Lovettsville residents shouldn’t expect to dig much deeper into their pockets this coming year, with most taxes and rates proposed to stabilize in the new budget and one proposed to drop by a little less than a penny.
Interim Town Manager Sam Finz presented his proposed $3.16 million Fiscal Year 2022 operating budget to the Town Council on Thursday night, along with his proposed $9.6 million FY22-26 Capital Improvement Program. Finz’s proposed operating budget is down by nearly 3% compared with last year’s budget, accounting for an expected decrease in revenue as a result of the pandemic’s effects on finances, including a drop in expected revenue from meals tax payments from shuttered restaurants and those operating at limited capacities.
Finz said there’s “a lot of guess work involved” in the budgeting process for all governments at the moment.
Most notable to residents, Finz proposed the town reduce the real estate tax rate from $0.184 per $100 of assessed value to $0.178 per $100 of assessed value. He proposed that drop because the average real estate assessment value in town rose by about 3% in the last year, meaning the town can reduce the tax rate a bit and still expect to pull in about $18,500 more from those payments, both residential and commercial, than in the previous fiscal year.
According to estimates provided by the county’s Office of the Commissioner of the Revenue, the average single-family home in Lovettsville is now assessed at nearly $411,000 and the average commercial/industrial property assessed at $609,000. Still, Finz pointed out that real estate assessments year-to-year typically rise by 5-6%.
Overall, Finz’s budget anticipates the town will pull in $640,676 in residential real estate tax revenue and $33,720 in commercial/industrial real estate tax revenue.
Finz pointed to the town’s 95-to-5 residential-to-commercial real estate tax revenue ratio. He said that although the town relied on residential growth in the past to largely sustain itself, that’s not likely to occur again, as the town is approaching buildout.
According to Finz’s estimates, the town’s population will increase by seven people, or two households, in the coming fiscal year, to 2,834 residents. He projected there would be 2,963 residents living in the town by Fiscal Year 2026.
If Lovettsville exceeds a population of 3,500 residents, VDOT will no longer maintain the town’s roads, meaning the town government will then be forced to expend millions of dollars to care for its roads.
The minimal increase in population through the next five years coupled with the 95-to-5 real estate tax revenue ratio is why Finz assured the council the town would progress under a “slow growth” model.
He said town leaders should pursue economic development efforts to bring in more businesses and even out that ratio a little, but not raise expectations beyond “what’s real.”
In addition to not paying too much more in real estate taxes, utility customers also might not be burdened with higher rates in FY 2022. Finz proposed the town maintain its water usage fees at $8.96 per 1,000 gallons and its sewer usage fees $14.23 per 1,000 gallons. While rates will likely remain the same in the coming fiscal year, Finz said it might be time to conduct a five-year utility rate study.
As for the pandemic’s effects on the town’s revenue streams, Lovettsville is faring relatively well, even with government-mandated business restrictions and closures.
Finz’s proposed budget anticipates the town will pull in only $39,000 less in meals tax revenue than what was budgeted in FY 2021, at $120,000. As for water and sewer usage payments—revenue streams many towns have seen diminish in recent months as businesses have been forced to condense operations or close and thus use less, or no, water—the proposed budget anticipates the town will generate the same amount of revenue as was budgeted in FY 2021: $490,000 from water payments and $771,282 from sewer payments.
The pandemic has also affected Lovettsville’s events, for which the town is known across the region.
Finz budgeted 8% less this year in the Event Fund, down to $246,833. He proposed that decrease in light of government-mandated restrictions on gatherings, which may or may not be relaxed by the time certain events roll around. Finz’s proposed budget shows expenditures required to put on the Oktoberfest event accounting for 86% percent of the Event Fund. That event attracts more than 10,000 people annually, although the event was canceled in 2020.
But even if Oktoberfest is canceled again this year, the town will incur no costs, since all town-run events are financed entirely through sponsorships.
Finz also proposed a five-year Capital Improvement Program that calls for $9.6 million to be expended from FY22 to FY26 on 19 projects.
In FY22, Finz proposed the town move forward with $668,000 worth of General Fund-related capital improvements: $360,000 for the second phase of Broad Way improvements, $228,000 for South Church Street and East Pennsylvania Avenue improvements, $50,000 for Locust Street improvements and $30,000 for Loudoun Street improvements.
Finz also proposed the town undertake $455,000 worth of Utility Fund-related capital improvements in FY22: $280,000 to study and repair the creek bank near the wastewater treatment plant, $100,000 to improve wastewater sludge handling, $50,000 on water treatment plant improvements, and $25,000 on water treatment plant security updates.
The Town Council will meet in budget work sessions Jan. 21 and Feb. 4. A public hearing will be held March 11. According to Finz’s timeline, the council should adopt the budget March 25.