Taxes would go up while city spending would go down slightly under the proposed 2009 budget Fredericksburg City Manager Phillip Rodenberg released yesterday.

Rodenberg said the theme of next year's budget will be "restraint," as a slowing economy and regional competition cut into sales tax revenues.

Even with a 5-cent real estate tax rate hike, along with several other smaller tax and fee increases, the overall budget would be 0.72 percent smaller than this year's spending plan. That is an abrupt shift from recent years, when city spending has grown at a rate of around 10 percent annually.

For city employees, the austere spending plan will mean no raises and the elimination of an extra pension benefit the city had previously contributed to.

For residents, it means that some city services will decline while their taxes go up. Rodenberg's budget transmittal letter states that residents can expect the Dixon Park pool to reduce its schedule this summer, for the city's street maintenance and tree-planting efforts to slow down and for recreational programs to reduce their offerings, among other things.

"The environment in which we're building this budget is one in which the economy is slowing," Rodenberg said.

That shows up in forecasts for the city's sales tax--the No. 2 revenue source behind the real estate tax, responsible for 14 percent of the proposed budget's revenues.

The proposed budget counts on getting $10.8 million from the sales tax, which is down from the $12.2 million it brought in just last year. Rodenberg said he doesn't expect the 2010 fiscal year to be much easier.

The city will have to issue debt to build a new courts complex, along with a few other smaller projects. That debt will add an estimated $3.4 million a year to city expenses. That is equivalent to an 8.5-cent increase in the real estate tax rate.

In addition, the Rappahannock Regional Jail will continue to expand, and the city will have to start paying debt service on that project, which will cost another $701,500 a year.

While the proposed Kalahari Resorts water park hotel and other recently announced economic development projects will help fund those needs, they won't solve all the city's fiscal problems. Budget officials project that revenues will continue to trail expenses, even after the new business revenues are factored in.

Emily Battle: 540/374-5413
Email: ebattle@freelancestar.com