allocates $4.4 billion in federal funding to local communities, allows the city to avoid losses in 2021 and 2022.
The city expects $94 million in relief through the ARPA over the next two years, with the first payment of $47 million expected in mid-May and the remaining payment coming one year later.
Just over $36 million of the federal funding will be used to “backfill” the income tax revenue shortfall for FY2021 and FY2022, sustaining current service. Washington recommended that a total of $60 million be used for revenue replacement over the next five years.
Beginning in FY2023, the city is projecting significant losses which would cut into the city’s reserves. Washington said the city will either need to be more aggressive in its recovery efforts or look into cuts to address the issue.
Washington also recommended $2.15 million of ARPA funding for immediate investment to go towards master plan funding, housing, special events like Art Prize, and the Homeless Outreach Team.
The commission will engage in a separate process to finalize an additional $10.2 million, but Washington is asking it to help “encourage economic recovery, address the needs of vulnerable populations, or allocate for other non-income tax revenue replacement to maintain services.”
The city manager recommended reserving the remaining $21.65 million for investments in years beyond FY2022.
The projected budget also recommends capital investments of $96 million.
More than $25.62 million is recommended to go towards “more equitable practices, practices and outcomes.” Potential investment includes staff diversity, equity, and inclusion training, lead line replacements with a focus on Third Ward neighborhoods, and violence reduction.
While no sworn staff will be cut from the Grand Rapids Police Department and Grand Rapids Fire Department, the city recommended a roughly three percent decrease in the share of the general fund allocated to GRPD from 38.5 percent to 35.8 percent.
However, the proposed police budget in FY2022 is $55,811,157 million. In FY 2021, GRPD's budget was $55,145,968 million, meaning the department is receiving $665,189 additional dollars.
Three non-sworn positions were reassigned from GRPD to lead home programming, communications, and neighborhood engagement and three radio technicians were moved to the Community Dispatch Department to shift the share percentage.
Property taxes will increase due to a voter-approved parks milage from 0.9353 mills to 1.25 mills. The city says however, the overall property tax millage will only increase by 0.2222 mils due to decreases in other components of the milage which includes City Operations, Library and Refuse.
A budget town hall will be held on May 6.
Read the full proposed preliminary budget here.