As the county seat grapples with the economic fallout surrounding the COVID-19 pandemic, town budget staff is bracing for what could be a difficult fiscal year.
The Town Council got its latest update on the fiscal picture at its meeting Tuesday, May 26. While the town finds itself in a $4.8 million revenue hole for the current fiscal year 2020, town staff members are not as worried about this year as the next one.
Town Manager Kaj Dentler said staff have already made allocations to cover the fiscal year 2020 shortfall, which he described as “a very manageable situation.” Next year may be a different story.
“[Fiscal year] 21 is the area of concern for me and should be for you,” he told the council.
Management & Budget Officer Jason Cournoyer said as staff members look ahead to the next fiscal year, which begins July 1, they believe economic recovery will come in the form of a gradual rebound. They are looking at the next fiscal year on a quarter by quarter basis, and are anticipating a revenue decrease in the first quarter of July 1 through Sept. 30 of around 27 percent.
“From then on we believe it’s going to improve gradually,” he said.
As they make their revenue projections for next year, parks and recreation revenue is expected to continue to take a hit, with a projected 43 percent shortfall. Ida Lee Park Recreation Center has been closed since mid-March and its programs cancelled. Many of the town’s popular annual events run by the Parks and Recreation Department have either been cancelled or are in jeopardy. There has also been no decision on whether to reopen Ida Lee’s outdoor pool for the summer.
Consumer taxes, in the form of meals tax and Transient Occupancy Tax, are also expected to be short of projections, with an estimated 22 percent shortfall.
The biggest anticipated hit is expected in the town’s investment income, with a projected 83 percent shortfall. This is tied mostly to the federal interest rate, which was cut to zero shortly after the global pandemic hit U.S soil, Cournoyer said. While staff had budgeted around $700,000 in investment income revenue for the General Fund in fiscal year 2021, that projection has now dropped to a little over $120,000.
All told, staff is projecting an overall General Fund revenue shortfall of 17 percent for fiscal year 2021, Cournoyer said.
To reduce expenses for the upcoming fiscal year, staff has frozen a number of vacant positions or delayed hiring. Each department has also been tasked with reducing its expenses by 10 percent. Staff will be working with its financial consultant to look at capital projects and their financing, as well as some different opportunities to manage debt, Cournoyer said.
With Leesburg anticipating $4.8 million from the federal CARES Act, council members will soon have to ponder how to use those funds. Cournoyer emphasized that per the signed legislation, the funds may not be used to cover a revenue shortfall. Though the council will wait until its June 9 meeting to consider how to use the funds, there was apparent enthusiasm for using the money for some type of business relief grants, similar to one run by Loudoun County government.