Tuesday Night—The Fat Lady Sings

As you read in the Free Lance Star, http://fredericksburg.com/News/FLS/2009/062009/06102009/472358, at the last Council meeting it was agreed to consider increasing the meals tax 1% instead of placing the entire tax burden on the real estate tax rate. The reasons for this recommendation have been covered in the previous posts. The vote on the rate was put off to give staff the opportunity to review the meals tax revenue projections and come back with recommendation to reduce the budget a further $100,000.00 to balance the budget.

In a staff memo later in the week a recommendation was submitted to, “Close the $100,000 gap with several relatively minor revenue and expenditure adjustments.” They included:

1. $30,000.00 savings from the Economic Director’s salary as it was not realistic to expect to fill that position until October.

2. $10,000.00 reduction in the Unemployment Reserve to $30,000.00 that the staff felt still left us with an adequate reserve.

3. $60,000.00 increase in revenue from the Business License Tax based on a “significant increase” in revenue from the spring projections.

None of these recommendations are contrary to the Council majority view that no further adjustments are made to the operating budget. Yet, Councilman Solley requested, and Councilwoman Greenlaw concurred, that a budget proposal also be considered setting the tax rate at 68.5 cents with no adjustments made to the budget. This scenario resulted in a surplus of $70,000.00. Added to the additional revenue projected from the Business License tax would bring the surplus to $130,000 which staff recommend be use to reduce the amount of reserve used to balance the budget.

I support staff’s effort to reduce the use of reserve, as all indications are that the economy is going to continue its downward trend. In addition to what has previously been posted on this point a recent story in the Free Lance Star, http://fredericksburg.com/News/FLS/2009/062009/06162009/473673 (Virginia Reports Drop in Revenue) shows state revenues still not meeting projections and more cuts in the state budget may be coming in August. Based on the state’s past track record localities can expect further reductions in state support.

However, I still have an issue with the majority view on Council that the current budget, which the 68.5cent rate supports, can be justified under the current economic downturn. My response to the last staff memo follows:

Good Morning All,

I have no problem with what staff has proposed to get to the 68 cent tax rate. Enclosed is a breakdown of additional savings totaling $68,860. I would suggest that these funds be either:

1. Redirected to human services.
2. Saved.
3. Used to start-up a fund to assist groups and organizations that have a specific proposal, some funding raised on their own, and consider some form of dollar match.

-Matt-

Bluemont—This is one of those groups that should be supported by the community; or we should consider setting up some sort of matching program putting them in the position of
raising some funding locally on there own.. Under the current financial constraints this is hard to justify as a core expense. ................................$5,000.00

DRMI—Based on numerous discussions there seems agreement that DRMI needs to put some resources on the table which the city should consider matching. This is not a core service.
........................................................................................$2,000.00

Heritage Festival—See Bluemont. .......................$ 4,000.00

Sister City—See Bluemont. .....................................$ 2,500.00

SPCA--$10,000.00 is for the Capital Campaign for the new facility. The SPCA does provide a service to the city in dealing with stray dogs and cats. However, deferring the payment this year
should not present a significant burden. The balance of $5,000 remains......$10,000.00

F’burg Arts Commission—As I understand it $5,000.00 of this budget is a state grant. This is another organization which needs to do some fund raising and the city consider matching that effort instead of just putting money on the table.................$ 4,500.00

FRA—If the EDA wishes to keep funding this organization, as was the
case last year, that is were there funding should come.......$11,110.00

Fburg Vol. Fire—The city currently pays the insurance for this organization to the amount of $7,500.00. At this point it the service to the Fire Department is not extensive. We all hope with the new program at JM this may change. Recommend 50% reduction..$ 5,000.00

Fburg Areas Museum—I have talk with reps of this organization and offered to consider matching their efforts to acquire operational funding. Recommend an additional $10,000.00 cut. ............................................................$10,000.00

Germanna CC—With the magnitude of state cuts why are we supporting a state institution?
............................................................$ 5,750.00

TOTAL SAVINGS...................$59,860.00

I agree with Councilman Ellis that there are probably other areas where savings can be found but the debate on the budget ended over a month ago when the Council majority advised staff that they would not consider further reductions. Since that decision was made the economic picture has continued to change, mostly for the worse, but there has still been no interest to consider further adjustments beyond shifting some of the tax burden to the meals tax. What has been proposed is another Council retreat later in the year to begin discussions on next years budget. With only a few days before the budget has to be passed the debate is over beyond the possibility of some peripheral changes as outlined above.

Under the current economic conditions leaving some flexibility in the budget is probably prudent. To cut it back further with the possibility of further state cuts, and the continued downturn in the economy, could lead to some painful mid budget/service cuts. Then there is the fact that we are already faced with some tough choices next year starting with the budget just over a million in the hole. If we take every opportunity to save over the coming year, and there is any improvement in the revenue picture, hopefully we will be able to reduce that deficit.

However, under the current economic conditions we can only justified asking residents and business to support core services.

How did you view this years budget process?