Charlottesville is expecting a loss in revenue of at least $8 million over the current and next fiscal year from the coronavirus pandemic.
Officials discussed revenue projections with the City Council in a virtual meeting Monday.
Before sweeping stay-at-home orders and the closure of many businesses, City Manager Tarron Richardson proposed a $196.6 million budget for fiscal year 2021, which starts July 1, plus a $35.3 million Capital Improvement Program and $111 million in other dedicated funds.
Since then, the area has seen 11 deaths and 222 cases of the virus, including 41 in the city and 64 in Albemarle County, according to the Thomas Jefferson Health District.
The city is hoping to keep funding at nearly the same level as the adopted fiscal 2020 budget. The revised proposal is $191.2 million, a decrease of $5.4 million. Officials also expect about $3 million in losses in the current fiscal year.
“That number can continue to go downward or if the economic conditions change it could go upward,” Richardson said.
Although other governments are expecting revenue shortfalls of around 5% to 6%, the city’s proposal is only a 2.7% loss of revenue.
Of the revenue decline, $853,000 is expected from sales tax and $850,000 is from the meals tax.
The revenue projections will be adjusted as the pandemic goes on and factor in the virus peaks and when students return to the University of Virginia.
The revised proposal would defer the roughly $7 million transfer to the Capital Improvement Program. The total program was proposed at $127.9 million over five years and included $35.3 million for fiscal 2021.
The total for fiscal 2021 would be cut to about $28 million. It’s unclear yet which projects would be delayed; Richardson said that information would be provided by May 18.
In fiscal 2021, the city had planned the first part of its commitment to construct a parking garage under an agreement with Albemarle County to keep county courts downtown; a new Belmont Bridge; expanding the Charlottesville General District Court; and various public housing redevelopment projects.
The $7 million, plus $1.6 million in other budget cuts, would be set aside for any unplanned expenses caused by the pandemic.
The revised proposal would require the school division to cut nearly $4 million from its proposed budget by keeping funding at the fiscal 2020 level of $57.36 million.
The city and school division were jockeying over funding before the coronavirus hit. The division’s original request was for $61.7 million.
The city originally allocated $57.36 million, but later provided $468,000 more to hire six teachers for the gifted education program. Funding for those teachers would have to come from cuts in other parts of the budget.
When funding the school division, the city uses a non-binding City Council guideline to automatically contribute 40% of new real estate and personal property tax revenues to the division. The earliest mention of the arrangement in available documents is in a Nov. 11, 1990, council meeting.
Under the revised proposal, the city only expects about $2 million in new revenues in fiscal 2021, but none of that extra money would go to the division.
Richardson said he’s in preliminary discussion with the school division on funding for the next fiscal year.
City departmental budgets were reduced by $2.7 million. About $600,000 is being cut from the city manager’s office, including a Department of Equity and Inclusion.
An increase for Neighborhood Development Services has been reduced by $400,000. The proposal also eliminates a $100,000 transfer to subsidize the city-owned Meadowcreek Golf Course.
Other deferred expenditures were funding for Unity Days and a new deputy sheriff.
The city is holding off on providing about $2 million to city advocacy and support organizations. The city was in the process of revising how it provides money to nonprofits when the pandemic hit. The money is not being used for operations, however, but will be allocated to programs battling the virus and that have been hit hardest by the pandemic.
“We don’t have enough information to make a decision,” Mayor Nikuyah Walker said.
Richardson said the city will review revenues and expenditures on a weekly basis and provide the council with monthly updates on the budget. The spending plan can then be amended once the economy reopens.
“It’s going to be ongoing throughout this crisis in terms of looking at our budget,” he said.
The council said the city should prioritize funding for services for at-risk members of the community and retaining employees.
The council accepted a new budget timeline that requires the spending plan to be approved by June 30. A public hearing will be held May 18.
The council also established all tax rates, which remain unchanged from last year, although real estate bills will increase as assessments rose this year.
In approving the tax rates, the council moved the deadline to pay real estate, personal property and the machinery and tools tax from June 5 to June 19. Treasurer Jason Vandever said his office will work with taxpayers to create payment plans or extend deadlines as necessary because of the virus.
“We fully understand that just the two-week extension is not going to be sufficient,” Walker said. “That’s why we wanted to make sure the payment plan option would be available.”