Fredericksburg will soon begin looking at its budget situation

BY EMILY BATTLE

Date published: 11/12/2007

BY EMILY BATTLE

Fredericksburg can't point to Central Park anymore as the answer to all of its financial woes.

City sales-tax numbers tell the story of how the proliferation of competing retail developments in the counties has quelled the rapid revenue growth that the retail complex once meant for the city.

According to figures that City Council members saw at a Friday budget retreat, city sales-tax receipts grew from just under $10 million in fiscal 2003 to $12.9 million in 2006.

In 2007, they dropped to $12.2 million, in part because Fredericksburg had to return $400,000 in sales tax that was mistakenly paid by Spotsylvania businesses.

"Our position is eroding with the opening of other regional stores," City Manager Philip Rodenberg told council members Friday. "It points out how important Celebrate Virginia is going to be to keeping us stable as an independent city."

As the sales-tax growth has trailed off, city expenses have grown, due primarily to a rise in health care and benefits costs, the city's share of school costs and debt service to pay for things like the new James Monroe High School.

As a result, the city has spent more money than it has brought in for the past two fiscal years.

Until projects like the Wegmans grocery and Celebrate Virginia--timelines for which are hard to pin down in today's economy--start operating, Fredericksburg budget officials don't see that trend reversing.

In the meantime, the city is using its general fund reserve--which grew in the years when Central Park was growing--to close the deficit.

This does not produce a lot of smiles when City Council members consider how to pay for a number of large capital projects.

Among them:

A new courts complex. The cheapest immediate option to meet current needs would cost about $33 million, which would require a 6-cent real-estate tax hike to finance, but building a complex that would meet longer-term needs could cost around $60 million.

Water- and sewer-system improvements. Council will hold a public hearing Tuesday on issuing bonds to pay for $8.5 million worth of water and sewer projects, and the city's wastewater-treatment plant is in need of upgrades.

A riverfront park. Building and buying land for the first phase of that project is expected to cost up to $7.1 million. The bond issue that will be heard Tuesday includes $2.5 million of that expenditure.

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Date published: 11/12/2007

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