With “caution” being the word of the day, Roanoke City’s Director of Finance, Ann Shawver and Director of Management and Budget, Amelia Merchant began framing the budget for fiscal year 2012. At a briefing with council Monday fingers were crossed that revenue will remain stable and expenses will continue to stay below this year’s budget.
Fiscal year 2010 was the first year ever the city had declining revenue. Fiscal year 2011’s adopted budget anticipates another year of decline at 1.5 percent. The preliminary forecast is for a flat fiscal year 2012 compared to 2011–Flat being an improvement after two consecutive declining years.
A surplus of $3.78 million for fiscal year 2010 is due to hiring delays and salary freezes. The economic downturn has produced a “smaller government” for Roanoke City. The employee per capita has declined to below the 2006 level at .0185 of an employee per person.
Though sales tax revenue hit a growth spurt in November, Shawver notes that fixed costs are increasing. Shawver remained wary with the lost revenue from the delayed openings of Wal-Mart and Kohl’s which are now scheduled for the middle of fiscal year 2012. Kohl’s is expected to generate about half the sales tax revenue of Wal-Mart.
City Manager Chris Morrill was more optimistic saying, “Kohl’s may be more of a regional draw.” People should linger in the city and spend time shopping at other stores and dining out.
Poverty in the city has continued to climb. In 2010, 22.76 percent of Roanoke’s population was on food stamps – a 15.4 percent increase over 2009. Health insurance premium and retirement contribution increases add to the overall fixed cost increase.
Long-term bond debt per capita has increased. Roanoke City has taken steps to toe the line on debt after exceeding the city’s debt policy in fiscal year 2010. It exceeded the 10 percent cap at 10.2 percent. Shawver warned that debt would hover at the 10 percent level for three more years. This leaves little or no room for funding additional capital improvement projects.
Answering city council questions on pension funding, Morrill settled concerns saying, “there is a lot of hysteria out there about municipality’s pension funds going bankrupt – we have a sound pension plan.”
The first cut at the FY2012 budget estimates an increase to the schools of $139,000 with total funding to schools just short of $69 million.
Shawver said, “it is a little early in the process” and she expects a clearer picture of revenue from personal property taxes when vehicle data becomes available. For now a decline of 3 percent is expected. Real estate values will be watched carefully and are expected to remain flat for FY2012.
General Assembly passes a BPOL tax change
With the passage of House Bill 1437 the Business professional and occupational license tax (BPOL) can be calculated using gross receipts or Virginia taxable income. It now waits to be taken up in the Senate Finance Committee.
The commissioner of revenue, Sherman Holland said that “Calculating the BPOL tax on net rather than gross receipts will result in less revenue for the City of Roanoke unless the Code of Virginia increases the established rates.” Roanoke presently calculates on gross receipts.
Shawver thought it didn’t mean that you could do both but had to pick one or the other. “Localities would need to have uniformity in the application of the tax. This type of legislation shifts the political battle to the local level,” said Shawver in an e-mail.