Grand Traverse County administrators who had serious worries at the start of the year about how the pandemic would affect county finances shared good news with county commissioners Wednesday: The county is on track to have a balanced budget for 2021, with federal aid staving off losses and rising property values positioning the county for growth in the coming year.

County Administrator Nate Alger presented commissioners with their first look Wednesday at the county’s 2021 draft budget. According to Alger, staff initially had “significant concern” early in the budget planning process about the trajectory of county revenues due to the pandemic, including potential deep cuts in state revenue-sharing with local communities. But Alger said major federal funding interventions – such as the CARES Act – helped stabilize the state’s budget, as well as Grand Traverse County’s revenues. “As it stands right now, the county’s overall revenue projections will increase modestly for 2021,” Alger wrote in a budget overview, estimating the increase at two percent over 2020 revenues, or $41.5 million total.

Increasing property values are expected to help drive that growth. Tax revenue is the single largest source of revenue for Grand Traverse County, representing 67 percent of incoming funds. The county is anticipating taking in $26.6 million in tax revenue in 2021, a 3.5 increase over 2020. Alger noted that even though building permits were down last year – 971 in 2019 compared to 1,313 in 2018 – “there were much bigger projects in 2019” that contributed to revenues. Construction Code Building Official Bruce Remai also reported that after construction was reinstated this year following a shutdown pause during the pandemic, his “office has been very busy, and it does not appear that construction has slowed,” according to Alger. “With new construction, we continue to see growth that is leading to an increase in taxable value.”

Addressing the county’s pension debt – a recurring pain point for commissioners past and present – is reflected as a continued priority in the 2021 budget. According to the county’s pension provider, Municipal Employees’ Retirement System of Michigan (MERS), the county’s current total pension debt is estimated at $99.7 million. The county is approximately 54 percent funded on its plan and is working to close the gap to get to 60 percent, the state-required minimum funding level.

Alger noted the county has been accelerating its payments to MERS and will pay another $7 million in 2021. Alger said he believes the MERS debt will be 100 percent funded on or before January 1, 2034. Another form of county retirement debt – other post-employment benefits (OPEB), which include non-pension retirement benefits like healthcare – is estimated at $2.4 million, with the debt 37 percent funded. Alger budgeted $300,000 payments in both 2020 and 2021 to try and fund the debt at a minimum level of 40 percent, which is the state requirement. “Our goal is to reach and exceed the required minimum funding levels, and we should budget accordingly,” Alger said.

Though the presented budget is balanced and results in “no reduction of employees or services,” according to Alger, administrators were still conservative in projections and planned outlays for 2021 due to possible impacts still to come from the pandemic. Several requested staffing increases – such as three new Sheriff’s Office employees, an assistant prosecuting attorney, a dispatch supervisor, and additional Commission on Aging staff – are not recommended to be filled at this time, Alger said. However, the administrator added that dispatch staffing could be revisited if a 911 surcharge proposal on the November 3 ballot is approved, as that could affect departmental funding, and that Commission on Aging staffing is still under review and has the potential to be funded going forward under that department’s dedicated millage.

The salaries of several key staff and elected officials are also under review for possible increases. Though not included in the draft budget, both the county clerk and county register of deeds requested salary increases of $5,000 each in 2021 and 2022, “as they believe that their salaries appear to be lower than their counterparts (in other counties) by approximately $10,000 a year,” according to Alger. Alger said he is still reviewing the salary increase request and will provide a recommendation to commissioners when the review is complete. The county clerk also submitted a request on behalf of elected officials for a two percent cost-of-living-adjustment (COLA) for 2021. Alger said that because he had already negotiated a 1.5 percent COLA increase for other employee groups, he could not recommend a 2 percent increase for elected officials.

However, commissioners agreed Wednesday to form an ad hoc committee – consisting of Chair Rob Hentschel, Vice Chair Ron Clous, and Commissioner Gordie LaPointe – to review salaries for several positions, including the county administrator, finance director, and HR director. That review could also include compensation review for some elected officials. Commissioners also agreed to have a dedicated study session next Wednesday (October 28) on the 2021 budget, with a chance to go through different funding areas in more depth. The meeting will include a presentation by the IT department – which is midway through an intensive modernization process of county technology equipment and systems, with several upgrades budgeted for 2021 – and opportunities for the sheriff to address his department’s funding requests.