A slight increase to the Leesburg tax rate will be needed to keep up with service level expectations and proper fiscal planning.
That was the message delivered by Town Manager Kaj Dentler to the Leesburg Town Council Tuesday night, as he presented the initial fiscal year 2017 budget. The town operates with a biannual budget and this year’s spending plan is considered a “budget by exception,” with much of the fiscal picture and plan laid out last year.
In total, Dentler’s initial budget breakdown has $55 million total in expenditures and debt service pegged for the General Fund; $1.7 million in the Capital Asset Replacement Fund; $13 million in the Capital Fund; and $21 million in the Utility Fund. The town is also anticipating $3.3 million in funding from the Northern Virginia Transit Authority to pay for transportation projects in Leesburg. The total budget is a 4 percent decrease from the current fiscal year’s budget.
A major headline is a 43 percent increase in General Fund debt service, thanks to the “fiscal cliff” created when putting together the FY11 budget. That year, town staff restructured $2.4 million in debt and in anticipation of this increase, the town has set aside funds in a Debt Service Reserve in order to avoid increasing taxes in FY17 and subsequent years. At one time, a 5-cent future tax rate increase phased over a three-year period was possible if appropriate reserves had not been set aside. The increased debt service costs will be funded with the accumulated funds in the Debt Service Reserve.
One significant change between last year’s FY16 budget adoption and putting together this year’s FY17 budget is an 18 percent savings in the town’s health insurance and other post-employment benefit costs. In addition to issuing a request for bids for the town’s health insurance contract, town management actively pursued other options, resulting in the expected decrease. The savings will be used to provide cash funding for Capital Projects management costs and to absorb some of the operational cost increases in Public Works and Information Technology.
Leesburg homeowners can expect a small increase in the average tax bill, which Dentler estimates to be at about 2 percent. Single-family home assessments were down 0.8 percent; townhouse assessments were up 0.9 percent; and condominiums were down 1.3 percent. Commercial properties in town saw an average assessment increase of 2.32 percent. In Leesburg, 30 percent of commercial properties are tax-exempt. This proportion includes schools, government buildings and the Federal Aviation Administration, to name a few.
Dentler is proposing a real estate tax rate of 18.72 cents per $100 of assessed value, which adds together the equalized tax rate of 18.6 cents plus 0.12 cents to account for inflation. Dentler noted that this is the first time that the proposed tax rate includes an inflation factor, and he said he decided to include this to better account for operating costs. While the budget over the past few years has stayed fairly level, Leesburg has added a significant amount of new or wider roads, as well as more rooftops, and town services have had to keep up with this demand.
“We have 50 lane miles more than we did 10 years ago but the same number of [staff] and equipment. The same dollars too,” he said.
In another example, Dentler noted that the cost of providing biweekly trash service to Leesburg residences has risen by $200,000 in the past year alone.
Dentler recommended that the council advertise a tax rate of 19.72 cents to provide more flexibility in what tax rate can be adopted. The council can still adopt a lower tax rate than is advertised, but not one higher than what is advertised.
Dentler is proposing 3 percent pay-for-performance raises for selected full- and part-time town employees, but no cost-of-living adjustments for any employees. For the first time in many years he is also proposing the addition of one full-time staff position—a network administrator to keep up with the growing IT demands in Town Hall. This would replace a contractual position and should end up saving the town about $50,000 a year. Other notable expenses include $60,000 earmarked for downtown initiatives, including marketing the Arts and Cultural District and creating a regular “energy” in the downtown area to attract residents and visitors. Dentler is also proposing to outfit the Leesburg Police Department with new in-car cameras as well as body cameras for each patrol officer. He is also eying the creation of a youth leadership academy run through the police department which will be geared toward teens between the ages of 16 and 20.
A budget public hearing is planned for the council’s Tuesday, March 8, meeting. A half-day budget work session is tentatively planned for the morning of Saturday, March 12, with an additional mark-up session scheduled for the council’s Monday, April 11, work session. That night will also have a public hearing for the tax rate as well as its potential adoption. The town budget and Capital Improvements Plan is expected to be adopted at the council’s Tuesday, April 12 meeting.