How Your Property Taxes Support County Government
Prepared By:
Ottawa County
Administrator’s Office
August 2015
1
OTTAWA COUNTY BOARD OF COMMISSIONERS
Back Row (Left to Right):
Donald G. Disselkoen ‐ District 3; Mike Haverdink ‐ District 5;
Matthew R. Fenske ‐ District 11; Dennis L. Van Dam ‐ District 6; Roger A. Bergman ‐ District 10;
Stuart P. Visser – District 1; James H. Holtvluwer ‐ District 7
Front Row (Left to Right):
Philip D. Kuyers ‐ District 9;
Chair Joseph S. Baumann ‐ District 2; Vice‐Chair Greg J. De Jong – District 8;
Allen Dannenberg ‐ District 4
2
TABLE OF CONTENTS
Executive Summary ___________________________________________________________ 4
I.
Introduction _____________________________________________________________ 5
II.
Property Tax Basics ________________________________________________________ 6
III.
County Millage Rates ____________________________________________________ 9
IV.
Funding the County: Basic Funding Structure ________________________________ 12
V.
General Fund Revenues _________________________________________________ 14
VI.
General Fund Expenditures_______________________________________________ 15
VII.
What are “Benefits”? ___________________________________________________ 17
VIII.
Methodology and Discussion _____________________________________________ 18
Legislative ________________________________________________________________ 21
Judicial ___________________________________________________________________ 22
General Government________________________________________________________ 24
Public Safety ______________________________________________________________ 26
Health and Welfare _________________________________________________________ 30
Community and Economic Development ________________________________________ 32
Culture and Recreation ______________________________________________________ 33
Other Governmental Functions _______________________________________________ 35
IX.
Conclusion ____________________________________________________________ 37
X.
Appendix _____________________________________________________________ 39
3
EXECUTIVE SUMMARY
The property tax is a basic funding source for many local government activities, including those of
the County. Taxpayers entrust a portion of their money with governmental institutions to be used
for public purposes. Because it values good stewardship of public money and desires to maintain
open communication with citizens, the County, under the direction of the Board of Commissioners,
has chosen to issue this report.
Questions have arisen as to whether citizens benefit from County services in proportion to what
they pay in taxes. This cannot be easily answered because different meanings of “benefit” exist.
However, the report will seek to provide a brief description of major services provided, whether
they are accessible to all citizens, and what the net cost is to taxpayers.
After offering some educational information about the property tax system and the County’s
funding structure, the report enters into a discussion that includes responses to the
aforementioned questions. The services provided by the County are examined by governmental
function (e.g. legislative, judicial, general government, public safety, etc.) and department/agency.
We conclude five key findings from this analysis:
1. With respect to funding for all governmental activities, property taxes compose only 32% of
total revenue. A majority of funding (52%) comes from intergovernmental revenue. While
the property tax is a significant revenue source, the County relies greatly upon
intergovernmental revenue.
2. The amount and proportion of property taxes (net cost to taxpayers) that support various
County services varies by governmental function. In absolute terms, public safety, health
and welfare, and judicial activities receive the greatest amount of property tax funding.
3. In aggregate, townships and cities have tax liabilities that are proportional to their
populations. Differences in individual units that are greater than or less than 0% can be
explained due to a variety of factors.
4. Nearly all County services are available and accessible to all County residents. Those that
are not receive minimal support from the General Fund.
5. Community policing contracts between the Sheriff’s Office and local units for additional
public safety services are paid for mostly by local units. These units financially support the
delivery of “frontline” services (e.g. deputies and vehicle costs) and additional supervisors
as requested (beyond those included in the contract), while the County is responsible for
providing the supervisory and administrative staff. In order to minimize costs, these
personnel manage multiple contracts. The County welcomes any interested, noncontracting unit to engage in discussions about potential contracting options.
4
I.
INTRODUCTION
The Board of Commissioners annually reviews and revises the County’s Strategic and Business
Plans. These documents provide guidance and describe the goals, objectives, and desired
outcomes which will direct the County towards its vision and mission.
The Strategic Plan contains four specific goals that are used to orient the County towards its
commitment to excellence and the delivery of cost-effective public services. The goals are as
follows:
1. To maintain and improve the strong financial position of the County.
2. To maintain and enhance communication with citizens, employees, and other
stakeholders.
3. To contribute to the long-term social, economic, and environmental health of the
County.
4. To continually improve the County’s organization and services.
The Commissioners and the County are committed to maximizing communication with citizens.
We recognize the importance of stewardship of public money in the accomplishment of our
mission. We hold it as a basic value to perform our stewardship in a responsible, cost-effective
manner, always remembering and respecting the sources of County funding.
In this spirit, the property tax report is intended to examine the funding for County services,
mainly those supported by the County Operating Property Tax of 3.6000 mills. This tax is the
primary source of funding for the provision of General Fund services. Other sources of funding
are utilized, especially in areas where the County serves as an agent of the State to deliver
mandated services.
Over the years, some local unit officials have questioned the benefit of County services received
by their residents in relation to taxes and services provided by the local units themselves. This
report will:
•
•
•
•
•
•
Review basic information about the property tax.
Compare the County’s property tax levy with other Michigan counties.
Describe the various funding sources of the County and its component units.
Detail the revenues and expenditures of the County’s General Fund, the fund that
accounts for all revenues and expenditures applicable to the general operations of the
County.
Calculate net costs to taxpayers for various County functions.
Describe the benefits associated with these functions, as well as assess the level of
availability to all County residents.
5
II.
PROPERTY TAX BASICS
The property tax is one of the most important revenue sources for local units of government. In
2014, $338 million was collected in property taxes within Ottawa County alone to support the
County; cities, villages and townships; intermediate school districts; local school districts; the
State Education Tax; and other entities with taxing authority.
Because it is an ad valorem tax, an owner’s tax liability is determined according to the value of
the property. The total for a parcel is determined by two factors: the taxable value of the parcel
(one-half the market value) and the combined tax rates of the various taxing entities. The
following equation demonstrates how one’s property taxes are calculated:
Value
𝑇𝑇𝑇𝑇𝑇𝑇 𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿 =
𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀𝑀 𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅
1,000
× 𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇 𝑉𝑉𝑉𝑉𝑙𝑙𝑙𝑙𝑙𝑙 ($)
Taxable property is divided into two categories: real property and personal property. Real
property includes land and any improvements that have been made, such as buildings. There
are six classes of real property: agricultural, commercial, developmental, industrial, residential,
and timber cutover. Personal property applies exclusively to businesses. This includes tangible
items such as equipment and furnishings.
Figure 1 shows the 2015 distribution of property within the County by category. The chart
reveals that the residential class represents 69% of the County’s tax base.
Figure 1. Distribution of Total Taxable Value by Property (2015)
Agricultural
3.0%
Commercial
10.9%
Personal
Property
9.5%
Industrial
7.1%
Residential
69.4%
Total Taxable Value
= $10.3 billion
6
Proposal A, enacted by Michigan voters in 1994, changed the method of property tax value
calculation. As a result of the referendum, each parcel now possesses two values: the assessed
value and the taxable value. The taxable value was created in response to rapidly increasing
assessed values, which was one factor previously used to calculate an owner’s property tax
liability.
Under Proposal A, the taxable value can only increase annually by the rate of inflation or 5%,
whichever is less. Using taxable value as opposed to assessed value will save Ottawa County
citizens $5.5 million in levies for the 2015 tax year. Figure 2 demonstrates Proposal A’s savings
to taxpayers, as evidenced by the gap between the assessed and taxable values. In 2008,
assessed values peaked, while taxable value has rebounded from the Great Recession, peaking
in 2015.
Figure 2. Effect of Proposal A, 1995-2015
13
Billions of Dollars ($)
12
11
10
9
8
7
6
5
4
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Taxable Value
Assessed Value
Rate
Property tax rates are traditionally expressed in mills. One mill is equal to $1 for every $1,000 in
taxable valuation. Different entities (schools, county, cities, townships, villages, and others)
have the authority to raise revenue through property taxes. The total millage rate for a parcel
depends on its location within these various jurisdictions.
As was mentioned above, a total of $338 million was collected in property taxes throughout
Ottawa County in 2014. Only an estimated $42.3 million (12.5%) was received by the County for
County purposes. This amount includes the County’s general and special millages.
Figure 3 shows the average distribution of the property tax collected from property owners. In
reality, this distribution will differ among property owners due to the variation in millage rates.
7
Over two-thirds (69%) of the amount collected in property taxes supports the state and local
education systems. Cities, townships, and villages receive 16%, while the County collects 13%.
Other jurisdictions compose the remaining 2%.
Figure 3. Average Property Tax Distribution
Schools
36%
Local Governments
16%
Intermediate
School Districts
16%
State Education
Tax 17%
Other
2%
County
13%
To make this more tangible, imagine a residential property with a taxable valuation of
$100,000.1 This hypothetical parcel is located in the West Ottawa school district in Olive
Township and qualifies for the Principal Residence Exemption. 2 Table 1 shows the distribution
of this property owner’s taxes, in both proportional and absolute terms.
The taxable valuation amount approximates half that of the market value amount through the property
assessment process. City and township assessors are responsible for determining these values.
2
The Principal Residence Exemption (PRE) exempts a principal residence, defined by the State as “[an owner’s]
permanent home and any unoccupied adjoining or contiguous properties that are classified residential or timbercutover,” from the tax levied by a local school district for school operating purposes up to 18 mills. In order to
qualify for the PRE, a parcel’s owner must be a Michigan resident who owns and occupies the property as his or
her principal residence.
1
8
Table 1. Property Tax Levy Example
PRE Residential Parcel with Taxable Value of $100,000 in Olive Township (West Ottawa Schools)
Millage
Example
% of Total
Entity
Jurisdiction
Rate
Amount
Tax Liability
County
Ottawa
4.3565
$ 436
15%
Township
Olive
4.9784
$ 498
17%
School District
West Ottawa
8.0500
$ 805
28%
Intermediate School District
Ottawa
5.5234
$ 552
19%
State Education
Michigan
6.0000
$ 600
21%
Total
28.9083
$ 2,891
100%
III.
COUNTY MILLAGE RATES
The total millage rate of 4.3565 mills that the County levied in 2013 provided $41.1 million in
property tax revenue. It is important to note that this rate is actually a combination of three
sub-rates, all levied for different purposes. Table 2 shows this breakdown and provides an
example of how these millage rates translate into real dollars for property owners.
Table 2. County Tax Levy by Purpose
Purpose
Operating
E-911
Parks
Total
Millage
Rate
3.6000
0.4400
0.3165
4.3565
Example
Amount*
$
360
$
44
$
32
$
436
2013 County
Description
Amount
$034.1 million For the general operations of the County
$004.1 million For the operations of the centralized dispatch system
$002.9 million For the purchase and operations of the park system
$ 41.1 million
* Note: These values are calculated based upon a property with a taxable value of $100,000.
** Note: As additionally explained in Table 4, amounts raised for operating are different in Tables 2 and 4. This is
due to different sources used, variation in levy and collection years, and differences in law related to unpaid IFT’s.
The County is authorized to levy up to 4.2650 mills for general operations rather than the
3.6000 mills that it currently levies. For the past 16 consecutive years, the actual levy has been
less than its maximum. Taxpayers benefit from a 16% savings between what the County could
levy and what it actually levies.
How Ottawa County Compares…
The County periodically monitors how our operating levy compares to other counties in
Michigan. Table 3 shows that Ottawa County had the lowest operating millage in a comparison
of both neighboring counties and counties of similar size in 2014. Even if it were to levy the
authorized maximum, the County would still be the lowest. In addition, the County also has the
fifth lowest operating levy among all Michigan counties.
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Table 3. County Operating Levy Comparisons, 2014
NEIGHBORING COUNTIES
Ottawa
Kent
Allegan
Muskegon
COUNTIES OF SIMILAR SIZE
3.6000
4.2803
4.6577
5.6984
Ottawa
Washtenaw
Kalamazoo
Genesee
Ingham
3.6000
4.5493
4.6871
5.5072
6.3512
Distribution among Cities and Townships
Some have questioned whether the distribution of property taxes between cities and townships
is proportional. To answer this, the absolute and relative values for each unit’s levy (with and
without the Industrial Facility Tax, or IFT) and population have been calculated in Table 4.
The biggest driver that determines the distribution of the County’s general operating levy,
found in the third and fifth column (entitled “% of County Levy”) in Table 4, is the total taxable
values of all properties within their respective jurisdictions. Georgetown and Holland Townships
have the highest total taxable values in the County, but they are also the most populous local
units.
To summarize the findings, townships contain 78.41% of the county’s total population. Property
owners in the townships pay 78.36% of the total property tax revenue without IFT’s, and
76.99% with IFT’s. This implies that, in the aggregate, properties in townships raise a similar
share of the property tax revenue received by the County relative to the proportion of citizens
who reside in townships.
Over 1 in 5 County residents (21.59%) live in cities (including the Village of Spring Lake).
Property owners in these jurisdictions pay 21.64% of the total property taxes collected without
IFT’s, and 23.01% with IFT’s. This signifies that, in the aggregate, properties in cities raise a
similar share of the property tax revenue received by the County relative to the proportion of
citizens who reside in cities.
A majority of units have differences between -1% and 1% with either method of comparison
(with or without IFT’s). Reasonable explanations can be offered for the units that fall outside
these bounds. For example, a unit’s demography, property class composition, or value of and
lost revenue due to Renaissance Zones can influence the data.
For example, the percentage of the County’s population that lives in Allendale Township and
the City of Holland is higher than its share of total property tax revenue. This can be explained
in part by the presence of Grand Valley State and Hope College respectively. To mitigate
10
confusion for non-resident students at these institutions, the 2010 Census stated that
individuals should use their current address as of April 1, 2010, when filling out Census forms.
Because of this methodology, the populations of these units are higher than if this group was
not included in the units’ population counts.
The distribution amongst a unit’s different property classes can also skew the data. For
example, Georgetown and Park Townships have a disproportionate amount of residential
properties, while the City of Zeeland and Port Sheldon Township have a higher proportion of
Table 4. Estimated Levies and Population by Local Units (2014)
Local
Unit
Estimated
% of
% of
Difference
Estimated
% of
County Levy County
County
% County
County Levy for
Total
for General
Levy
Levy Population
Levy General Operations
Population % Population
Operations (without
(with
(with IFT)
(without IFT)
IFT)
IFT)
(without IFT)
Difference
% County
Levy % Population
(with IFT)
TOWNSHIPS
Allendale
$
1,443,582
4.12% $
1,499,099
4.14%
21,655
7.78%
-3.66%
-3.64%
Blendon
$
774,689
2.21% $
774,689
2.14%
6,147
2.21%
0.00%
-0.07%
Chester
$
285,619
0.81% $
285,619
0.79%
2,058
0.74%
0.08%
0.05%
Crockery
$
503,227
1.44% $
503,381
1.39%
4,297
1.54%
-0.11%
-0.15%
Georgetown
$
5,025,531
14.34% $
5,036,402 13.90%
49,646
17.83%
-3.49%
-3.92%
Grand Haven
$
2,443,028
6.97% $
2,458,280
6.79%
15,990
5.74%
1.23%
1.05%
Holland
$
3,955,745
11.28% $
4,129,555 11.40%
37,433
13.44%
-2.16%
-2.04%
Jamestown
$
1,065,300
3.04% $
1,091,518
3.01%
7,694
2.76%
0.28%
0.25%
Olive
$
549,955
1.57% $
593,393
1.64%
4,957
1.78%
-0.21%
-0.14%
Park
$
3,332,578
9.51% $
3,332,578
9.20%
18,537
6.66%
2.85%
2.54%
Polkton
$
374,858
1.07% $
374,858
1.03%
2,529
0.91%
0.16%
0.13%
Port Sheldon
$
2,148,898
6.13% $
2,148,898
5.93%
4,443
1.60%
4.53%
4.34%
Robinson
$
750,351
2.14% $
750,351
2.07%
6,389
2.29%
-0.15%
-0.22%
Spring Lake
$
1,972,455
5.63% $
2,011,969
5.55%
14,887
5.35%
0.28%
0.21%
Tallmadge
$
985,093
2.81% $
1,003,137
2.77%
7,881
2.83%
-0.02%
-0.06%
Wright
$
389,574
1.11% $
394,027
1.09%
3,146
1.13%
-0.02%
-0.04%
Zeeland
$
1,470,559
4.19% $
1,501,467
4.15%
10,690
3.84%
0.36%
0.31%
Subtotal
$ 27,471,042
78.36% $
27,889,222 76.99%
218,379
78.41%
-0.05%
-1.41%
CITIES
Coopersville
$
355,282
1.01% $
385,711
1.06%
4,344
1.56%
-0.55%
-0.49%
Ferrysburg
$
568,661
1.62% $
568,780
1.57%
2,984
1.07%
0.55%
0.50%
Grand Haven
$
1,929,040
5.50% $
1,953,470
5.39%
10,965
3.94%
1.57%
1.46%
Holland
$
2,306,898
6.58% $
2,328,008
6.43%
26,571
9.54%
-2.96%
-3.11%
Hudsonville
$
758,275
2.16% $
774,008
2.14%
7,323
2.63%
-0.47%
-0.49%
Spring Lake (Village) $
390,576
1.11% $
390,576
1.08%
2,323
0.83%
0.28%
0.24%
1,932,516
5.34%
5,626
2.02%
1.62%
3.32%
8,333,068 23.01%
60,136
21.59%
0.05%
1.41%
Zeeland
$
1,277,478
3.64% $
Subtotal
$
7,586,210
21.64% $
TOTAL
$ 35,057,253
$
36,222,290
278,515
Note: Due to different sources used, the amount for general operations in Table 2 and Table 4 (this table) are different. Table 2
uses actual numbers from the 2013 Comprehensive Annual Financial Report, but this table uses estimated numbers from the
2014 Apportionment Report.
Sources: 2014 Apportionment Report; 2014 Projected Census
11
Industrial properties, including the J.H. Campbell Generating Complex power plant. This helps
explain the larger “difference” percentages found in the rightmost columns in Table 4 on the
previous page.
In summary, we conclude that there is little difference in aggregate between townships and
cities when it comes to the distribution of property tax revenue raised.
IV.
FUNDING THE COUNTY: BASIC FUND STRUCTURE
Before digging further into where property taxes go, it is important to have a basic
understanding how the County’s fund structure works. As will be demonstrated in the following
pages, property taxes only provide funding for a portion of the activities of the County.
In accordance with the State Chart of Accounts, the County maintains 66 different funds to help
finance its various functions and services. Figure 4 summarizes how the County’s funds are
broadly categorized.
Figure 4. County Funds, by Type
All
County Funds
Proprietary
Funds
Governmental
Funds
General
Fund
Property
Tax
Dollars*
Fiduciary
Funds
Special Revenue
Funds
Parks and
Recreation
Public
Health
Mental
Health
Nonmajor
Funds
*Note: All property tax dollars are received into either the General Fund or the Parks and Recreation Fund;
however, transfers can be made from the General Fund to other funds.
12
The bulleted points below offer a more detailed description of the governmental funds
highlighted in Figure 4 (above):
•
•
General Fund – used to account for all revenues and expenditures applicable to the
general operations of the County.
Special Revenue Funds – used to account for revenue from specific revenue sources
(other than major capital projects) and related expenditures which are restricted for
specific purposes by administrative action or law.
o Major Special Revenue Funds – includes Parks and Recreation Fund, Public
Health Fund, and Community Mental Health Fund.
o Non-Major Special Revenue Funds – includes 25 funds, largely representing
grant revenue and other non-property tax revenues that are in some way
restricted in their use.
In 2013, the County collected $129 million in revenue for governmental funds. As Figure 5
shows, 32% came from property taxes; however, intergovernmental revenue from federal,
state, and local units of governments is the largest source for the County’s governmental funds.
Figure 5. Revenue Sources for Governmental Funds, 2013
1%
4% 2%
9%
Intergovernmental Revenue
Property Taxes
Charges for Services
52%
Rental Income
Interest, Rent, and Other
Licenses and Permits
32%
Total Revenue in
Governmental Funds
=$129 million
13
V.
GENERAL FUND REVENUES
Total governmental fund revenue (excluding transfers in) amounted to $129 million in 2013.
The General Fund, which is a governmental fund, is the chief operating fund of the County and
provides baseline support for the provision of Countywide services. It accounts for all financial
resources of the general government, except those required to be accounted for in other funds.
In 2013, General Fund revenue composed 46.1% ($59.5 million) of all governmental fund
revenue.
Table 5. Governmental Funds and General Fund Revenue by Source (2013)
REVENUE SOURCE
Taxes 3
Intergovernmental Revenues
Charges for Services
Licenses and Permits
Rental Income
Fines and Forfeits
Interest on Investments
Other
Subtotal
Add: Transfers In
TOTAL:
ALL GOVERNMENTAL FUNDS
% OF TOTAL
AMOUNT
$
41,102,695
31.9%
$
67,009,472
52.0%
$
11,581,189
9.0%
$
1,193,107
0.9%
$
5,273,139
4.1%
$
60,548
0.0%
$
(77,480)
-0.1%
$
2,832,192
2.2%
$
128,974,862
$
10,149,065
$
139,123,927
$
$
$
$
$
$
$
$
$
$
$
GENERAL FUND
AMOUNT
% OF TOTAL
38,152,623
64.2%
7,952,614
13.4%
8,883,002
14.9%
423,144
0.7%
3,442,554
5.8%
60,548
0.1%
(91,289)
-0.2%
641,421
1.1%
59,460,329
49,356
59,509,685
Table 5 states that 64% of General Fund revenue came from taxes in 2013. Among all
governmental funds, this proportion dropped to 32% due to an increased reliance on
intergovernmental revenue in funds other than the General Fund.
Figure 6 shows the different possible revenue sources for all governmental funds, including the
General Fund. The General Fund has the same revenue sources as other governmental funds;
however, the distribution among these sources is different.
Note: The total amount collected in property taxes in 2013 was $41,102,695. Revenue ($2,941,638) from the
special levy dedicated exclusively to the Parks and Recreation fund is not collected in the General Fund and has
subsequently not been included in the row detailing tax revenue in the table above.
3
14
Figure 6. Revenue Sources for General Fund
Licenses and
Permits
Rental
Income
Charges for
Services
Interest on
Investments
Intergovernmental
Revenue
Taxes
Fines and
Forfeits
Other
Revenue
GENERAL
FUND
(REVENUE)
Transfers
In
The County’s total millage rate in 2013 was 4.3565, resulting in revenue of $41.1 million. $38.2
million went to the General Fund. The remaining $2.9 million went directly to the Parks and
Recreation Fund because of the 0.3165 mill levy approved by voters for parks and recreation
activities.
Out of the $38.2 million in County tax revenue to the General Fund, $4.1 million was collected
for the Ottawa County Central Dispatch Authority due to the 0.4400 mill special levy for the
Authority’s operations. The remaining $34.1 million was collected for general operating
purposes. This is a key figure to remember throughout the remainder of this report.
VI.
GENERAL FUND EXPENDITURES
The General Fund supports, in part or in whole, a wide variety of County services. Figure 7
exhibits the different functions that the General Fund provides for.
15
Figure 7. Expenditure Categories for General Fund
Public
Works
Public
Safety
General
Government
Health and
Welfare
Community and Econ.
Development
Other
Governmental
Functions
Judicial
GENERAL
FUND
Legislative
Transfers
Out
(EXPENDITURES)
Expenditures come in two forms: traditional expenditures and transfers out. Figure 8 shows the
distribution of expenditures among different governmental functions and transfers out. Out of
the $59.3 million expended, 41% was attributable to public safety activities, 18% to general
government activities, and 20% to judicial activities. Almost three-quarters of the amount
transferred out went to support health and welfare activities.
Figure 8. General Fund Expenditures and Transfers Out, 2013
Community
Development
1%
Health and
Welfare
1%
Transfers Out
16%
Judicial
21%
Public Works
1%
General
Government
18%
Public Safety
42%
Total Expenditures
and Transfer Out
= $59.3
16
VII. WHAT ARE “BENEFITS”?
Having looked at General Fund revenues and expenditures, it is time to begin the discussion of
the overarching question that gave rise to this report: to what extent do citizens benefit from
the services they pay for in taxes? To answer that question, it is necessary to further define
what “benefit” means.
In private sector transactions, we often use the phrases “we get what we pay for” or “we want
to get our money’s worth.” We exchange our money for goods and services that we directly
and personally enjoy. Public sector (i.e. governmental) services are different. We sometimes
pay for services that we will seldom or never utilize, but they are available if we need them.
Many County services are mandated by law; others are discretionary, provided for the
enjoyment and well-being of residents at the pleasure of the Board of Commissioners. Most
services supported in part or in whole by property taxes are equally available and accessible to
all residents.
It is important to make a few distinctions among the services that the County provides to
citizens. The first distinction that needs to be made is between services that provide observed
benefits to citizens and those that provide unobserved benefits. Most of the time, citizens go
about their daily lives unconcerned with how well government is functioning. While they may
not be observing any benefits, they are experiencing benefits. Only in times when there is a
noticeable absence, notable controversy, or poor management will most citizens pay close
attention to and ask questions of their respective governing units.
The Sheriff’s Office is an excellent example for this distinction. While most people do not
interact with the Office on a regular basis, they still expect public safety officers to ensure their
safety and that of their communities. Often these services are taken for granted. Criminal
incidents, tragedies or disasters quickly remind citizens of the presence and importance of
public safety services.
Another distinction can be made between services that provide actual benefits and potential
benefits. Unlike some local units, the County does not directly provide services such as public
utilities (e.g. electricity, water, etc.). These utilities deliver actual benefits, because citizens use
electricity and water daily. Many of the services the County provides do not benefit citizens
until they need them.
As an example, services provided by the County Clerk, such as vital records, business
registration, and concealed weapons permits are not experienced by citizens as benefits on a
regular basis. It is only when individuals find these necessary that they actually benefit from the
services provided. Another salient example is the Ottawa County Central Dispatch Authority.
Hopefully, citizens do not have the use the 911 system on a regular basis; however, citizens can
rest assured that the service is always there should it be needed in an emergency. A whole host
17
of services provided by the County have potential benefits but are not actualized until an actual
service is rendered.
The third and final distinction is between direct benefits and indirect benefits. Direct benefits
are those services from which citizens benefit directly. These could be any services that a citizen
has direct access to (e.g. services provided by County Clerk, recreational locations maintained
by Parks and Recreation, etc.). However, other entities such as the courts and the County jail
provide indirect benefits to all citizens. Many individuals will never set foot in a courtroom or a
jail cell, but they indirectly benefit from the safety and security that these entities provide.
Other examples of indirect benefits include those internal services provided by departments
such as Information Technology and Facilities Maintenance to various departments that offer
services directly to patrons. All citizens benefit indirectly, because without these departments
the County could not provide high quality services.
VIII. METHODOLOGY AND DISCUSSION
This report began by providing an overview of the structure of the property tax system and
County funds. In order to trace property taxes from the point of collection through their
expensing, it is necessary to develop a methodology that will allow us to provide a means of
accurately estimating what citizens’ property taxes support.
Using County financial documents (i.e. audits and budgets), it was possible to develop a means
of estimating how much and in what proportion a government function receives property tax
funding. The County has a reputation for excellent financial transparency and accurate
reporting.
This report utilizes data from 2013. This is the most recent year for which actual revenue and
expenditure amounts have been audited. Data from the 2013 Comprehensive Annual Financial
Report (CAFR) for the revenues and expenditures in the General Fund were matched to
comparable data (also from 2013) provided in the 2015 budget. More detailed information is
available in budgets than in audits. However, due to this and to ensure the integrity of the data,
both financial documents were utilized in the formation of a methodology.
Table 6 provides a review of the categories used in reporting on the revenue and expenditure
sides of financial documents. Revenue is accounted for as taxes, intergovernmental revenue,
charges for services, rental income, fines and forfeits, licenses and permits, interest on
investments, and other revenue.
Expenses (when categorized by function) are accounted for as legislative, judicial, general
government, public safety, public works, health and welfare, community and economic
development, or culture and recreation expenses.
18
Unlike the audit (CAFR), the budget takes apart each of these functional categories and
separates them by department and, in some cases, divisions. Revenues and expenditures are
included for each of these departments and divisions. These entities can then be combined and
categorized according to their governmental function (e.g. legislative, judicial, etc.).
Table 6. Financial Reporting Categories of Revenues and Expenditures
Revenues
Expenditures
(Sources)
(Government Functions)
•Taxes
•Intergovernmental revenue
•Charges for services
•Rental income
•Fines and forfeits
•Licenses and permits
•Interest on investments
•Other
•Legislative
•Judicial
•General Government
•Public Safety
•Public Works
•Health and Welfare
•Community and Economic Development
•Culture and Recreation
Except for the Treasurer’s Office and the Central Dispatch Authority in the General Fund and
the Parks and Recreation Fund in the Special Revenue Funds, taxes are not included in revenue
sources for other entities. Additionally, the Treasurer’s Office, the County Clerk’s Office, and
Fiscal Services serve as recipients of revenues that are either attributable to other departments
(e.g. reimbursements for judge’s salaries) or can be allocated corporately (i.e. state revenue
sharing, formally known as the Economic Vitality Incentive Program [EVIP]).
In order to estimate the amount and proportion of tax dollars used by each governmental
function (e.g. legislative, judicial, general government, etc.), the methodology aggregates
General Fund expenditures and transfers out by category and subtracts that number from each
category’s respective net revenue amount to determine the net remaining cost.
The County receives a substantial amount of revenue sharing (EVIP) from the State annually. In
addition, some departments or funds collect non-tax revenue that is greater than their
expenses. If this surplus is not restricted in any way, it can be used to support activities for
other departments or funds. For example, the General Fund receives revenue from the State’s
Convention Facility Development Tax. Public Act 2 of 1986 requires that 50% of the amount
received by a County be used to reduce property taxes, unless the funds are used for substance
abuse programs. Ottawa County annually receives enough to do both of these activities.
The net cost to taxpayers is then determined by adding the sum of the revenue sharing and
other unrestricted monies and distributing them proportionately among the various
governmental functions. Once this aggregated net cost has been calculated, we can add the net
19
change in the General Fund balance. Because of the way in which the methodology is
structured, this total should be equal to the amount of taxes subtracted from total General
Fund revenue. Figure 9 provides a chart showing the flow of the methodology detailed above.
For more detailed data, please see the appendix.
Figure 9. Description of Methodology
General Fund Expenditures
Add: Transfers Out
Total Expenditures (+ Transfers Out)
Net Revenue
(Subtract): Total Expenditures (+ Transfers Out)
Net Remaining
Add: Distribution of Revenue Sharing, Excess Unrestricted Funds
Net Cost to Taxpayers
Add/(Subtract): Net Change in Fund Balance
Total
Should correspond to one another
General Fund Revenue
(Subtract): Taxes
(Subtract): Revenue Sharing
Add/(Subtract): Attributable Revenue
Net Revenue
In addition to including a “net cost to taxpayer” figure, each governmental function section also
contains a percentage of expenses paid for through property taxes. This amount is calculated
using the following equation:
% 𝑜𝑜𝑜𝑜 𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇 𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝑛𝑛′ 𝑠𝑠 𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸 =
𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝑛𝑛′ 𝑠𝑠 𝑁𝑁𝑁𝑁𝑁𝑁 𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶 𝑡𝑡𝑡𝑡 𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇
× 100
(𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺 𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹 𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹 𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸 + 𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅 𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆 𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅 𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹 𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸)
In the following section that examines each functional area, the function’s net cost to taxpayers
and percentage of the function’s expenses paid by property taxes will be bolded and
underlined.
Having described the methodology this report will use, this section will look at answering three
different questions:
•
•
•
What services does the County provide?
What is the cost to taxpayers?
Are the services provided accessible to all?
20
Legislative
Figure 11. Legislative Entities
LEGISLATIVE
Board of
Commissioners
Reapportionment
Commission
Tax Allocation
Board
Table 7. Major Legislative Services Provided, by Entity
Board of Commissioners
Reapportionment Commission
Tax Allocation Board
MAJOR SERVICES PROVIDED
Represents all citizens
Provides leadership and policy direction for the County
Ensures equal representation for all citizens
Examines budgets of local units and determines millage
rate distribution
Cost to Taxpayers
Expenditures in 2013 amounted to $395,500. After adjustments, the net cost to taxpayers was
$356,000. This means that 90% of legislative expenditures were supported through property
taxes.
Summary of Findings
In a representative democracy, citizens elect and entrust representatives to communicate their
interests. At the county level, the Board of Commissioners is elected to fulfill these duties. All
citizens are equally represented by their respective commissioners because the
Reapportionment Commission ensures that all districts are equally populated. The Tax
Allocation Board exists to ensure that property taxes are levied equitably and proportionately.
21
Judici al
Figure 12. Judicial Entities
JUDICIAL
20th Circuit
Court
Probate Court
Friend of the
Court
58th District
Court
Juvenile
Services
Legal Self-Help
Center
Community
Corrections
Table 8. Major Judicial Services Provided, by Entity
20th Circuit Court
Trial Division
Family Division
Friend of the Court
Juvenile Services
Probate Court
58th District Court
Traffic Division
Criminal Division
Civil Division
Probation Division
Community Corrections
Legal Self-Help Center
MAJOR SERVICES PROVIDED
Handles felony criminal, civil, and appellate cases
Handles domestic relations and delinquency cases
Protects the rights and interests of the children in
domestic relations matters
Enforces court orders issued through the Family
Division
Provides services for delinquent youth, including
detention, intensive supervision, community
probation, and treatment program.
Handles cases involving estates and trusts,
guardianships, and conservatorships and mental
commitment proceedings
Handles traffic-related cases, including drunk driving
cases
Handles misdemeanor criminal cases
Handles civil cases, including small claims and summary
proceedings
Provides or refer offenders to rehabilitative services
Promotes accountability and reduce recidivism
Develops alternative sentencing programs to reduce
jail commitments
Provides legal assistance in non-criminal cases without
the assistance of an attorney
22
Cost to Taxpayers
Judicial-related expenditures amounted to $15.7 million in 2013. After adjustments, the net
cost to taxpayers was $6.0 million. This means that 38% of judicial expenses were supported by
property taxes.
Summary of Findings
The judicial system of Ottawa County aims to administer justice with fairness, equality, and
integrity. Its functions are carried out largely by the 20th Circuit Court, the 58th District Court,
and the Probate Court. Unlike some counties, the jurisdiction of these courts is the same as the
area within the County’s borders. This means that the County possesses only one Circuit Court,
one District Court, and one Probate Court, which is unlike other more populous counties in the
State. The county currently maintains three district court locations.
Each court derives revenue from different sources. Because it is part of the State Court system,
the 20th Circuit Court receives funding from the State General Fund. This source supports
judges’ salaries and benefits and covers a portion of the operating costs for the Court’s Trial
Division. The County General Fund provides the majority of funding for the Court. It supports
employee salaries and benefits, as well as general operating needs such as facilities and
technological infrastructure. The third source is the state Department of Human Services, which
provides partial reimbursement for activities such as those provided by Juvenile Services and
Friend of the Court.
The 58th District Court is funded mostly through court fees and fines and the County’s General
Fund. Activities of the Probate Court are supported largely by the General Fund. The County
does receive reimbursement for the District and Probate Judges’ salaries and FICA taxes (i.e.
Social Security and Medicare).
The Legal Self-Help Center is fully funded through intergovernmental revenue, charges for
services, and other revenue. A majority of funding for the operations of the Friend of the Court
comes from intergovernmental revenue, while another large portion comes from a General
Fund transfer. Community Corrections is supported almost equally through a transfer from the
General Fund and intergovernmental revenue and charges for services.
Most citizens will rarely, if ever, use the court system; however, it exists to ensure the proper
functioning of and provide security for all residents. A well-functioning judicial system is vital to
maintaining a safe environment. This is something from which all citizens benefit.
23
Genera l Gove rnme nt
Figure 13. General Government Entities
GENERAL GOVERNMENT
Non-Elected
Officials
Elected
Officials
Administration
Human
Resources
Clerk/
Register of
Deeds
Treasurer
Facilities
Maintenance
Information
Technology
Prosecuting
Attorney
Water
Resources
Commissioner
Corporation
Counsel
Fiscal
Services
Equalization/
GIS
MSU
Extension
Table 9. Major General Government Services Provided, by Entity
County Clerk/Register of Deeds
County Clerk
Register of Deeds
Fiscal Services
Corporation Counsel
Administration
Equalization
MAJOR SERVICES PROVIDED
Maintains vital records and Circuit/Family Court records
Handles applications for business registration, passports,
concealed weapons permits
Keeps record of all documents related to land and
property in the County
Provides centralized financial services for all accounting
and financial matters, budget, purchasing and risk
management
Represents the County in all legal matters
Prepares legal opinions, drafts and reviews contracts,
policies, and resolutions
Oversees general operations
Provides leadership and management of Board initiatives
Examines assessment rolls and determines whether
property has been equally and uniformly assessed at true
cash value
24
Geographic Information Systems
Information Technology
Human Resources
Prosecuting Attorney
Treasurer
MSU Extension
Facilities and Maintenance
Water Resources Commissioner
Manages mapping system which provides geographic data
Oversees and provides support for technological
infrastructure
Responsible for recruiting, hiring, retaining, and releasing
of employees
Represents the people of Ottawa County in legal matters
Assists victims, including victims of domestic violence
Manages County funds, record revenue, collect delinquent
taxes, conduct tax foreclosures, manages dog licenses
Provides education and tools to help citizens live and work
better
Maintains all County assets, including facilities and
equipment
Responsible for the construction, operation, and
maintenance of storm water management systems
Cost to Taxpayers
General Government expenditures amounted to $11 million in 2013. After adjustments, the net
cost to taxpayers was $3.6 million. This means that only 33% of general government expenses
were supported through property taxes.
Summary of Findings
General Government activities are undertaken by various departments to deliver services that
are State-mandated or help support the broad operations of the County.
Some departments are headed by elected officials: the Clerk/Register of Deeds, the Treasurer,
the Prosecuting Attorney, and the Water Resources Commissioner. Each of these offices
provides different services to citizens and other stakeholders. A general overview of these
services can be found in Table 9 above.
About half of the General Government departments provide internal services for County
activities—that is, they provide support services for the County as an organization. Human
Resources, Corporation Counsel, and Facilities and Maintenance are a few examples of
departments that perform essential, behind-the-scenes services.
While citizens do not interact directly with these “hidden” units, these departments play an
indispensable role in maintaining a well-run organization. They enable those that do interact
with the public to provide excellent services to citizens. Of those departments that provide
services to the public, all are equally accessible to citizens.
25
Public Safety
Figure 14. Public Safety Entities
PUBLIC SAFETY
West Michigan
Enforcement
Team (WEMET)
Sheriff's
Office
Central Dispatch
Authority
Law
Enforcement
Jail
(Corrections)
Emergency
Management
Table 10. Major Public Safety Service Provided, by Entity
Sheriff's Office
MAJOR SERVICES PROVIDED
Law Enforcement Division
Jail-Corrections Division
Emergency Management Division
West Michigan Enforcement Team
Ottawa County
Central Dispatch Authority
Enforces laws and ensure safety throughout the
County
Operates general road patrol, traffic services, K-9 units,
investigative units, marine units, dive team, animal
control units
Provides court building security
Houses inmates safely and with integrity
Ensures preparedness in emergency situations
Investigates drug cases and enforce drug laws
Operates 911 system for all emergency situations
Cost to Taxpayers
Expenditures for public safety activities amounted to $24.5 million in 2013. After adjustments
and excluding the revenue and expenditures associated with OCCDA, the net cost to taxpayers
(from the general operating levy) was $16.6 million. This means that 68% of public safety
expenses were supported through property taxes.
The revenues and expenditures for the OCCDA are excluded from this report, because the
Authority is a component unit and does its own financial reporting. It should be noted,
however, that the County accounts for the revenues and expenditures associated with tax
revenue raised through the voter-approved special millage.
26
Figure 15 shows that of the $16.6 million, nearly half (47%) went to law enforcement activities.
These include the various activities of the Sheriff’s Office (general law enforcement services),
Marine Safety, and Animal Control. Another 47% went to support the operations of the County
correctional facility. The remaining amount provided funding for WEMET, Community Policing
Contracts with local units of government and school districts, and Emergency Preparedness and
Response.
Figure 15. Net Cost to Taxpayers for Public Safety
WEMET**
4%
Emergency
Preparedness
2%
Law Enforcement
47%
Corrections
47%
Total = $16.6 million*
* Note: This does not include the special levy for Central Dispatch Authority (E-911).
** This only reflects the cost of the County’s contribution to WEMET.
Summary of Findings
Public safety is the County’s second largest activity following health and welfare. Because this is
such a large activity within County government, the County takes very seriously its
responsibility to ensure the safety of its citizens and their communities. It does this through
enforcing traffic laws, by housing inmates in the County’s correctional facility, and by
responding to and preparing for emergencies.
Community Policing Contracts
There has been some discussion regarding whether residents of cities and townships are doubly
taxed through the County tax for public safety services. The County currently provides
contracted services to 14 of 17 townships and two cities; Hudsonville and Coopersville (In 2014,
Ottawa County also began providing contracted services to the City of Ferrysburg and the
Village of Spring Lake). Cities and townships have the opportunity to discuss and consider
27
contracted community policing services from the County, thereby minimizing real or perceived
duplicated policing services/general law enforcement and potentially reducing such costs.
While the detailed provisions within contracts vary, the general idea is that local units and the
County share responsibility for covering the costs of delivering law enforcement services.
A basic level of service is available Countywide, including but not limited to such services as
patrol, K-9, marine, and detective services. The General Fund has historically provided funding
for 28 deputies, including 4 K-9 deputies, spread throughout four quadrants. These officers
provide 24-hour patrolling. The base staffing also includes WEMET officers (which will be
discussed later), captains, sergeants, detectives, clerks, and other support staff. Cities, village,
and townships benefit from K-9 and detective services.
If local units desire additional services, they can contract with the County. Under this
arrangement, the County and local units work together to determine an appropriate level of
service. In 2015, 60 Deputies and 8 Sergeants in the Sheriff’s Office are involved with these
contracts and paid for by local units.
In order to provide appropriate supervisory and administrative personnel and to control costs
for which the County is responsible, a formula is used to determine the amount of supervisory,
clerical, and investigative staff that is needed for a given number of law enforcement officers.
As has been said before, the County is responsible for the basic level of supervisory and
administrative staff needed to support the contracts.
The major benefit to local units comes in a reduction of costs. They are only responsible for
paying for the cost of delivering the “frontline” law enforcement services and, in some cases,
voluntarily supporting some or all of the cost of additional supervisory positions beyond those
included in the contracts. These arrangements allow units to forgo hiring their own
administrative and supervisory structure traditionally needed to maintain their own public
safety departments. In addition, local units’ costs can also be reduced by taking advantage of
the County’s purchasing power. The County can benefit from receiving discounts on large-scale
items that are typically not available to smaller units.
The County respects local units’ decisions to retain their own police departments; however, it is
willing to enter into discussions with interested units about potential contracts with the
Sheriff’s Office.
Law Enforcement
As was highlighted above, the General Fund supports a basic level of public safety services for
the entire County. Additional services are provided by local police departments or local unit
contracts with the Sheriff’s Office. It can be concluded that this base level benefits all who live
in, work in, or pass through Ottawa County.
28
WEMET
WEMET is a multijurisdictional drug enforcement task force, which consists of five teams and an
administrative unit responsible for investigations in Muskegon, Ottawa, and Allegan Counties.
The jurisdictions serviced by WEMET are Muskegon, Ottawa, and Allegan Counties.
Participating agencies are: Michigan State Police, Ottawa County Sheriff’s Department, Allegan
County Sheriff’s Department, Muskegon County Sheriff’s Department, Holland Police
Department, Muskegon Police Department, Norton Shores Police Department, and Grand
Haven Department of Public Safety.
Corrections
The County’s Correctional Facility (Jail) is the second largest public safety expense. It houses
offenders securely, keeping the general public safe and secure. The protection provided
through this facility benefits all citizens.
Emergency Response and Preparedness
The Emergency Management division of the Sheriff’s Office and OCCDA are combined under
this subheading. Emergencies are usually unexpected and require appropriate responses. In the
case of the OCCDA, dispatchers contact the proper emergency responders.
Responses to some emergencies can be planned ahead for, in the event that they do occur—for
example, the widespread flooding that occurred throughout the County in 2013. The
Emergency Management division undertakes this enormous task. While they cannot prepare
for every possible emergency, they have developed established procedures that provide
guidance in the event that a public safety response is needed. Citizens benefit from both of
these emergency services.
29
Health and We lfa re
Figure 16. Health and Welfare Entities
HEALTH AND WELFARE
Community
Action Agency
Administrative/
Epidemiology
Environmental
Health
Public
Health
Child Care
Fund
Clincal
Health
Community
Mental Health
Community
Health
Health
Promotion
Medical
Examiner
Table 11. Major Health and Welfare Services Provided, by Entity
MAJOR SERVICES PROVIDED
Community Mental Health
Public Health
Epidemiology Division
Clinical Division
Community Health Division
Health Promotion Division
Environmental Health Division
Community Action Agency
Circuit Court-Child Care Fund
Provides services to people with developmental
disabilities and/or serious mental illness
Analyzes disease in order to control their course and
protect the community
Prepares for public health emergencies
Provides family planning, communicable disease, and
immunizations
Provides support, education, and prevention programs
to families, children, and pregnant women
Educates and encourages citizens to make healthy
choices
Identifies, responds and eliminates, and prevents risks
to human health and safety
Inspects various establishments for potential risks
Assists individuals and families who struggle with
financial self-sufficiency
Provides programming for minors in delinquent and/or
neglect/abuse cases
30
Cost to Taxpayers
Health and welfare expenditures amounted to $63.3 million in 2013. After adjustments, the net
cost to taxpayers was $6.3 million. This means that 10% of the cost of undertaking health and
welfare-related activities was supported through property taxes.
Summary of Findings
Health and welfare is the County’s largest functional expense. These activities are heavily
dependent upon intergovernmental revenue for their continued operations. For example,
intergovernmental revenue (particularly Medicaid) and charges for services provide a majority
of the funding for Public Health and Community Mental Health.
The General Fund directly supports the activities of the Substance Abuse department, the
Medical Examiner, and Veterans’ Affairs. Revenue from the State’s Convention Facility
Development Tax fully funds the Substance Abuse program.
Transfers from the General Fund are also made to other special revenue funds that support
health and welfare-related activities. Public Health annually receives a large transfer, but
Community Mental Health (CMH) also received a small transfer. The transfer to Public Health
amounted to $3.56 million in 2013. CMH received a transfer in the amount of $593,000.
Because almost 43% of funding for Public Health comes from the General Fund, it is worth
stating that most services provided are accessible to all citizens. For example, the Department
provides immunization services, food service inspections, hearing and vision screenings for
students, well and septic services, and various programs aimed at improving and ensuring each
County resident’s health and well-being.
Most funding for services to specific population groups is provided through intergovernmental
revenue in the form of state assistance programs and Medicaid. Community Mental Health and
the Community Action Agency provide assistance to targeted, eligible recipients. The General
Fund provides only minimal support to Community Mental Health. In fact, only 1.5% of
expenditures in this agency were funded by a General Fund transfer.
For accounting purposes, expenditures from the Child Care Fund (CCF) are categorized as a
health and welfare activity. The fund receives almost an equal amount of revenue in the form
of a transfer from the General Fund and reimbursement from the State Child Care Fund. By law,
the state reimburses the County for 50% of all staff and program expenditures in the CCF. In
2013, the Child Care Fund received $3.8 million in support from the General Fund.
While the services provided by the Child Care Fund are only available to a specific population,
the County is legally obligated to provide financial support as required by State law and
Department of Human Services rules and regulations.
31
Community and Economic Development
Figure 17. Community and Economic Development Entities
COMMUNITY AND
ECONOMIC DEVELOPMENT
Planning and
Performance Improvement
Table 12. Major Community and Economic Development Services Provided
MAJOR SERVICES PROVIDED
Planning and Performance
Improvement
Responsible for analyzing and improving organizational
performance and maximizing the use of financial
resources
Obtains and processes federal and state grant awards
and allocations
Attracts new economic development into the County
Responsible for land-use planning
Cost to Taxpayers
Planning and Performance Improvement (also referred to as Planning and Performance)
activities are supported largely through the General Fund.
Community and Economic Development expenditures amounted to $705,000 in 2013. The net
cost to taxpayers was $600,000. This means that 85% of the department’s expenses were
supported through property taxes.
Summary of Findings
While citizens do not directly receive benefits from Planning and Performance, the department
plays an essential role in supporting and improving the operations of the County. The many and
varied services the department provides internally to other County departments help to
improve the operations and delivery of services to citizens. Planning and Performance plays an
essential role in wisely planning for the future. This in itself makes the department’s existence
valuable to all County residents.
32
Culture and
Recreation
Figure 18. Culture and Recreation Entities
CULTURE AND RECREATION
Parks and Recreation
Table 13. Major Culture and Recreation Services Provided
MAJOR SERVICES PROVIDED
Parks and Recreation
Acquires, develops, operates, and maintains the
County Parks and Open Space system
Provides natural resource-based recreation and
education opportunities
Cost to Taxpayers
Parks and Recreation activities are accounted for in the Parks and Recreation major special
revenue fund. This fund receives revenue from the voter-approved special levy for parks
operations. A large majority of Parks funding comes from property taxes, with the remaining
amount coming from intergovernmental revenue, charges for services (e.g. reservation and
park entrance fees), private donations, and other revenue.
Voters first approved a ten-year special millage in 1996 for Parks and Recreation activities.
Strong support in 2006 resulted in the levy being renewed for another ten years. The current
millage will expire in 2016.
Prior to the Commissioners’ decision in 2008 to discontinue support from the General Fund, the
County made an annual transfer of $530,000 to the Parks and Recreation fund. Since 2010, the
goal has been to have this fund rely entirely on sources other than the General Fund.
During times of buying and developing land, expenditures in the Parks and Recreation fund
generally exceed the revenues received by the department. The expectation is to fund this
deficit through means other than General Fund transfers. It should be emphasized that Parks
will not always engage in purchasing land. During these non-purchasing times, the only expense
will be park development and maintenance costs and a matching of revenues to expenses
within the Parks and Recreation Fund.
33
Parks and Recreation expenditures amounted to $3.1 million in 2013. The special levy raised
$2.94 million in revenue for operations and activities.
Summary of Findings
One of the County’s greatest assets is its natural resources. The County is known statewide for
its beautiful parks and abundant opportunities for recreation.
The Parks and Recreation department is in charge of overseeing the Park and Open Space
system. Their goal, as taken from their mission statement, is to “enhance [the] quality of life for
residents and visitors, by preserving parks and open spaces and providing natural resourcebased recreation and education opportunities.” It is also concerned with maintaining and
improving the County’s water quality, as exemplified in the Upper Macatawa Wetland
Restoration Project.
Regardless of whether citizens use them or not, County parks and open spaces benefit all
citizens. In addition to residents who visit and enjoy the beauty of the parks, thousands of nonresidents visit these parks each year, contributing to the local economy and supporting the
activities of the Parks and Recreation department through fees collected.
It can be concluded that the facilities, services, and activities that the Parks and Recreation
department provides are equally available to all residents if they choose to utilize them.
34
Other Governmental Functions
Keeping in mind that the County received $34.1 million in property tax revenue for general
operations, perceptive readers will notice that the cost to taxpayers of the governmental
functions discussed thus far falls short at $33.45 million. The difference that has not yet been
accounted for is equal to $650,000. The following information will explain where this amount
was expended.
Public Works
One of the major governmental functions that have not yet been described is that of public
works. Total expenditures amounted to $916,000 in 2013. General Fund expenses amounted to
$347,000, which went to support the maintenance and repair of drains throughout the County.
After adjustments, the net cost to taxpayers was $311,000. This means that 34% of public
works expenditures were supported through property taxes.
Other
General liability insurance cost the County $130,000 from the General Fund. This reflects those
insurance costs not directly applied to departments. The net cost to taxpayers was $116,000.
Fund Balance
The remaining amount ($223,000) is attributable to the net change in the General Fund
balance. The fund balance is used to help finance County activities when other sources of
funding are reduced, as was experienced during the Great Recession of 2008-2009, or to
finance one-time expenditures such as capital construction or improvement projects (i.e. nonoperational costs).
A healthy fund balance helps preserve County operations in the midst of economic challenges
and subsequent decreased revenue by not having to reduce the quality or quantity of services
delivered to citizens. The continued General Fund surplus that the County experiences year
after year is the result of conservative budgeting, in which those responsible for budgeting pay
close attention to the costs their departments are incurring. Fiscal conservatism is a significant
feature of the Ottawa County culture, and the County as an organization is committed to
maintaining and improving its strong financial position through prudent budgeting and fiscal
practices (2015 Ottawa County Business Plan, Goal 1).
Summary
Table 14 totals all “net cost to taxpayer” amounts reported in the previous pages. Readers will
notice that this estimation ($34,063,000) is almost identical to the amount collected
($34,062,688) by the County through the general property tax levy.
35
From this data, we can conclude that over three-quarters (83%) of the amount of taxes
collected for general operations ($34.1 million) in 2013 was associated with the public safety,
health and welfare, and judicial activities of County government. This is expected, as these are
the major responsibilities of County governments statewide.
Table 14. Reconciliation of Tax Revenue and Net Taxpayer Cost, by Governmental Activity
Function
Total Tax Dollars
Legislative
Judicial
General Government
Public Safety
Health and Welfare
Community and Economic Development
Public Works
Insurance
Fund Balance
TOTAL
$
$
$
$
$
$
$
$
$
$
*Note: Figures are estimated and rounded.
36
354,000
6,060,000
3,500,000
16,200,000
6,195,000
630,000
311,000
130,000
683,000
34,063,000
% of Total
1.0%
17.8%
10.3%
47.6%
18.2%
1.8%
0.9%
0.4%
2.0%
100.0%
IX.
CONCLUSION
The Board of Commissioners is committed to maintaining and increasing communication with
citizens. Whereas property taxes provide a substantial amount of funding to the County and
because the Board places high importance on good stewardship of public money, this report
has been created and issued to provide local unit officials and citizens an analysis of how their
tax dollars support County government.
Sections 2 and 3 of this report provide basic information about the property tax system and
how the County compares with other counties and how cities and townships compare with one
another. Property taxes are one of the most important revenue sources for local governments.
In Ottawa County alone in 2014, an estimated $338 million was levied to support the County,
local units (cities, villages, and townships), schools, and other taxing authorities.
The County receives only 13% of what a taxpayer pays in property taxes on average.
Furthermore, this amount includes a special levy for the Central Dispatch Authority and Parks
and Recreation. The remaining amount supports the general operations of the County. This
report focuses exclusively on this figure, which amounted to $34.1 million in 2013.
It is worth highlighting that Ottawa County has the lowest operating levy in comparison to
neighboring counties and counties of similar size throughout the state. Additionally, the County
also has the fifth lowest operating millage in the State. For the past 18 years, the County has
levied less than its allowed maximum. This has resulted in a savings to taxpayers each year.
Section 4 through 6 offers basic information about the County’s funding structure. Property
taxes provide funding for less than one-third of all governmental fund revenue, with
intergovernmental revenue providing a majority of the funding. In 2013, total revenue for
governmental funds amounted to $129 million. Most expenditures were associated with health
and welfare, public safety, general government, and judicial activities.
The General Fund, which is the County’s chief operating fund and a governmental fund, is
supported largely (64%) through property taxes. Public safety, general government, and judicial
activities are its largest expenditures. In 2013, the General Fund received $59.5 million in
revenue and expended $59.3 million, increasing the fund balance by $223,000.
Special revenue funds have been set up to support the activities of Public Health, Community
Mental Health, Parks and Recreation, and others. These funds do not receive tax revenue but
often do receive transfers from the General Fund.
The impetus behind this report has been to look at the value or benefit in services citizens
receive relative to the taxes raised. Of course, the term “benefit” can have many meanings.
Section 7 looked at different types of benefits (observed vs. unobserved, actual vs. potential,
and direct vs. indirect).
37
Section 8 begins by briefly explaining the methodology used in this report and then moves into
a discussion about the net cost and benefits to taxpayers according to government functions.
Many of the services provided by the County are accessible to all citizens. Some departments
and agencies provide direct services to citizens, while others provide support for the County’s
organizational infrastructure, thus allowing those entities that do interact with citizens to
provide their services well. Some agencies only offer services to eligible populations, yet receive
some funding from the County. Overall, this has historically been limited and County funds only
provide a small portion of these agencies’ total revenue.
With respect to public safety, discussions about the perceived duplicity of services in some
communities have been common for years now. Some local units have voluntarily entered into
partnerships with the County in the form of community policing contracts. These units pay for
“frontline” law enforcement services, as well as any additional supervisory staff they request
beyond what is provided for by the County. The only expenses associated with these contracts,
for which the County is responsible, are the personnel costs for supervisory and administrative
staff.
These community policing contracts provide positive benefits for and create strong,
cooperative partnerships between the County and local units. Ottawa County is willing to enter
into a discussion with local units that might be interested in receiving these types of contracted
services.
A key figure mentioned in various locations throughout this report is the amount raised in
property taxes for the general operations of the County ($34.1 million). At the end of Section 8,
Table 14 provides an estimate of how taxpayer dollars were used according to governmental
function. As expected, public safety, health and welfare, and judicial activities composed almost
three-quarters (77%) of this net cost amount.
In conclusion, most services provided by the County are universally accessible. Citizens may not
always observe, utilize, or directly benefit from the services that the County provides, but they
are there in the event that they are needed.
This report has sought to provide an accurate analysis of how the County uses property tax
revenue. The County hopes that this has been an informative guide to its general operations. It
will continue in its commitment to be good stewards of and transparent with the financial
resources with which citizens have entrusted it.
38
X.
APPENDIX
Legislative
General Fund (1010) Expenditures
Transfers Out (from General Fund)
Total Expenditures
(395,483)
(395,483)
General Fund (1010) Revenue
Less: Taxes
Less: Revenue Sharing
Add (Less):
Attributable (Non-Attributable)
Revenue
Adjustments
General Fund (1010) Revenue
(without Taxes)
Net Remaining
Percent (%) of Net Remaining
Public
Safety
Public
Works
(347,456)
(347,456)
Health and
Welfare
Community and
Economic
Development
(695,298)
(7,971,898)
(8,667,196)
(703,272)
(703,272)
1,770,807
-
35,830
-
-
Other
Subtotal
(15,408,992)
(15,408,992)
(20,398,744)
(459,657)
(20,858,401)
(130,386)
(40,000)
(170,386)
(50,198,919)
(9,374,769)
(59,573,688)
-
4,483,968
-
51,536,934
(34,062,835)
(3,750,000)
5,988,522
(4,068,889)
-
-
-
1,755,400
(2,308,800)
553,400
-
-
-
-
-
1,755,400
(40,121,635)
(3,515,489)
-
-
-
-
-
6,239,368
11,415,299
2,473,033
-
1,770,807
35,830
-
(6,783,134)
18.0%
(3,993,693)
10.6%
(18,385,368)
48.8%
(347,456)
0.9%
(6,896,389)
18.3%
(667,442)
1.8%
(170,386)
0.5%
(37,639,351)
684,697
(6,098,437)
403,128
(3,590,565)
1,855,839
(16,529,529)
35,073
(312,383)
696,129
(6,200,260)
67,372
(600,070)
17,199
(153,187)
3,799,356
(33,839,995)
63,816,061
(38,131,724)
(3,750,000)
-
21,934,337
3,750,000
49,356
3,799,356
Add: Distribution of
Revenue Sharing and
Excess Funds
Total Remaining
NET COST TO TAXPAYER
General
Government
(12,119,288)
(903,214)
(13,022,502)
(395,483)
1.1%
State Revenue Sharing (estimated)
Transfers into General Fund
Total Available for Distribution
Judicial
39,920
(355,563)
$
355,563 $
6,098,437
$
3,590,565
$ 16,529,529 $ 312,383 $ 6,200,260 $
600,070
$
153,187 $
33,839,995
Add: Fund
$
Balance Change
222,693
Total
39
$
34,062,688