While the Town of Leesburg’s outlook for fiscal year 2021 has improved since the COVID-19 pandemic arrived stateside this spring, there’s muted enthusiasm from the town’s staff and financial advisors, as difficult decisions loom ahead.
Although a final audit for the past fiscal year 2020 is not expected until December, initial indications are that the town will realize at least $1 million in savings, which will be carried over to help balance the fiscal year 2021 budget. Town Manager Kaj Dentler stressed these savings were not solely attributable to revenues exceeding projections, but critical action taken by the town government to tighten and cut expenditures in the spring. Those measures included freezing 18 staff positions and doing away with much of the town’s annual maintenance program. Long term, he and others stressed to the council during Monday night’s work session, these measures are not sustainable.
In the spring, the staff predicted a fiscal year 2021 General Fund budget shortfall of $7.2 million. That number has improved slightly to a current estimate of $5.5 million, Management and Budget Officer Jason Cournoyer said. According to a staff report, lost revenues from the Parks and Recreation Department account for $2.15 million of that shortfall. Ida Lee Park Recreation Center and its amenities were closed for months, and many programs and special events were canceled or cut back. The report also shows an almost $2 million decrease in consumer taxes, with meals and beverage taxes accounting for almost $1 million of that shortfall.
The town staff is planning to continue many of the expenditure reduction practices put in place this past spring through the current fiscal year, including keeping those 18 positions frozen and suspending its Capital Asset Replacement Program. The town’s financial consultant has also proposed that the council consider refinancing existing town debt to take advantage of historically low interest rates, and also to restructure issuances from previous years to free up to $3.7 million in cash flow. A vote on that was expected for Tuesday night.
The staff also is hoping to use some of the leftover CARES Act funding the town received to reimburse itself for police department salaries in the current fiscal year. They are estimating as much as $3 million could be leftover following the disbursements of grants to small businesses and nonprofits.
Dentler and the town’s finance staff has put together a four-year budget outlook to manage through the fallout of the COVID-19 pandemic. The year’s events have also reinforced the need for a Revenue Stabilization Fund, “so when these moments of crisis hit, we’re more prepared than we are,” Dentler said. The town manager said he hopes to create such a fund within the next year.
The four-year outlook goes through fiscal year 2023, at which time potential revenue from a town-county revenue-sharing agreement related to the Microsoft data center campus in Compass Creek is expected to kick in.
On the plus side, despite approximately $600,000 in past due utility bills from town water and sewer users, the town’s Utilities Fund is reporting that revenue for fiscal year 2021 will remain the same or exceed projections, since usage of the system has not dropped dramatically during the pandemic. Leesburg, like many other localities, has begun to proceed with service disconnections since the State Corporation Commission on Oct. 5 lifted the moratorium it imposed on state-regulated utilities. Utility customers have the opportunity to reach out to town staff to set up a payment plan to keep their service from being disconnected. They are also being referred to the county’s utility assistance program for those who have experienced economic hardship during the pandemic.