Reworked city budget narrowly passes council by 5-4 vote

Richmond City Council held Monday’s meeting by teleconference. (Screenshot)

While it plans to revisit its budget numbers regularly in light of an evolving economic outlook, Richmond City Council has a blueprint in hand for how the city will face what’s expected to be its most turbulent fiscal year in decades.

Council on Monday voted 5-4 to adopt Mayor Levar Stoney’s revised budget plan for fiscal year 2021, which starts July 1. Members in opposition primarily took issue with the plan’s revenue projections, which some described as unrealistic in light of the economic impacts of the coronavirus pandemic.

Council member Kim Gray said the plan didn’t go far enough in terms of spending cuts in light of the pandemic’s impacts on local revenue sources, referring specifically to admissions, lodging and meals taxes.

“We know those industries have been devastated, and it’s going to take a lot more for them to be able to come back to 90 percent as this budget states,” Gray said, referring to revenue projections that the city’s budget writers based on an assumption of businesses returning to about 90 percent of their levels in mid-June.

City councilwoman Kimberly Gray

Gray, who is challenging Stoney in the mayoral election this fall, previously had dismissed that assumption as a best-case scenario, contending that the city should brace for tougher economic times. In Monday’s teleconferenced meeting, she and others argued that more time could be taken to tweak the budget before adoption was required.

“We are looking at dipping into reserves in our 2020 budget, and if that’s the case, I think that we need to acknowledge these devastating economic times go deeper than what’s being proposed,” Gray said.

Chris Hilbert, Kristen Larson and Reva Trammell joined Gray in voting against the budget, which was approved by majority vote. Andreas Addison, Michael Jones, Stephanie Lynch, Cynthia Newbille and Ellen Robertson supported the plan, with the understanding that it would be revisited regularly.

Contending that council members opposed to the plan had yet to propose specific cuts themselves, Jones said before the vote, “What are we going to cut? Are we going to cut jobs? Are we going to cut services? We’ve had ample time to do that.

“I believe the numbers are going to dictate what we do,” Jones said. “How many times do we go back? Is it death by 1,000 cuts, no pun intended?”

“This is not a one-and-done,” said Newbille, the council’s president. “This is an ongoing amendment process that we will have to be diligent about and strategic, and be informed in terms of any amendments that we put forth.”

Richmond City Hall. (BizSense file photo)

5 percent reduction

The approved budget is based on a general fund totaling $744.1 million, a decrease of about 5 percent from the $782.6 million general fund budget that Stoney initially proposed in March.

Most of that reduction reflects decreased projections in tax revenue, primarily from property taxes, including $17.3 million less from real estate taxes and $2 million less from personal property taxes.

Other local taxes also factor in the reduction, with the city expecting $5.5 million less in business license taxes, $1.9 million less in local sales taxes, and $4.7 million less in taxes on meals and prepared foods. Lodging and admissions tax projections are also less by $923,000 and $267,000, respectively.

Looking at meals taxes specifically, the adopted budget projects $41.99 million in total meals tax revenue in FY21 – $4.7 million less, or about 10 percent, than the $46.65 million projection in Stoney’s original proposal. Of that $41.99 million, $8.52 million would go specifically to fund school facilities.

Stoney’s original projection was just slightly higher than the $46.16 million in meals tax revenue that the city budgeted to receive in the current fiscal year. The previous year, FY19, the city collected $45.74 million in meals tax revenue, with $9.28 million of that going to schools.

Mayor Levar Stoney (BizSense file photo)

As of March 31, the end of the third quarter for FY20, the city had collected $30.13 million in meals tax and expected to receive $32.58 million, which would be a shortfall of about $13 million from what was projected in the current budget that the city recently amended in light of the pandemic.

In an email Tuesday, John Wack, the city’s finance director, said the adopted budget projections do not rely on all restaurants in the city to be operating at 90 percent by the start of the fiscal year.

He said the projections anticipate some pent-up demand for prepared food, rescheduled events from the spring that would produce meals tax revenue in FY21, and payment plans associated with a tax amnesty program that likewise would push revenues that would otherwise come this fiscal year into FY21.

Council adopted that tax amnesty program Monday, giving taxpayers until mid-August to pay real estate and personal property taxes without penalties or interest. The move is meant to give taxpayers more options in meeting other financial obligations in light of the pandemic.

Tax rate, staff levels maintained

The adopted FY21 budget maintains the current real estate tax rate of $1.20 per $100 of assessed value and retains proposed fee increases and new fees, save for a proposed utility rate increase that has been scrapped.

It scraps essentially all new funding that had been included in the initial proposal, including a 2 percent employee salary increase and other pay adjustments for police and fire personnel. It also cuts funding for new and currently vacant positions, but avoids any layoffs or furloughs.

The plan provides $181 million for the city’s public schools, about $5.7 million more than the $175 million in the current budget, but about $10 million less than what Stoney proposed in March, when he suggested a $16 million increase in school funding.

In a statement released during Monday’s meeting, Stoney described the budget as a work in progress in light of the economic unknowns that remain with the pandemic.

“This budget is not the budget we first proposed, nor is it the budget we wanted, but it’s the budget we have to live with in light of these most difficult and challenging times,” the statement said. “Amid the uncertainty of this pandemic, we must be prepared to make adjustments as we go, and we fully expect to do so in the coming months.”

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Steve Richmond
Steve Richmond
2 months ago

The article mentions, “a proposed utility rate increase that has been scrapped.” It is a well kept secret that utilities are a “cash cow” for the city. They creep up and creep up and creep up, generally unnoticed. But utility costs are about the most regressive form of “tax” one can imagine. Any candidate for mayor who advocates for reducing utility charges will go a long way toward getting my vote.