Strong returns on consumer taxes in the Town of Leesburg likely means there will be no tax rate increase for fiscal year 2021.
Town Manager Kaj Dentler presented his proposed $143 million budget to the Town Council Tuesday night. Although a year ago he advocated for—but did not get—a 1-cent tax rate increase, for Fiscal Year 2021, Dentler is recommending the council base the budget on the current rate of 18.4-cents per $100 of assessed value.Personal property taxes are also proposed to remain flat.He pointed to continued increases in consumer taxes, namely meals and beverage taxes, sales and use taxes, which now account for more revenue in the General Fund budget than real estate taxes. Assessments are also up 3.6 percent across town, with each class of residential unit in town increasing in value by an average of $20,000.
If adopted, keeping the tax rate level will mean slight increases to the average residential tax bill. Single-family homeowners would pay an average of $6.58 more monthly; townhome owners an additional $3 per month; and condominium owners $2.25 more, according to town figures.
Should the council wish to trim the budget to the equalized tax rate—where the average tax bill would remain flat—of 17.5 cents, $755,000 would need to be cut from the budget.
Despite the positive indicators on property values and consumer taxes, Dentler and the town’s finance staff attributed the largely conservative budget to being cautious about relying too much on consumer taxes and planning for the next economic downturn. Clark Case, director of Administrative & Finance Services, explained that consumer taxes drop much more dramatically during an economic downturn, and with little warning, compared with real estate taxes, which usually take a year and a half to two years to see the impact. Dentler said the town staff also is waiting to see the economic impact of the Compass Creek development, which includes a Microsoft campus and data centers, on the town tax rolls.
“It’s a good time to pause for a lot of reasons,” he said.
Dentler has only asked for one new position in the General Fund, an IT systems analyst, following along on the recommendations endorsed by the council in the adopted IT strategic plan. He has recommended delaying hiring on that position until mid-year, for a budgetary impact of $78,000, with the full salary and benefits needing to be accounted for in Fiscal Year 2022. Other IT-related enhancements include $415,000 in recurring costs to separate the town’s internet service dependence from Loudoun County, and the implementation of Office365.
Other General Fund impacts include the full funding of the new staffing positions adopted in last year’s budget, but with funding on those delayed until Jan. 1 of this year, part of an increase of $1.2 million in personnel costs; and a 10 percent jump in pension costs mandated by the state. There is no cost of living adjustments planned for employees in the budget, but there is an average 3 percent pay for performance increases. Dentler also is increasing the amount of money set aside for project management costs in the Capital Fund, via a transfer from the General Fund, to reduce the dependence on debt service for that line item. The budget also accounts for a $145,000 increase in the town’s trash and recycling contract, with both contractual increases and the need to provide additional service, and trash bins, to new units in town.
One General Fund impact that won’t be there during next year’s budget deliberations is the town’s annual contribution to fire-rescue operations. The proposed budget marks the final year of the town’s contribution, which has been gradually reduced over the past few years as part of an approved phase-out plan. County government funding is expected to pick up the slack from the town’s previous contributions.
Not every item on town departments’ wish lists made their way into the proposed budget.
Dentler said a total of nine requested General Fund positions, including four police officers, were not part of his proposal.
Dentler also did not include the $600,000 in funding for snow removal operations that was required last winter. When the council recently discussed the town’s snow removal budget, several council members expressed support for increasing the amount in this budget, but Dentler said he plans to ask the council to use the surplus from the Fiscal Year 2020 audit to put in a storm reserve account at year’s end. Then, the council could build that account up annually and draw from it when needed. Despite this winter’s relatively minor weather events, Dentler noted the townhas already spent $59,000 of its $155,000snow removal budget this winter.
Just under $38,000 in requests from the town’s boards and commissions were also not put in the budget, with Dentler saying he wanted to give the council the opportunity to determine whether those had merit.
The Utility Fund, which as an enterprise fund is self-supporting and does not impact real estate taxes, includes funding for four new positions that were planned for in the five-year rate structure previously approved by the council.
The Capital Fund, out of which the Capital Improvements Program is funded, includes some new noteworthy projects. These include the addition of a seasonal tennis bubble to go over the current outdoor tennis courts at Ida Lee Park. That project comes in close to $1 million, but will be funded in part by $400,000 in proffers. The rest of the funding, however, is expected to be completely offset by revenues generated by court use. Also at Ida Lee, the roof over the indoor pool is planned to be replaced next fiscal year. Construction will also be in full swing on the Rt. 7/Battlefield Parkway interchange, and the new Edwards Ferry Road sidewalk.
The police station expansion and the airport’s north hangars will both be in design and potentially begin construction next fiscal year. Proposed for design work in Fiscal Year 2021 are the widening of Evergreen Mill Road; the expansion of the Town Shop; the Rt. 15/Edwards Ferry Road interchange project; and Veteran’s Park, with the county expected to contribute $4 million to that project.
Broken down, the $143 million budget includes $62.5 million for the General Fund; $43.2 million in the Capital Fund; $4.2 million in Northern Virginia Transportation Authority funding; and $33.8 million in the Utility Fund.
Dentler has proposed three budget work sessions, all planned during the council’s regularly scheduled work sessions on Feb. 24, March 3, and March 23. A public hearing on the budget is planned for March 10, and the tax rate public hearing and planned budget adoption is set for March 24.