Thoughts on the FY 20-21 Budget

budgetCouncil was given the FY 20-21 Budget from the City Manager, which was revised to reflect the budgetary impacts of COVID-19. Like other communities across the Commonwealth and the nation, our city is faced with a very complex balancing of needs and services. And like many of our residents’ own households, it appears that some difficult choices must be made.

According to our City Manager, the guiding principles of this revised proposed budget is to maintain the current level of service with the least amount of disruption, which means that all new initiatives are proposed to be either eliminated or delayed, some existing programs are proposed to be delayed and there is a targeted reduction of existing positions. There is also much uncertainty surrounding both the short- and long-term economic impacts, so the newest budgetary revision requires some flexibility. In an effort to provide our residents with relief during this unprecedented budgetary situation, City Council has already approved the elimination of penalties and interest for all late payments for real estate taxes and personal property taxes through August 1 and a two-month meal tax holiday for the months of May and June.

The original version, which was released before the response to the outbreak was fully-realized, did not feature a tax increase, and the most recent revision does not include any major tax increases either. However, there are some proposed fee increases; the Stormwater ERU fee increases from 49.3 cents per day to 52.8 cents per day (which is part of a six-year funding plan previously approved by City Council) and annual increases in rec center fees.

Of course, revenue for the City will be impacted by the effects of COVID-19. The City is anticipating a loss in revenue of $67.3 million, so to maintain a balanced budget, the appropriations in the newly revised proposed budget must be either reduced or replaced by alternative funding sources. In addition to reductions in some previously approved programs and an emphasis on deferring or eliminating new initiatives, the City Manager is also proposing no compensation increases. The revised proposed budget estimates that the economic effects will be longer lasting locally, with a “gradual return to normal” occurring over the next several months to December.

These are the City Manager’s revisions to the originally proposed budget:

  • Among the impacts in the Current Operating Budget include 30 full-time employee positions in the Current Operating Budget.
  • Reductions in originally proposed CIP Budget include 17th Street improvements, Strategic Growth Area projects, City software upgrade and replacement plan, rural road recurring flooding, landfill capping, fire apparatuses.
  • Deferrals in New Operating Budget initiatives include 20 full-time employee positions for Hillard-Heintze recommendations and Disparity Study recommendations.
  • Deferrals in New CIP initiatives include Hillard-Heintze CIP recommendations and eliminate the Southern Rivers watershed site acquisition.
  • New Operating Budget initiatives eliminated include 35 full-time employee positions.

The General Fund overall is reducing 30 existing vacancies and 55.83 new positions, and 7 new positions for the TIP Fund from the originally proposed budget. With a reduction in $10 million of State revenue for renovating Buildings 1, 2 and 11 at the Municipal Center, the City Manager is proposing to swap revenue sources with Public Facility Revenue Bonds. With a State Recordation Tax Revenue loss of $1.9 million, the City Manager is proposing an offset in reduction in payment to HRT.

Facing a loss of $20.4 million when compared to revenues shared with Schools in the original budget, the School Board has been recommended by the City Manager to provide their reconciled budget at the April 28 City Council meeting. City Staff will monitor revenue collections on a monthly basis, and if adjustments for appropriations occur, we will be provided recommendations to realign budgetary decisions.

Moving forward, I will be reviewing the originally proposed budget and the revised proposed budget and will be making my own recommendations. My goal will be to create recommendations that will best improve our city and best serve families struggling during this time. Please let me know your thoughts on the budget changes; City Council-members will now have the opportunity to suggest changes to the City Manager’s revised proposed budget. In compliance with social distancing and limiting gatherings of groups, there will be virtual public hearings on April 22 and 28 (residents wishing to make comments during the meetings must register for WebEx and register with the City Clerk’s Office by calling 757-385-4303 or via email at abarnes@vbgov.com). Of course, you can always share your insight with us by emailing citycouncil@vbgov.com. You can also check out the proposed budget and amendments at www.VBgov.com/budget.

Hopefully, with the adjusted components of the newest revised proposed budget, the City is positioning itself to be balanced and flexible for the economic uncertainty over what is likely to be the next several months, but I am eager for your insight as I make my own recommendations. I look forward to hearing from you before our May 12 meeting to adopt the budget.

I hope everyone is doing their best to stay safe and look out for one another. If you have any questions or concerns, please let me know.

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