Norfolk faces $39M budget shortfall

NORFOLK

Faced with a projected $39 million shortfall in next year's budget, City Manager Regina V.K. Williams has ordered department heads to slash their budget requests.

Williams told most department heads to trim their budget requests by 5 percent from current spending levels, according to an e-mail obtained by The Virginian-Pilot.

The police and fire departments and school system will face 3 percent reductions. Constitutional offices must absorb a 1.5 percent cut on top of large reductions in state aid.

Williams said taxpayers will see reductions in services and increases in user fees when the new budget begins July 1.

Williams said she also will call for additional cuts in the current budget within a few weeks. She said the city is projected to have a $7.5 million shortfall in the $1.1 billion budget for the current year, which ends June 30.

Next year's projected shortfall is similar, but in relative terms more steep, than budget gaps in other cities. Virginia Beach, which has a $1.9 billion budget and a larger tax base than Norfolk, faces a $41 million gap next year. When the school budget is included, that rises to $84.4 million.

The city and schools have separate budgets in Norfolk.

"We keep hearing these days that balancing the budget is going to be challenging, but it's going to be worse than that," Williams said Friday.

She said because the economy is changing, revenues will not increase to previous levels at least for several years. "If you know you're doing something on an interim basis, it's one thing," she said. "But the economy is restructuring itself, and because of that, we need to change the way we do things."

In her e-mail, she called for the "elimination or reduction in services, programs and operations that do not relate to... our core mission." Any new programs must be deferred and all vacant positions will be reviewed to see whether they can be eliminated, she wrote.

Williams said it's unlikely she will have to resort to layoffs or furloughs, but she can't guarantee that.

Councilman Barclay C. Winn was unaware of the e-mail, which Williams sent late Tuesday, but said he's not surprised. "We're going to have to cut some projects out, too, and that's going to be tough," he said.

In her e-mail, Williams wrote that nearly all revenue sources, except for real estate taxes, have declined in the current year. Given declines over the last two years in housing prices, real estate taxes are expected to decline significantly when new assessments are in place July 1.

Meanwhile, the city is seeing large increases in health care and retirement costs coupled with reductions in state aid, she wrote. The state cut $5 million from aid to the city in the current budget, and Williams expects the cuts to be deeper next year.

Constitutional offices are state agencies that also receive supplemental city funding, and most have already absorbed large cuts in state aid.

In response to state budget cuts, George Schaefer, Circuit Court clerk, has laid off seven employees and eliminated two vacant positions, reducing his staff to 41. He said the compensation board estimates he needs 69 employees to adequately staff his office.

"We have a very lean operation," he said. "The proposed cuts in the next state budget will be disastrous for us. But I understand the city can't ride to anyone's rescue. They have their own problems."

Sheriff Robert McCabe said a hiring freeze he instituted in October has left 36 positions unfilled. He said he will soon have to begin laying off people to make cuts mandated by the state.

"I don't know how we're going to deal with the reduction in city funds," he said.

Williams said she will do all she can to avoid tax increases.

"Our residents and businesses are already suffering."

Harry Minium, (757) 446-2371, harry.minium@pilotonline.com