Challenging Budget Ahead
Harrisonburg To Hold Line, Monitor Reductions
Posted: December 4, 2012
HARRISONBURG — At the risk of sounding like a broken record, City Manager Kurt Hodgen asks department leaders to “hold the line” on spending next fiscal year and plan for a 5 percent budget reduction as a “contingency.”
Those requests, made in a letter sent to agency heads Friday, echo what he asked this time last year.
“It feels like it,” Hodgen said of a broken record. “There’s still enough uncertainty [above us].”
The federal “fiscal cliff” could impact state revenues, which would then negatively affect local government, he said. Gov. Bob McDonnell already asked state agencies to prepare for 4 percent budget reductions.
In Harrisonburg, department leaders must submit a regular budget proposal to Hodgen by Jan. 17 and the 5 percent contingency plan by Feb. 15.
“Departments should not propose any new or expanded programs unless they are fully offset by spending reductions elsewhere in your budget,” he said in his letter. “Ask for only what you need based on what you can reasonably expect to accomplish in the next fiscal year.”
Health insurance rates are expected to jump 15 percent for the city in fiscal 2014, which begins July 1. Hodgen hasn’t calculated what the extra cost would be to government, but rates have not increased in at least five years, he said.
“Our program performance has not been good this year,” Hodgen said. “We’ve been paying a little more than we’ve been taking in.”
What could further compound the city’s financial challenge is the recent real estate assessment, which found that overall values were down by 1 percent. That could slightly lower local tax revenue, Hodgen said.
Reasons For Optimism
The city has seen growth in some revenue line items, he adds. Taxes on hotel rooms, for example, already brought in almost 50 percent of the projected $1.9 million in the fiscal 2013 budget through the first four months.
Also, additions such as the New Leaf Pastry Kitchen help the city’s bottom line, albeit only slightly. The shop is inside the city-owned Hardesty-Higgins House on South Main Street.
Harrisonburg Tourism and Visitor Services also operates there.
New Leaf pays $500 a month as rent, but it also serves as a tourist draw into the visitors center. The kitchen’s area was vacant for almost all fiscal 2012.
City officials can also be optimistic because the current $199.2 million budget withstood fiscal uncertainty as it was developed.
The General Assembly convened a special session to finish its work earlier this year, approving a budget several weeks later than scheduled.
City Council then adopted its budget, maintaining the level of services provided by the government.
Still, Hodgen wants department leaders to view their 5 percent contingency budget for fiscal 2014 as if the cuts will be permanent.
“While everyone did a great job of identifying target areas for reductions in their budgets last year, many of these reductions would have only realistically worked for one year,” he said in the letter.
Fire Chief Larry Shifflett said sustaining a flat budget has long-term implications on local government.
“The limitation for most all departments is when you have capital projects that cost thousands or hundreds of thousands of dollars,” Shifflett said. “It’s not so much the everyday budget.”
For the Harrisonburg Fire Department, those stalled projects include the addition of the city’s fifth fire station — to be built in the Park View area — and outfitting the most-traveled intersections with a traffic intervention system.
The technology, already in place in about 20 intersections, allows emergency vehicles to control traffic lights. Shifflett said the department needs $320,000 to finish the project.
Lee Foerster, director of the Harrisonburg Parks and Recreation Department, said balancing his budget has required reallocating small amounts of funding. For example, park benches and grills are used longer before getting replaced.
But the effort to just stay afloat does lead to long-term setbacks, Foerster said.
“We’re falling behind,” he said. “We have a tremendous demand right now for playing fields. … We’re about four or five years behind building soccer fields.”
Salaries Stay Put
Hodgen asks city officials not to include salary increases in their budget requests.
By the summer, the city should finish a comprehensive pay scale study. A request for proposals from interested companies to conduct the study has been made.
Hodgen said a decision from City Council on employee pay may not come until after members have the study. The report, estimated to cost $100,000, will provide officials with information on how Harrisonburg is positioned in the labor market.
Hodgen also advises city departments not to add any positions in their budget proposals, unless required by law or to meet a health or safety need.
According to a draft budget schedule, council will review a proposed spending plan March 26.
Contact Preston Knight at 574-6272 or email@example.com