Director of Finance Ann Shawver.
It’s that time of the year and time for the first pass on the 2014 budget at Monday’s city council briefing.
As last year it was their first look at what the Budgeting for Outcome teams and staff have assembled. Budgeting 101 teaches to ask for the most that you can justify, make a solid case and hope you beat out the other departments for the goodies.
For local governments in tough economic times it is slim pickings’ on flat revenue at best. Add to that increases in fixed costs. Departments have an uphill battle when justifying an increase in their individual budgets. It almost has to be a state or federal mandate or crisis before it gets a second look.
Roanoke’s Director of Finance, Ann Shawver and Director of Management and Budget Amelia Merchant were cautious in their fiscal year 2013 projections. The $252.9 million for this fiscal year was at the same level as it was for fiscal year 2007-2008.
The projected budget presented to city council Monday increased to $257.7 million for FY 2014 – just shy of the high in FY 2009. The city is inching back to the budget projections of previous years. However, Roanoke City’s revenue is basically flat considering the increases in fixed costs and added outlays for the schools and other expenses.
Fixed costs have increased incrementally in the last 5 years. The General Assembly has mandated “Aid to Localities” – an oxymoron that really says “give some of our money back” so we (the state) can balance our budget. For 2014 it is expected that will end per Governor Bob McDonnell but until the budget passes and the GA agrees to eliminate the fixed cost of $1.2 million of “aid” will remain unallocated.
It is still not time to get excited about any incremental revenue. Though sales tax, meals tax and occupancy taxes have increased, mandated expenditure increases have taken a big bite out the pie. In previous years the city depended on giant leaps in real estate valuation and the increased tax revenue that fattened city coffers. That growth has come to a screeching halt.
Real estate valuations for residents have decreased for the second year in a row. The only thing that pulled valuations up was a slight increase from new construction. That still led to an overall .7% decline.
Roanoke City Public Schools will see a $978,000 increase in funding based on the 40% formula for a a total of $73.7 million.
Fixed cost increases come from both general insurance premium increases and the Affordable Healthcare Act starting in 2014. The city will begin covering 19 part-time employees and up to 200 employees that may not be covered by healthcare insurance.
All fixed cost increases total $2.5 million. There will not be much left to spread around of the $4.8 million in additional revenue after fixed costs and school funding commitments. That is not much considering other major city needs.
Just as last year the Budget Committee’s first pass with departments wish lists for “incremental requests” exceeds the $257.7 million budget. Last year the first pass at the budget was over projected revenue by $8.9 million. That was with revenue projected to be $252.7 million at the time. At least the 2014 first pass on the budget by the committee is only over budget by $5.9 million this time.
Director of Management and Budget Amelia Merchant at the podium. Director of Finance Ann Shawver seated at council briefing on the budget.
The largest incremental increase request was $4.1 million for infrastructure needs – roads, bridge, curb gutter, storm water management and roads. The next highest request for an increase was Safety at $1.48 million.
There is more work to do and incremental requests to cut. Which ones will get the few extra dollars may depend on who makes the best pitch. None of the figures include a pay raise for city employees. For every 1% increase in raises it will cost the city $760,000
The 10% Capital Improvement Project debt policy was exceeded by .3% in 2010 and continues to hover just below that mark. in 2012 there is no wiggle room at 9.9% and not much better in 2013 at 9.7%. There is really little relief through 2018. “It’s not like we’re going to melt if we violate it again,” said Shawver. “But we’ll work hard not to.”
Not included in the CIP through 2018 are projects for replacing older fire stations (No. 7, 8, and 2). Architectural and engineering costs are projected to be $700,000. The new station location will increase response times said City Manager Chris Morrill.
Other projects on the CIP plate are infrastructure improvements for the passenger rail station, public works and separate requests from the Jefferson Center and the Virginia Museum of Transportation. Passenger rail service is dependent on the General Assembly passing a budget containing rail funding of over $100 million.
City council will get another briefing on March 4 with the final cut on April 15. Citizens will get a chance to weigh in at a public hearing on April 25. Citizens weighed in last year and persisted in getting funding restored to several agencies. On May 13 the budget will be adopted by city council.