Despite the pandemic — and Albemarle County ending fiscal year 2020 with an operating budget deficit — there is still about $7.5 million that the county has available for future uses.
On Wednesday, the Board of Supervisors received a draft of the Comprehensive Annual Financial Report for the fiscal year that ended in July.
In an interview prior to the meeting, Albemarle’s Chief Financial Officer Nelsie Birch said that the county had to use $1.2 million from its general fund fund balance to cover operating costs, which leaves the county with about $7.5 million for one-time uses.
“We don’t have to spend it, and quite frankly, right now, from a financial management perspective, it would be very prudent for us not to spend it because of where we are,” she said.
Earlier this year, the county made some cuts and froze positions to help meet anticipated revenue shortfalls in fiscal year 2020.
“If we would not have controlled spending like we did, you probably would have seen us use the entire fund balance, because revenues just plummeted in that last quarter,” Birch said.
County staff did not propose any uses for the funds, but will discuss it with the board during the fiscal year 2022 budget process.
“Right now that’s staying in fund balance, until such time as we decide, working with the board, where we’re comfortable, but the first thing is, we’re not doing anything until after the January assessment, until we understand how low are we going economically,” she said.
Birch told the board that staff presented only a draft CAFR due to turnover, and technology that is hard to train on.
“One of the areas that we’ve identified that bogged down this CAFR from getting completed on time was grant management and capital assets are two areas that we need to focus on,” she said. “We don’t have specific accountants dedicated to that, and we need to.”
The department has a plan to restructure staffing instead of adding new positions.
David Foley with Robinson, Farmer, Cox Associates, the county’s external auditing firm, said the county’s CAFR was “another clean audit” from Albemarle.
Also at its meeting Wednesday, the board discussed a number of possible future financial changes including a cigarette tax, moving the June 2021 property tax due date and providing a time extension to pay real property taxes.
The board voted to hold a public hearing on each item in the future.
If the cigarette tax is ultimately approved, it would be up to 40 cents per pack starting in January 2022.
Lori Allshouse, the county’s assistant CFO for policy and partnerships, said the General Assembly provided counties with the option to levy new taxes and make changes, somewhat similar to what cities can do. Other possible new tax changes — such as taxing plastic bags, raising the food and beverage tax, removing the limit on the transient occupancy tax and imposing an admissions tax — will not come before the board in the near future.
“All these other options that were provided by the General Assembly are very important for your consideration,” she said. “What we thought, given where we are with the pandemic, given where we are today and thinking about next year’s budget, what we want to do is to just bring the cigarette tax forward today and not bring these other items forward,” Allshouse said.
If the board approves the tax, county staff want to do a regional approach to minimize resources required and streamline the process, and Allshouse said there is interest from Charlottesville, Fluvanna County and Orange County in working together.
“If approved, we recommend that the cigarette tax revenues, after the administrative costs, could be dedicated to a specific category” Allshouse said. “It isn’t required, but you could say this particular tax revenue could be dedicated to a certain expenditure in your budget.”
She said an early estimate showed the county could generate possibly $750,000 to $1 million a year. Charlottesville, which already has a cigarette tax, has seen revenue from the tax decline in recent years, but also called it “lumpy revenue” that doesn’t come in consistently.
Supervisors said they supported the public hearing and supported the tax for health reasons to reduce smoking rather than as a revenue source, even though it will likely bring in revenue.
“I definitely would be in favor of the revenues being used to improve the life expectancy and the medical well being of our community,” Supervisor Diantha McKeel said.
If the property tax due date change is ultimately approved, the first installment of real estate, tangible personal property, machinery and tools, mobile homes, and public service corporations taxes will be due on June 25 instead of June 5.
“What we learned from the pandemic is, why don’t we push back when [County Executive Jeff] Richardson provides his recommended budget to the board in order to take advantage of updated revenue assessment numbers,” Birch said. “In order to do that, it sets in motion all of these dates because of all the requirements that are set forth by the state.”
She said the change would just be for 2021, but that the county will reevaluate the timing and the deadlines in the future if this goes well.
“We’re testing a theory that we think is going to work, but we want to make sure it’s going to work before we do this in perpetuity,” Birch said.
The board also supported scheduling a public hearing to extend by 90 days the time a property owner has to pay a supplemental bill due to the correction of an assessment by the county when the director of finance “determines that good cause exists.”
County Assessor Peter Lynch said this is a specific form of a supplemental bill, and considered “a surprise bill or unexpected bill for the taxpayer.”
“It’s referring to improvements that were added with a permit, there was notification to the county itself, but for some reason my staff did not pick it up,” Lynch said.