If early estimates received by city council at a budget work session on Monday evening are correct, Waynesboro could be facing a budget shortfall of more than $4 million in fiscal year 2021.
City manager Mike Hamp told council members that the “two big ideas” are strategies to contend with revenue shortfalls in the current fiscal year and create a balanced budget for the next.
“The strategies required in both cases are severe and they will be perceptible to our residents, our customers, our organization and to our employees,” said Hamp. “There’s no way around it as we see the magnitude and the substance of the challenge in front of us for this fiscal year and the next.”
In a presentation by deputy city manager Jim Shaw, the city projects COVID-19 related revenue shortfalls to total $1,936,000 in the current fiscal year. Of that shortfall, meals comprise $1.2 million, lodging accounts for $236,000 and sales make up $500,000.
“I think everyone recognizes that the coronavirus-related shutdowns are going to have an impact on local governments’ budgets. It’s having an impact on local and state and even national and global economies,” Shaw said.
To combat the projected revenue losses in FY20, the city has already implemented a spending freeze for non-essential expenditures, froze hiring on all positions unless approved by the city manager and implemented furloughs on some full- and part-time employees.
In addition, the city plans to defer a planned transfer for the 2021 capital improvement plan in the amount of $960,000, decrease street paving by $650,000, and reduce departmental budgets including furloughs in the amount of $326,000.
The savings from the measures is expected to total $1,936,000 — the same amount Waynesboro anticipates losing in FY20.
Council was originally presented with a more than $53 million budget for fiscal year 2021. However, Shaw said with about 30% of the general fund consisting of meals, lodging and sales taxes there will be a “big impact” on the budget.
With a projected 2.5% loss in real property, 5% to personal property, 10% to local sales tax, 25% to business licenses, 25% on transient occupancy tax, another 25% to meals, and a 5% loss in all other revenues — the city is looking at a $4,060,000 shortfall in FY21. That would lower the next fiscal year’s budget to around $49 million.
To balance the budget in FY21, Shaw recommended council appropriate $500,000 from the revenue stabilization fund created by city councils in the past.
“That revenue stabilization fund is there in order to fill a budget shortfall if the council believes that this is a one-time and catastrophic event. The measure there is essentially that you don’t think this is something you would encounter in any typical budget year. In staff’s view, this is a legitimate use of the revenue stabilization fund,” he said.
In addition to using the fund, Shaw recommended deferring $1 million worth of capital that would include city projects like Sunset Park. Shaw also recommended eliminating the 3% merit raise for employees, saving $340,000, and reducing VDOT paving in the amount of $480,000. Lastly, Shaw proposed a $1,740,000 reduction in departmental budgets.
Since wages and benefits make up two-thirds of the general fund, Shaw said he didn’t “see how we will be able to avoid making some reduction in wages.” Shaw noted, however, that the city has considered several different options.
One of the ideas includes a one-day furlough for employees in the general fund. If public safety and public works were subject to that one-day furlough, the city would save $48,700. Without public safety and public works, savings amount to $25,500.
“I think that our preference would be that we not impact public safety delivery and certainly at least not those front-line employees,” Shaw said.
Another option for the city includes freezing open positions or holding positions when vacated. Currently, nine positions are vacant that total $522,956. Five of the nine positions are in public safety.
Lastly, Shaw said a “last resort” option could be a general workforce reduction. Some combination of options could be presented in the city’s final budget.
“We’re reacting very quickly to an unknown environment...it’s unknown how quickly we’ll get back to business as usual so to speak,” Shaw said. “Some of the things that we’re doing we’ll want to monitor and the data we have available to us to monitor is limited. We are just now receiving the meals tax receipts for the month of March. We won’t see sales tax receipts back from the state for March until mid-May. So, it takes some time for us to really even know exactly where we stand.”
If the city finds itself in the same state it is currently around September or October, Shaw said Waynesboro will have to make “more fundamental changes” in the way business is conducted. Staff is hoping for a more optimistic and “quick recovery,” Shaw noted, but “as we sit here today, I think we’re contemplating a more dire outcome.”
“It is a trying time, I think we said that at our first meeting out of the gate,” Waynesboro Mayor Terry Short said. “It is lead by example, and I think that we’re very confident in our staff’s ability to bring us some hard choices we need to make as a community, but are going to be necessary to weather this storm.”
Waynesboro will hold a budget public hearing on Thursday, May 7, at 7 p.m. The meeting will be held electronically and is viewable on government access television and the city’s YouTube channel.
To submit comments for the budget public hearing, citizens can email their name, home address and comments before 5 p.m. on May 7 to email@example.com. Comments also may be submitted online at www.waynesboro.va.us, or residents may call in the night of the meeting by dialing (844) 844-9200 and using access code 398145#.