Revenue-wise it was another banner year for the Town of Leesburg, thanks to rising residential and commercial assessments and increases in consumer taxes. But, Town Manager Kaj Dentler warns, the Town Council needs to be prepared should the tides turn in future years.
Dentler presented the proposed fiscal year 2019 budget to council members Tuesday night. The $125.7 million budget proposes modest increases across the three key funds that make it up—the General Fund, the Utility Fund and the Capital Fund. The General Fund, including debt service, is proposed to increase 3.3 percent, to $58 million; the Utility Fund is proposed at just under $27 million; and funding for both capital projects and the Capital Asset Replacement Fund total $14.7 million for the coming fiscal year.
The proposed budget comes in more than $18 million above the current fiscal year’s budget; however, the increase is largely attributable to the receipt of Northern Virginia Transportation Authority funding, which accounts for almost $13 million above 2018 levels.
Dentler has also proposed that council members hold the tax rate level at 18.4 cents per $100 of assessed value. That is above the equalized tax rate of 17.6 cents, which means property owners could expect a tax bill increase next year. Dentler warned the council against trying to lower the rate.
“The equalized rate doesn’t work for us,” he said. “The county can drop their real estate tax rate to the equalized rate, because their personal property taxes and [revenue from] data centers more than make up for that. We don’t have anything like that.”
Should the council adopt the 18.4-cent rate, it would mean small increases in the average tax bill across all three housing types: single-family home, townhouse and condominium. On average, homeowners would see an increase of $33.40 from calendar year 2017, or an additional $2.78 per month.
To reduce the proposed tax rate by a penny, the council would find $750,000 in budget cuts.
As he does annually, Dentler noted that the town’s proposed rate is below other nearby localities, including Purcellville, Herndon and Vienna, whose tax rates typically hover in the low- to mid-20s. Leesburg, he noted, has fewer municipal employees per capita, at one full-time employee per 148 residents, than its surrounding localities.
Switching into growth mode was another key theme drilled home by Dentler, and proposed staff increases play a role in that.
Dentler has proposed four new full-time positions in the General Fund alone, as well as adding two more full-time employees to the Water Pollution Control Facility.
The four positions in the General Fund total $372,000, including compensation and benefits. The positions include a construction inspector, to keep up with the pace of development in town; an administrative assistant in the Department of Plan Review; and two positions related to IT and cybersecurity. The latter two positions stem from recommendations made by the Technology and Communications Commission following a recent security risk assessment and aim to protect the county seat from cyber threats.
“If cybersecurity is going to be a top concern, we need to put some resources there,” Dentler said.
Staffing increases have been rare in recent years, ever since 26 employees were let go in the fiscal year 2012 budget following the recession. Between fiscal year 2011 and 2012, a total of 35 positions were eliminated at Town Hall. Only 10 have since been replaced, Dentler said.
“But the [town’s] population has continued to grow,” he emphasized.
Construction inspector was one of the positions let go in the lean years but, with the upturn in the economy, there’s a need to reinstate it. Dentler points to the current and coming residential construction to hammer home his point. More than 2,000 residential units are in the development pipeline, with more than 200 units alone expected to break ground this calendar year. Once the 2,000-plus units have been constructed, the town will reach a 95 percent build out threshold. On the commercial side, 1.7 million square feet is currently under development.
Increases in revenue from consumer taxes—like meals tax and Transit Occupancy Tax—have helped to keep the proposed real estate tax rate level, Dentler said. Meals tax alone accounted for $5.4 million, or 9 percent of total revenues, last year. Land development fees accounted for $1.25 million in town revenues.
While the town’s growth comes as a central theme of the budget, Leesburg’s infrastructure is also aging, Dentler said. He points to the Capital Asset Replacement Fund in particular as an area that may need further attention in upcoming years. Annually, the town allocates $1.6 million to replace or upgrade town infrastructure—such as replacing HV/AC units and upgrading floors. But the actual need is probably closer to $3 million annually, he said.
“We’re growing and we’re aging. We can’t forget both. The pressure on the tax rate is only going to increase,” Dentler said.
Other items in the proposed General Fund budget include average pay-for-performance increases for town staff of 3 percent; $20,000 to convert streetlights from mercury vapor to LED; $20,000 for a potential office lease for the airport remote tower, should the town not be able to find free space in a county facility; and the restoration of full funding to Visit Loudoun. Last year, council members cut funding to the county tourism body by $30,000, but Dentler wants to restore funding to the requested level of $95,000.
One conversation that will likely continue into next budget year is the deletion of funding for the town’s fire and rescue companies, the Leesburg Volunteer Fire Company and Loudoun County Volunteer Rescue Squad. Dentler has proposed $644,000 in total contributions to the two bodies for the next fiscal year, $520,000 of which is local funding. He said he has been in conversations with the two companies about discontinuing funding after the coming fiscal year and they are both in agreement because it would be made up by the county’s annual contribution to the fire-rescue organizations.
The six-year, $168 million Capital Improvements Program includes several new projects in the coming years. Twelve million dollars is proposed for the expansion of the Leesburg Police Department headquarters, with design work starting in fiscal year 2021; $3 million for the renovation of the Town Shop in fiscal year 2023; and storm drainage improvements on Liberty Street between Market and Loudoun streets, also in 2023.
During the next fiscal year, some big projects will wrap up or commence. The final phase of the Sycolin Road widening project will begin, as will utility relocation along Evergreen Mill Road. Design work for hangars on the north end of Leesburg Executive Airport will also begin.
With revenues up and a commitment to sound financial planning, there is much to be optimistic about in Leesburg, Dentler said. However, if the economy turns again, he says town staff is well prepared. He hopes council members will follow that thinking when debating any potential budget cuts or additions.
“We have a lot of growth in a positive situation, but you have to keep your eyes on the long term and remember our lessons from the past. We’re prepared now if the economy goes south,” he said.
The proposed budget can be accessed online at leesburgva.gov/budget. Budget adoption is tentatively slated for April 10, with public hearings planned for that evening as well as March 13. Council members were expected to vote Tuesday evening on an overall schedule for budget work sessions, public hearings and adoption.