Finances in the Town of Middleburg are bouncing back to levels seen four years prior to the pandemic.
Town Manager Danny Davis presented his $5.3 Fiscal Year 2022 budget to the Town Council last Thursday night—one that’s down by 9.4% from FY21 to account for drops in anticipated tax revenues caused by the effects of the COVID-19 pandemic. Although the proposed budget is down from the current fiscal year, as expected, it’s at about the same level as that of the FY18 budget and down by only $500,000 from FY20’s budget.
In the General Fund, Davis proposed no tax rate increases but accounted for an anticipated $393,521 drop in tax revenues coming from an expected 6.2% drop in business license tax revenue, an expected 20% drop in meals tax revenue and an expected 10% drop in occupancy tax revenue. The drops in meals and occupancy tax revenue hits the town hard, since it derives 47% of its General Fund revenue from them.
“The upcoming fiscal year remains very much uncertain,” Davis said.
The proposed budget also accounts for an anticipated 4.06% drop in real estate tax revenue. While the average residential real estate assessment increased by 9.15% this year—the average home value in town is nearly $493,000—commercial assessments dropped by 13.8%. Davis said the town staff thinks those assessments should “bounce back soon.”
With an unchanged real estate tax rate of 15.3 cents per $100 of assessed value, the town expects to pull in nearly $16,000 less from the taxes in FY22, down to $503,318 in all.
The proposed budget also plans for a $140,145 decrease in General Fund expenditures, a 2% increase in staff salaries to account for a market adjustment, and the continuation of a merit program that rewards high-performing staffers.
Davis also included an “FY22 COVID” General Fund revenues portion in his proposed budget which the town can use if its finances are more negatively affected by the pandemic than what is expected at this point. Those expected revenues are dropped by 29%.
Davis’ proposed budget also suggests continuing with annual 3% utility rate increases to account for inflation, operations and capital investments. Even with the rate hikes, town leaders anticipate the town will bring in the same amount of revenue in the Utility Fund as it did in FY21, since water consumption is down.
As for expenditures in the Utility Fund, Davis proposed the town create a Capital Asset Replacement Fund specifically for “significant equipment purchases,” with any unused funds to be rolled into the next fiscal year.
“We know that equipment always breaks down,” he said.
On the capital projects side of town finances, specifically in the General Fund, Davis’ proposed budget puts an emphasis on the $6.5 million town hall project in the General Fund. His proposed Capital Improvement Fund includes $2.5 million worth of work in FY22 and $3 million in FY23.
In December, the Town Council voted to award a $651,800 contract for the architectural and engineering portion of the new town office project to Glavé & Holmes Architecture, which will partner with the North Carolina-based design firm Creech & Associates. It also voted to award a $417,770 contract for construction management of the building to Downey & Scott. The new town office will be built on the same property as the existing town office, which will be demolished.
During his budget presentation, Davis also outlined a few key actions the Town Council took during FY21 amid the pandemic that helped to keep businesses and residents financially stable to some extent.
The Town Council last year voted to provide $200 credits to all utility customers, set up a retail support program in which it reimbursed businesses a portion of the value of the merchandise they sold during sales, hosted a housing assistance program with up to $50,000 in rent and mortgage assistance through the help of the Windy Hill Foundation, provided direct financial support and permitting help for restaurants as they prepared to set up outdoor seating in the winter months, and provided a restaurant support program in which all in-town households received more than $230,000 in meal vouchers to spend at participating restaurants.
“I believe it was due to this quick and significant response that our restaurants remained operational and successful,” Davis said
The Town Council will review the proposed FY22 budget during a Feb. 23 strategic initiatives meeting, Feb. 25 and March 11 budget discussions and other meetings leading up to adoption by June 30. The public can provide input on the proposed budget at any council meeting, can leave a message for the council by calling 540-687-5152 and can provide input at middleburgva.gov/input.