City’s strategic priorities, COVID-19 drive preliminary fiscal plan
Published on April 27, 2020
GRAND RAPIDS, Mich. – City Manager Mark Washington this morning presented the fiscal year 2021 preliminary fiscal plan to the City Commission. The City's fiscal year runs July 1 through June 30. The proposed $540 million spending plan is $13 million less than last year’s plan due to the dynamic financial impact of COVID-19 yet maintains essential City services, supports investments in equitable outcomes, furthers the ability to implement strategic priorities and ensures financial stability. The general operating fund portion of the proposed budget is $146,078,885.
Unlike past years, the fiscal years 2021-2025 plan is built on reduced revenue projections that have required rapid changes in planned expenditures due to COVID-19. The strong foundation of the City’s strategic plan has allowed leaders to pivot rapidly amid the changing dynamics of the pandemic response. What remains unchanged in the fiscal plan are the strategic priorities, outcomes and objectives and the values of accountability, collaboration, customer service, equity, innovation and sustainability. These continue to shape the City’s work as it responds to the pandemic, economic crisis and the community’s recovery.
General operating fund revenues are projected to decline more than 3 percent when compared to the adopted fiscal year (FY) 2020 plan. As recently as last month, these revenues were projected to be 4 percent higher than last year before COVID-19.
The sudden net reduction in projected revenues of nearly 7 percent drove down expenditures from the FY2020 adopted budget. This required a net year-over-year general operating fund expenditure decrease of $1.75 million below the FY2020 adopted budget.
“Our immediate focus is to save lives and keep people safe by helping to stop the spread of COVID-19,” Washington said. “Reliance on our strategic plan has allowed us to develop a preliminary fiscal plan that is financially sustainable, remains focused on our values, continues progress toward outcomes and emphasizes investments in community and economic recovery in this unprecedented time.”
Just weeks after the City’s midyear performance management update in late February and a hopeful State of the City address in early March, the economy that was powering forward at a good speed braked to a slow roll in less than 30 days, Washington said.
“The City Commission has to adopt a budget in May, which does not give us a lot of fiscal history with COVID-19,” he said. “With the recent extension of the Stay Home, Stay Safe order, the need for a phased reopening of the economy and continued economic uncertainty, we likely will need to make additional adjustments of another $5 million to $10 million over a variety of funds in the City budget before or shortly after the fiscal plan’s adoption.
“We will continue to proactively manage our finances as the impacts become more certain. This could be a $23 million decrease in overall spending when combined with the $13 million in reductions included in the preliminary fiscal plan. What were once solid growth projections now point to equally solid revenue reductions.”
Washington said the proposed budget anticipates revenue shortfalls but minimizes the negative impact to essential services in a fiscally responsible and sustainable way. The proposed general fund budget continues strong stewardship by maintaining reserves and does not recommend use of the budget stabilization fund.
“We remain hopeful that stimulus funding from state and federal governments will assist in response and recovery,” Washington said. “We will continue to monitor economic performance after budget adoption and, if the economic realities are different than our initial projections, we will be able to quickly adjust and propose budget amendments.”
Washington has implemented a modified hiring freeze for non-essential positions that allows exceptions for public safety and critical positions. He also has reduced employee travel and training. The City is leveraging $5 million in health insurance cost savings for FY2021 under a new contract that does not reduce benefits. The City also has seen other savings from vendor and supplier contract negotiations and insourcing some programs.
The general operating fund recommendation includes a new amount of $250,000 for economic recovery and investments to support resiliency of community members and local business during COVID-19 and to "build back better” once the pandemic passes. This will be combined with $2.2 million in supplemental Community Development Block Grant and $1.1 million in Emergency Solutions Grant funding and $232,500 of reappropriated unspent funds for the continuation of the Third Ward equity program for a total of $3.75 million in economic stimulus identified to date for the Grand Rapids community from City sources.
“We will marshal every available resource and focus them on investments that re-energize community life and stimulate business recovery,” Washington said. “This will be led by a resource leadership team that will develop new business supports, collaborate with all stakeholders and secure every possible dollar of state and federal support to focus on recovery and ensure resiliency. We will identify gaps in support for residents who, due to structural inequities, are most vulnerable to economic insecurity and COVID-19 exposure and direct investments to support their resiliency during the pandemic.
“However, more needs to be done, and we are pleased that Kent County has received CARES Act funding that will help residents throughout the county.”
The proposed budget also includes $30.34 million in mobility improvements for streets and sidewalks. Water operations and capital improvements continue to be funded at a level that maintains the quality of our resources at $62,498,427 and sewer operations are funded at $52,088,455. The proposed budget calls for $62,803,764 for police and $32,883,475 for fire – both unreduced from FY20 levels.
The FY2021 preliminary fiscal plan includes investments in each of the City’s six strategic priorities:
- Governmental excellence
- Engaged and connected community
- Economic prosperity and affordability
- Health and environment
- Safe community
The preliminary fiscal plan recommends more than $15,144,851 in operating investments in the strategic priorities that are expected to contribute to improved equitable polices, practices and outcomes.
“We continue to make progress in embedding equity into our processes with an emphasis on the budget,” Washington said. “Initiatives are under way across our organization – some of which require direct investment and others that represent a new way of thinking about our work. We look forward to highlighting our equity work when the capital plan and strategic priority investments are reviewed during the commission’s budget work sessions next month.”
Sample investments with equitable outcomes include:
- Improve language access to translation and interpretation services
- Support indigent defense representation at initial criminal offense court appearances for the 90 percent of defendants who are disproportionately persons of color and without representation due to a variety of structural inequities within the criminal justice system
- Embed equity in all City practices, policies and spheres of influence related to the Grand River restoration project
- Expand staff equity, diversity and inclusion training, strategy implementation and data collection methods
- Launch a master plan scoping phase that includes leading with and embedding equity throughout this work
- Support employee resource groups and leverage groups in attracting and retaining diverse staff and support an inclusive workplace culture
Economic prosperity and affordability
- Capacity building and systems navigation support for micro-local business enterprises
- LEAD program’s workforce development and job placement efforts
- Youth employment (Steepletown Neighborhood Services and Hispanic Center of Western Michigan) and economic support for refugees (Treetop Collective)
- Temporary water utility bill assistance
- Refuse service for households with a low income
- Continued efforts to increase affordable housing, including State Land Bank Authority partnership and grants from Community Development
- Mobile permit center pilot program
Engaged and connected community
- Neighborhood Match Fund
- Revised language access administrative policy that includes language contractual services
- OurCity Academy
- Community engagement framework development and implementation
- Neighborhood and resident capacity building (Neighborhood Summit and Neighborhood Leadership Academy)
- Neighborhood association grant support
Health and environment
- Expungement program
- Homelessness prevention and rapid rehousing
- Police candidate recruit program
- Mel Trotter Ministries public inebriate program
- Michigan prisoner re-entry and support program
- Human trafficking prevention
- Women’s Police Summit
The proposed budget recommends an overall capital investment of $75 million that will improve road conditions through Vital Streets projects, invest in water and sewer systems asset management, build the next phase of park millage improvements and invest in stormwater and street lighting infrastructure, including LED lighting. The capital plan shows intentional balance and distribution among the city’s three wards and strong investment in its neighborhoods of focus for FY2021 and over the five-year planning period. Neighborhoods of focus are 17 Census tracts that have concentrated poverty and unemployment.
Read the city manager’s full budget presentation to the commission HERE.
The City Commission will review the preliminary fiscal plan during the following work sessions:
- Tuesday, May 5 – 9 a.m. to noon online – CLICK HERE for details
- Tuesday, May 12 – 1 to 4 p.m. online – CLICK HERE for details
- Tuesday, May 19 – details are being finalized
The fiscal plan public hearing will take place during the City Commission’s 7 p.m. meeting Tuesday, May 19. The City Commission will vote on the plan during its 9 a.m. meeting Thursday, May 21. Location details for these meetings are being finalized.
All work sessions and meetings will be streamed live on the City’s Facebook and YouTube and broadcast live on Comcast Channel 26. They also will be streamed live in Spanish HERE.
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