Deficit looming: City hears grim fiscal prediction
Unless something dramatically changes, the City is on course for an ever-swelling deficit that could top $8 million a year by fiscal 2016. That's according to a grim presentation to City Council by City budget director Leslie Beauregard.
"The farther out we go, the wider the gap becomes," said Beauregard.
She noted that state funding appears flat and that Albemarle County's contributions to the City, via the so-called Revenue Sharing Agreement, will bottom out two years from now about three quarters of a million dollars below the current level of $18.5 million.
Another problem area is property taxes, which have fallen six percent below the current City budget. Despite the prospect of red ink, Beauregard doesn't appear to be feeling blue.
"Things are looking better than this time last year," said Beauregard. "We were pretty depressed this time last year."
Indeed, during last year's preliminary budget report, released two months before the announced retirement of former City Manager Gary O'Connell, the deficit was expected to swell much higher: to $11 million by 2015.
Further fueling optimism in Beauregard's Monday, November 15 presentation was the fact that meals and lodging taxes have actually climbed above projections.
"We were pleasantly surprised by these–- especially lodging," said Beauregard, noting that the tax on hotel rooms appears on track to finish Fiscal Year 2011 about 5.5 percent ahead of Fiscal 2010.
Council has scheduled a work session on December 2nd to discuss the budget. On December 14, the capital spending program will be the subject of a public hearing before the Planning Commission.
Virginia law doesn't actually allow localities to run deficits. The City will either need to raise taxes, cut spending–- or pray for a sudden uptick in the economy that might cause tax collections to spike.
In another fiscally disappointing glance at a crystal ball, the City watched a presentation on a federal mandate to reduce pollution flowing into the Chesapeake Bay. The TMDL, or Total Maximum Daily Load program of the Environmental Protection Agency, could cost Charlottesville as much as $15.6 million annually to comply. Council endorsed a letter by the City planning director, Jim Tolbert, calling the proposed regulations too onerous.
Tolbert's letter calls on the EPA to more aggressively pursue agricultural runoff before demanding that cities and developers retrofit their infrastructure.