The Virginian-Pilot
©
VIRGINIA BEACH
The economic free fall is hitting Virginia Beach harder than officials first expected, and the city will have to shrink its budget for the first time in more than 20 years.
The budget shortfall for the city and schools in 2009-10 is estimated to be at least $103 million, $37.5 million more than officials projected in November, excluding cost increases such as energy.
Real estate, vehicle and business license tax revenue will not only be below projections for the next budget year but also lower than what the city is taking in this year. People also are dining out less and buying fewer items, contributing to declining city revenues, said Catheryn Whitesell, the Beach's budget director.
"The economy is causing us some real issues," Whitesell said. "The sky is falling."
The city's budget will decrease to $1.03 billion, down by 1.96 percent from the current year. Even in the recession of the 1990s, the city's budget grew slightly, White-sell said.
The City Council is facing some thorny decisions as it tries to make up the city's portion of the shortfall, which amounts to about $47.8 million.
Whitesell presented the City Council on Tuesday with 19 ways to close the gap. Among the options: Eliminate employee pay raises; require employees to take unpaid days off; delay bond sales; defer vehicle replacements; reduce the amount going to programs such as tourism advertising, land preservation and schools; charge garbage fees; tap into savings accounts to pay for retiree health care liabilities and construction projects; or raise real estate and personal property taxes.
"No single strategy will balance the budget," Whitesell said. "It will take a combination."
Councilman Bill DeSteph said he doesn't support raising real estate taxes.
Local residents saw their tax bills jump in recent years as the value of their homes grew, and taxing them more now as they struggle is unfair, DeSteph said.
"I have a little trouble with this one," he said.
According to budget officials, if the City Council tacked a penny onto the 89-cent tax rate, it would bring in an additional $5.3 million. Even with a rate increase, residential property taxpayers would still see their bill decline by an average of 3.4 percent, over this year.
Other council members balked at putting off certain expenses, such as replacing old vehicles and selling bonds while the interest rates are low. Some of tho se options might solve next year's budget shortfall but could cause Virginia Beach problems in the long term, Councilwoman Rosemary Wilson said.
The City Council will consider the options at its budget meeting Feb. 9 and 10.
Deirdre Fernandes, (757) 222-5121, deirdre.fernandes@pilotonline.com
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Budget cuts
Attention to our new Mayor Sessoms...now is the time for all recently elected politicians to come to the aid of their co-workers. Allowing the hardest working City employees in the Tidewater/Hampton Roads area to take a hit in their wallet again is unacceptable. Have the financial spin doctors take another look at the proposed budget restructuring. There has got to be a better way to accommodate for the previous administrations’ poor operational choices.
cFredrick
Cut spending? Well for starters scrap the proposed purchase of the N&S rail line. Do away with the full color brag sheet of over $50K that the Beach pays for in The Pilot. Suspend construction on Town Center for the time being. The city just maybe could have saved some money by not spending $32K (I think that's right) on adding 1/2" to a swimming pool. Maybe suspend $200K interest free loans to theater companies. Little things like that. Are we getting there?
I'm Glad
I hope they don't raise any of the taxes but I'm glad they don't have that last mayor anymore. They would go over line item by line item of expenditures. Then raise taxes while cutting what the locals could use and spend it at the ocean front where the locals are not welcome. Also I noticed a hiring freeze for some positions (hourly) but not management positions.
Back to The Basics
The economy is hurting taxpayers and governments alike. Virginia Beach has spent like drunken sailors for the last seven or eight years, obligating the taxpayers for many new projects. Both the city and the school board need to return to the basics. I have urged the council to reduce spending, using the same methods employed by private industry, for several years. I might as well have been talking to a wall. They need to freeze or reduce salaries, reduce staffing through attrician, put capital improvements on hold except for maintainance, possibly increase class size and reduce extra curricular activities, and take any other steps that they can to reduce spending without raising fees and taxes. Taxes more than doubled for most property owners during the last seven or eight years so the city got the tax increases on the front end, but spent it all. Mayor Sessons during the campaign acknowledged that the economic conditions would impact business as usual. I hope he remembers those comments.
Real Budget Changes? Not in the plan...
I've watched the spin put on by the city manager and staff and I do not see real budget problems. They plan to raise taxes! Yet, they do not propose merging fire and EMS into one cost saving department nor do the seek to collect the 8 million or so from the insurance companies for ambulance transports. Until they put those things on the table, I do not believe we have a real budget crisis.
They suggests charging for garbage but not for ambulance transports? LOL Every other city in Tidewater has already found millions saved by merging services but not in Virginia Beach. Why raise the property taxes a cent when you can cut duplicated service costs and pick up millions for a service we provide for free? Stop the smoke & mirrors…
Virginia Beach will be OK
Why would the author print the quote that "The sky is falling." ? It is a stupid quote. Nothing is falling except the proposed budget. The budget has numbers for people who like numbers. Our city manager and city council will make the rights choices. They will balance the city budget. I have confidence in their abilities. I like the idea that we may have a smaller budget planned. I read complaints each year about increased budget amounts, now we finally get a reversal.
Salaries are a big part of the budget. I do not like tax increases, city employee lay-offs or pay cuts. Department heads will find ways to reduce operating expenses. We may have to pay higher user fees. City employees may have to settle for no pay raises this year. My private sector employer has frozen pay already. Hold off on capital projects that do not have a return on investment.
Why did the administration fail to disclose the "sky was falling
in to the public? Certainly, before falling over each other to support the Phase 4 TIF project on January 13th? Clearly, the administration was keenly aware of the purported short fall. Only its not a shortfall. The Administration produced a windfall when they increased the budget by a staggering $700 million since 2000. Yup, despite monumental increase, , dept chops, other than essential services were lowered by a microscopic 1.25%. Not very impressive for our lip sealed representatives! The City Council should be cutting real estate taxes since the tax rate reduction of 27% was well below the average tax increase of 115% since 2000. In many cases, that tax hike soared by over 135% for many thousands of struggling homeowners. Just consider the additional utility fees and other related fees including soaring home insurance hikes.
Yet they tell us there IS
Yet they tell us there IS room in the budget for a $20 million rail right-of-way, and $60 million for Town Center. I keep waiting for the white rabbit to show me the way back to the sane world.
Let's see
The school year is set now at 184 days. You are only required to go 180 days. There was a wasted snow day. Now the school system is going to make everyone come to work on a holiday to make-up that day. So the school system will have to operate the buses, buildings, and personnel on a day that the money would not be spent. Why can't they just forget the make-up day and use one of the extra 184 days that are already in the calendar. Imagine the money saved from fuel and other expenses that aren't needed on a day that school should be closed...
Spend, Spend, Spend
One would think that City Council would not be talking about spending for that ridiculous light rail (that no one is going to use) or expanding Towne Center (when so many places are vacant now) ...... but the majority voted in that Big Spender Mayor - instead of the candidate that would have looked at each expenditure line item by line item - and the rest of us have to suffer with it for the next 2 years