The City of Charlottesville has officially kicked off its budget season now that the
staff’s recommended guidelines
for how the budget will be shaped. Budget Director Leslie Beauregard
presented an overview of the process
and shared the latest financial forecast with Council at their meeting on November 17, 2008.
Listen using player above or download the podcast:
Beauregard reported that City is still expecting to see an increase in revenue collection through FY2014, though the rate of growth is much slower than in recent years. However, Beauregard says revenues are not increasing enough to cover the increasing cost of local government services. The City is still trying to fill a
$1.78 million shortfall for the current fiscal year
, but will have a clearer picture by the end of the calendar year of how much revenue will be generated by real estate taxes. Other City taxes on meals and lodging, sales and BPOL are also declining in growth. Beauregard warned that Governor Tim Kaine might make further cuts to the state aid to local government program in the current fiscal years’ budget.
“As of right now, we’re looking at 1% growth on residential and commercial, which is dramatically less than what we’ve seen in past years which has been double-digits,” Beauregard said. Staff had anticipated a 4% increase. Beauregard said the City is not anticipating revenue trends to increase for the next five years.
“Revenues have dropped dramatically and we don’t see this turning around any time soon,” she said. She said a “revenue team” of City budget officials is meeting every month to review the data, more frequently in the previous year. Beauregard said the City is saving money by delaying capital projects, canceling a planned launch of ambulance services, freezing 13 positions, and by not granting market salary adjustments. She said City agencies are conserving between 11% and 18% of their normal energy consumption.
With the general threat of further revenue reductions, Beauregard sought Council’s input on how the City can meet its mandated requirement of adopting a balanced budget for FY2010, which begins on July 1, 2009. Beauregard said the budget process is clouded by an incomplete revenue picture as well as uncertainty over what programs will need to be cut to balance FY2009. Staff has already put together a draft Capital Improvement Budget which will be heard by the Planning Commission at a work session on November 25, 2008.
“What we have presented is a dramatically cut CIP with no new projects funded,” Beauregard said. For the operating budget, departments are being asked to submit flat budgets as well as 10% reduction plans. Departments cannot make any new requests for funding unless they can find their own revenue or unless the request is offset by equivalent cuts. Both the City and the County have sent letters to outside agencies telling them not to submit requests for new funding in the next fiscal year.
Beauregard listed 15 guidelines for how the FY2010 budget will be put together, and here are some of them:
Councilor Satyendra Huja said he would like to see at least some of the $18 million from County revenue sharing go to pay for CIP projects and one-time expenditures. O’Connell said staff suggests putting into a reserve because of the uncertain revenue picture.
“Our sense is with the revenue sharing money we would be able to set that aside and you could look at it year-by-year,” O’Connell said. He suggested Council consider building a large reserve to weather the current and future downturns.
Councilor David Brown said it was important that Council not sacrifice maintenance needs to balance the budget. “We need to look hard at making sure we don’t fall further behind on critical capital needs,” Brown said. O’Connell said the budget would be developed based on priorities given to staff at Council’s retreat. He pointed out that the second priority was “Repairing Aging Infrastructure.”
“What we’re going to try to protect are things that are major maintenance kinds of items,” O’Connell said. “One of the things we did while the economy was really good was invest in major buildings and major facilities that had not gotten attention over time… Part of the suggestion as we move into next year’s budget is to slow down some of those major investments.”
The City’s current budget is nearly $127.3 million for operations in FY2009, an increase of 4.27% over the previous year. That includes nearly $7.7 million in County revenue sharing. The remaining amount was transferred to the CIP Fund ($3.9 million), Charlottesville housing fund ($900,000), the Facilities Repair Fund ($550,000) and the Equipment Replacement Fund ($584,950).
Citizens will have many opportunities to give their opinions on how next year’s budget should be shaped. In addition to numerous work sessions and public hearings, the City is conducting an online budget survey. On February 11, 2009, the budget will be released by the City Manager’s Office. It will be formally presented to City Council on March 2, 2009 followed by a series of work sessions before being adopted in a special meeting on April 14, 2009.