The Purcellville Town Council Tuesday night voted to adopt a $14.7 million Fiscal Year 2021 operating budget and $1.3 million Capital Improvement Program for quarters 2-4.
The three-quarter budget encompasses an $8.2 million General Fund, a $3.4 million Sewer Fund, a $2.6 million Water Fund, a $430,000 Parks & Recreation Fund and $1.3 million Capital Improvement Program that includes $97,000 to pay for a Basham Simms Wastewater Facility membrane replacement.
In June, the Town Council voted to adopt a $4.8 million Fiscal Year 2021 operating budget and nearly $300,000 CIP that accounted for town finances solely for the first quarter, from July 1 to Sept. 30. According to the town staff, that was done to alleviate the need to hold too many public meetings during the state of emergency amid the pandemic and because there was not enough data at the time to accurately predict the pandemic’s economic impact on the town.
That first-quarter budget was based on a broader Fiscal Year 2021 picture that projects town operating revenues and expenditures to total $19.4 million throughout the entire fiscal year, from July 1, 2020 to June 30, 2021. That overall FY21 budget features no tax or rate increases over the previous year and is down by $1.2 million from Town Manager David Mekarski’s originally proposed budget for the year, with a majority of capital improvement funding cut out. Mekarski cut that funding to help the town better cope with a projected revenue drop this year as a result of state-mandated business closures and restrictions.
But the town is still faced with multiple “high-risk” capital improvements across the utility funds.
According to Town Engineer, Dale Lehnig, the town has multiple pressing water projects totaling $15.5 million, with the top eight critical projects totaling $6.3 million and needing attention before June 2024.
To help fund those, the council is expected to vote Oct. 13 to authorize the town staff to take out a $3 million line of credit from Bank of Charles Town with a 1.81-percent interest rate and a final maturity date of June 30, 2023—the last day of Fiscal Year 2023.
By the end of Fiscal Year 2024, the utility funds will have a cumulative shortfall of $8.5 million. That means the town at that point will need to transfer $8.5 million from its $12.4 million utility fund cash reserves accounts, leaving only $3.89 million in those accounts—well below what the town’s fiscal policy calls for.
The clock is ticking on that vote, too. Such a low interest rate won’t always be available to the town. Mekarski said the town’s high credit rating won’t hold if the town doesn’t take action to bolster its water and sewer funds, which shrunk by 39 and 16 percent respectively from FY19 to FY20.
“We have an obligation as a governing unit to examine a final solution, to achieve structural stability, to achieve long-term sustainability,” Mekarski said. “We have to come up with a financial plan.”