THE BUDGET--What Else

Here is the e-mail I sent out yesterday to staff and Council members which provides a little more detail on today's FLS story on the budget http://fredericksburg.com/News/FLS/2009/042009/04082009/457892--

Good Afternoon All,

At our last work session on the budget council members expressed support for more money for the schools. There were also comments on City employee salaries and Outside Agencies. To do all this would add significantly to the operating budget. We are already dipping heavily into our Undesignated Reserves just to meet the current budget and are still looking at a tax increase of at least three cents.

As I have said many times (an no doubt you are tired of hearing about it) we have the lowest median income in the region and the highest number of residents on fixed incomes. While they may not own their homes any real estate tax increase is passed on in rents and the cost of goods and services. Today, we all know of people facing pay cuts and possible job loss. In addition, due to the crash of the markets people who once thought they had a secured source of income have seen the value of their investments, and income, decline. Under these circumstances, and the fact that we are still facing the cost of a new court facility within the next two years, raising the real estate tax beyond staff’s recommendation is difficult to justify.

However, understanding the current dynamic on Council I would like to propose the following:

1. A half-cent increase in the meals tax added with some of the saving identified in the budget should cover the $300,000 to restore employee’s salaries.The meals tax is on disposable income and spreads the pain to both residents (homeowners and renters) and visitors to the area. The small increase should not have a negative impact on visitation to our restaurants. I’ve also chatted with staff and made sure that the amount to be included in the budget takes into consideration the current economy.

2. In regard to the schools we have designated reserves for schools and the regional jail totaling $400,000.00. I would propose using a portion of these funds, not to exceed what we put towards employee’s salaries, for the schools.As staff will point out this is using one-time funds for operating expenses. In this case we are trying to maintain funding and not expanding operating expenses. What this does is put off the day of reckoning for a year. But it also gives City taxpayers a small breathing space also. I would be remiss to remind some that next year they will be facing re-election.

In looking at the lodging tax the return would not be significant at one-half or one percent and staff does have a concern that an increase now would affect business.

In regard to Outside Agencies I would point out that all were advised a year ago that this was going to be a tough year. In looking over this budget I do see opportunities to better prioritize the expenditures with existing funds.

Below is the link to the budget on the City's new website:http://www.fredericksburgva.gov/Departments/CityManager/index.aspx?id=769

A lot of people have commented on waste and overspending in the budget. Here is your opportunity to identify that waste and or recommend cuts, or just make an observation that you think is important.