Charting a course through unknown waters

When Goochland County Administrator John Budesky presented his recommended county budget for FY 2021 on February 18, we lived in a different world.  Projected revenues for the current fiscal year, which ends on June 30, were trending toward a healthy surplus, and forecasts for FY2021 were rosy. The budget proposed at that time included raises for all employees, new positions especially more deputies and fire-rescue providers, an increase in the local transfer to schools, and some capital improvement projects.

Then Covid 19 upset the global apple cart and we moved into the twilight zone. The calendar, however, did not stop. Goochland supervisors need to approve a budget for FY 2021 and set tax rates by the end of April so tax bills may be prepared and mailed by Mother’s Day to keep some revenues flowing to the county.

On April 7, before the public hearing on the FY 2021 budget, Barbara Horlacher, the county’s director of finance, presented a fiscal picture for Goochland very different from that of February. Horlacher shared a slew of dramatic revisions to forecasts for the current year and a decreased budget for FY 2021.

These were based on extreme conservative assumptions, a “base case” scenario, “because we don’t know how bad it will get,” she said.  The Finance Department will provide monthly year-end projections until the end of calendar 2020 to see how actual conditions compare to projections because no one really knows what the world will look like in the coming months.

(To see the summary of FY 2020 year end projections presented at the April 7 meeting go to: https://www.goochlandva.us/DocumentCenter/View/6782/Goochland-County-FY-2020-Year-End-Projections-FY-2021-Budget-Amendments.)

Horlacher explained that these projections are based on the most conservative assumptions for revenue, to be adjusted as actual results come in. Real estate tax revenues collected in FY2019 were $26.5 million, the number used in the original proposed FY2021 budget. Real estate tax revenues collected year to date (tax rates are set for the calendar year, collections in December and June are for the fiscal year) are $13.4 million. Year to date personal property tax collected is $7.5 million of the $11.3 million forecast. These projections assume collection percentages lower than past years, which have been in the mid to upper ninety percent range.

As the supervisors waived penalties and interest for real estate taxes paid after their June 5 due until July 5, the amount of taxes that will actually be paid remains an unknown, Horlacher said.

Sales tax revenues, which Horlacher explained have about a two-month lag, YTD are $2.3 million of the $3.1 million forecast. So far, the county has collected $882k in building permit fees, the revised projection assumed no further collections.

The overall change to the revenue projections for the forecast budget shows a decline of $1,181,752.

To achieve a balanced budget for FY 2020, Horlacher proposed a series of belt tightening actions. They include:  all departments, except general services and public safety must  turn back a minimum of five percent of their operating budgets and hold all non-essential spending; no travel without county administrator approval;  freeze all non-essential non- public safety vacancies; and require a $150 K turnback from schools. In past years, the county’ practice has been to allow schools to use end of year surplus funds for items that could not be funded in that year’s budget. Horlacher recommended allowing the schools to retain any surplus amount over $150 k.

These steps, Horlacher contended, would result in a break even result for FY 2020. She also said that the situation will be carefully monitored on a month-by-month basis to allow adjustments, if necessary, to be made. More frequent meetings of the audit committee will take place to afford a “deeper dive” into actual conditions.

Capital improvement projects slated to begin in FY 2020 that have not been started will not be funded. These include: $449 K for a VOIP system; fuel and documents management systems; and sports field relocation that could be returned to the general fund. Money, $350 k, set aside to purchase land to relocate the Company 2 fire-rescue station, currently located on Rt. 6 in Crozier, is requested to be used instead for renovations to the treasurer/commissioner of revenue space on the Sandy Hook Road side of the administration building ($300k); $25 K toward the pedestrian bridge at Tucker Park; and the remaining $25 k to facilities improvement.  

During the pandemic, facilities improvements completed unexpected tasks, such as installing exterior drop boxes at the administration building. Ongoing projects may continue and all purchase orders must be approved by the county administrator and all expenditures must be approved by the finance director.

Board chair Susan Lascolette, District 1, thanked Horlacher and staff for hard work on this difficult and unpleasant task.

John Lumpkins, District 3, asked how the $150 k turnback for schools was arrived at. He wondered what sort of savings the schools realized due to closing.

School Superintendent Dr. Jeremy Raley, who attended the meeting online, said that the schools are working through this trying fiscal time and looking carefully at revenue streams.  The schools expect a negative financial impact due to a significant decrease in sales tax revenue.  State fund reductions are still unknown. Raley will brief the school board at its meeting on April 14. ( watch online at (https://www.facebook.com/GoochlandCountySchools/) or via their app, @GoochlandCountySchools.)

Not operating buses and lower energy usage in empty buildings results in some savings. However, the impact of lower sales tax revenue is of greatest concern. As the picture becomes clearer, firmer numbers will be available. Raley said that he and his staff have had great conversations on the topic with Budesky and Horlacher.

FY 2021

Normally the proposed budget is tweaked before approval. Horlacher said that the amended proposed budget is totally changed from that presented in February.

The February proposed FY 2021 budget, which Horlacher said now seems like a fairy tale, was based on an expectation of a four percent increase in assessed valuation, going forward no increase in values for the 2021 assessment was used in revenue calculations.   

The “new improved “proposed budget assume $4.5 million less than previously expected. Reductions in expenditure include: reductions of all department budgets, except public safety, by five percent; freeze all new positions and associated costs; maintain contracted support services at FY 2020 levels; and maintain school funding at the FY 2020 level; remove all merit and benchmarking salary increases; reduce contribution to debt service reserve from $2 million to $900k; reduce pay go contribution to capital improvement projects from  $840 k to zero; and increase reserve for contingencies from $200 to $300k to deal with unknowns.

Horlacher said that if revenues improve, the supervisors can approve budget supplements in the future.

The $8 million CIP was suggested to be amended downward. The $1.4 million ladder truck, which has an 18-month delivery time; the Randolph Elementary Parking project, which will be partially funded with proffer money; and facilities site improvements were unchanged. Information technology replacement was earmarked for $100k; $50 k for one sheriff’s vehicle and one county vehicle. These will be funded with money set aside and proffer dollars.

Lumpkins raised concerns that real estate values might decline as they did in the previous recession. Horlacher said that a one percent decrease in the total valuation of real estate would be about $260K. If they dropped four percent observed Lumpkins, there is a bit of room in the proposed budget.

Ken Peterson, District 5 observed that the last recession was real estate centric and this one is caused by a virus, so the results may be different. He asked why all new positions, including those in public safety were removed. Horlacher said she did not believe that if things continue the way they are on July 1, recruiting and interviewing for those jobs will be difficult. That can be revisited if conditions improve.

Peterson asked if there were any force reductions in county staff. Horlacher said there no reductions were included, but vacant positions will stay that way. “We have a fantastic staff second to none and we want them to know that we’re not going there (to layoffs),”  said Peterson.He thanked all involved for being proactive to work through this problem and make tough decisions to balance budget and provide services to county residents.

The amendments result in a FY 2021 proposed budget of approximatly $86 million versus the $92. 5 million proposed in February. There will be no changes in tax rates. Most fees and utility rates remain the same as last year.

Public hearings

Jonathan Lyle expressed skepticism that there will be no growth in values the coming year. He urged rethinking raises for our outstanding county staff; finding ways to support the schools in their excellent work; and asking outside agencies like Monacan Soil and Water District to also participate in the five percent budget reduction. He also advocated support for the sheriff’s department, in funding at  least one new deputy.

Comments on all hearings will be open until Monday, April 13 at 5 p.m. Comments may be made by phone, email, or letter. On April 21, the supervisors will vote on the FY 2021 budget and adopt tax rates for calendar year 2020. If you have comments on these Public Hearing Items, please send comments to boscomment@goochlandva.us or by Regular Mail to: Goochland County Administrator, P.O. 10, Goochland, VA 23063 or contact 804-556-5811.