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Fredericksburg City Beat

This blog includes news about City Hall, city schools and other 22401 news.

Pamela Gould reports on City Hall. You can reach her at 540-735-1972 or pgould@freelancestar.com. Robyn Sidersky reports on city schools. You can reach her at 540-374-5413 or rsidersky@freelancestar.com.

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Next week: Budget vote

If you’re trying to while away your last few hours in the office before the three-day weekend, why not catch up on Fredericksburg’s plan for spending your money next year, which comes up for the first of two required City Council votes on Tuesday.

Unfortunately, TheMoneyYouCouldBeSavingWithGeico, pictured at left, has not been found dancing around City Hall, so tax increases are still on the table. 

Here are a few things to remember:

Why are they voting on the tax rate before the public hearing? Because of timing and the intricacies of city code. The council has to have two "readings," or votes, on all of its budget and tax ordinances. By state law, it must have approved a budget before July 1. There are only three regular council meetings between now and then, so unless they really want to take this down to the wire, they’ve got to start voting on Tuesday (I would not be floored if they did take it down to the wire, though. See here.). The public hearing on the real estate tax rate (post-reassessment) will be on June 9 at 7:30 p.m. The council will be able to take the final budget vote on either June 9 or June 23. But this City Council typically doesn’t vote on anything on the same night that a resident speaks against it at a public hearing, so it’s likely the final vote will come at the last possible opportunity, June 23. 

So are they finished messing with the budget, or are there more changes to come?

Depends on whom you ask. Mayor Tom Tomzak says budget talks are over, as far as he’s concerned. Nobody’s ever 100 percent happy about these things, but Councilman Matt Kelly has written about his problems with the plan and said he would submit an alternative when it came time to vote. Councilman Brad Ellis has also said he wants clearer direction on the money that goes to nonprofits. Everybody seems to want that, but Ellis has said he wants to address that before the budget is approved, while other council members have said that discussion will have to wait until the next fiscal year.

Here are a few reminders about what’s been talked about during this process:

- Money for schools: The council already approved the part of the budget that funds the schools. The original plan called for giving the schools $1 million less than they got this year. The council reduced the cut to $700,000 by taking money from reserves.  

- Reserve spending and the bond rating: Last month, Fitch Ratings told the city that it had changed the outlook on its AA bond rating from "stable" to "negative." One of the concerns Fitch cited was the reassessment, which was still in the works back in April. Fitch was concerned that the overall value of taxable property could decline by as much as 25 percent. It ended up declining by 13 percent, and the council has proposed raising the real estate tax from 56 cents to 70.5 cents to make up for that. Another problem Fitch cited was the city’s reserve spending. The current budget proposal, though it cuts spending and raises taxes, includes nearly $1.3 million in reserve spending. Budget officials made clear in a memo to council members for next week that this will mean the city will have to make even more cuts next year if revenues don’t improve.

- Nonprofit funding: Always a debate (see above). Here is the most recent proposal for who would get what. 

- Who pays? In April, council members decided that they would raise the real estate tax an extra penny instead of raising the meals tax to get money to avoid cutting most city salaries (background here). That decision included a debate over whether the city should ask more from all of its property owners, or more from restaurant owners, who contribute a lot to the non-real-estate tax base, in order to balance its budget. Now that the reassessments are out, it is clear that the bulk of the real estate tax increase will come from commercial property owners, not homeowners (some of them will actually get a tax break). If a new budget debate does open up in these final weeks, look for some of the argument to be over how the burden of next year’s tax increase is being spread.

 

Final fact: Under the current assessments, a penny on the real estate tax brings in $400,000. But under the new assessments that would take effect July 1, a penny would bring in about  $340,000.  

 

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Permalink: http://news.fredericksburg.com/citybeat/2009/05/22/next-week-budget-vote/