The City’s Budget Director, Leslie Beauregard, has briefed City Council on a projected $1.78 million deficit faced by the City as the fiscal year continues. Beauregard also let Council know what spending cuts are being implemented in order to stay within budget over the next ten months.
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Part of the shortfall is being caused by a half-million dollar reduction in state funding, a reduction Beauregard said the City
had been expecting even as the budget was adopted
. Those reductions will continue into FY2010, and affect state funding for constitutional officers, social services, and police officers. Since the budget was adopted, revenue estimates for the year have been lowered because of decreased real estate value and a decline in consumer spending.
“People aren’t shopping, they’re not staying in hotels, they’re not eating out as much,” Beauregard said. “Not only that, but everyone is feeling the pinch from the increase in utility costs and the increase in fuel costs.”
The largest source of revenue for the City comes from real estate taxes. Staff had projected a 4% increase in assessments this year, but Beauregard said the City is seeing a growth rate of only 1%. That trend will continue for the foreseeable future.
To save money this year, Beauregard said the City is hoping to reduce energy consumption by 20 percent across the board. A chart included in Council’s packet lists suggestions such as changing the maintenance schedule for the Parks and Recreation Department, requiring more City employees to work from home one day a week, and allowing zoning inspectors to travel in the field only 3 days a week. City staff will also be prevented from using individual space heaters at their desks. The Public Works Department will consider higher fares for the Charlottesville Transit Service.
“We’re taking action less than two months into the fiscal year,” Beauregard said. “While the economic outlook right now is a challenge, we shouldn’t look at it as doom and gloom but as an opportunity to make some improvements.”
Council also adopted a resolution written by the Virginia Municipal League condemning the way the General Assembly balanced its budget by cutting local aid.
Councilor Julian Taliaferro suggested holding a community work session with the County to find ways to make the area’s case for restoring the funding. “It’s creating hardships for many people in the community,” he said.
“I don’t think there’s a whole lot of fat and waste in our City budget but there certainly are ways we can be more efficient,” Mayor Dave Norris said.
City Manager Gary O’Connell said the challenge will be to continue maintaining services while dealing with the shortfall. He singled out Charlottesville Transit Service buses as one example of a service that may not be able to stay within budget.
“We talked in the last two budget years that a storm is coming,” O’Connell said. “Well, it’s come. The shift has occurred… I won’t be surprised in the next two or three weeks to hear about even more cuts at the local level.”
suggested switching to zero-based budgeting, wherein every expenditure is up for review each new cycle. O’Connell said that if the city were to do so, programs developed in the last few years would be “rethought.” He questioned whether that was worth the effort.
While Norris said he commended staff for looking to become more efficient, he said he would not support an increase in bus fares. “We have abundant evidence in this community… that reducing fares substantially increases ridership,” said the Mayor. Norris also said he was opposed to stopping the delivery of free recycling bins provided by the City.
O’Connell said that there would be lots of suggestions like that which would trigger debate. “Getting your feedback on those items will be important,” O’Connell said. He also said the Finance Department has generated a report listing various ways to raise revenue, something he said would be “the wrong approach.”
Beauregard will next appear before Council in November when she presents the long term forecast. That’s one of the first steps in developing the City’s budget for FY 2010.