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City manager recommends no raises, no spending increase, 5-cent real estate tax rate hike

Date published: 3/12/2008


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

PROPOSED CITY BUDGET Total: The general fund totals $77.9 million, which is a 0.72 percent decrease from this year's budget.


Real estate tax: Rodenberg recommends a 5-cent increase in this tax rate, from 53 cents to 58 cents per $100 of value. This would raise an additional $2.05 million in city revenue. For someone who owns a $300,000 house, it would mean a tax increase of $150 a year.

Other taxes: EMS fees would be raised to maximize the reimbursements the city gets for these fees from Medicaid and Medicare. This would bring in $60,000. Solid waste fees would go up 5 percent, bringing in $34,500. The lodging tax would go from 5.5 percent to 6 percent, raising $55,000. The planning department would also begin charging a fee when traffic-impact studies are required for a development project. This could bring in $5,000.

Utilities: The proposed budget would raise water fees 4 percent and sewer fees 8 percent. For a residential customer who uses 10,000 gallons every bimonthly billing cycle, this would mean paying an extra $4.21 per bill.


Schools: The manager recommends a $1 million increase over what the city gave the schools this year. The School Board had asked for $2.8 million more.

Employees: The proposal includes no raises for city employees. It also cuts six city positions, which are already vacant: two in the fire department, two in public works and one each in the police and parks and recreation departments. Part-time salaries would also be reduced. Employee health benefits would stay the same, while the city's health care costs will rise $240,000.

Jails: The city will be required to spend $574,000 more than it did this year on the Rappahannock Regional Jail, as the jail opens two new wings and tries to keep its officers' salaries competitive regionally. Fredericksburg is contractually bound to pay a quarter of the costs of running the jail, based on the percentage of inmates who are arrested in Fredericksburg versus the three other localities that fund the jail--King George, Spotsylvania and Stafford counties. The jail increase is tempered somewhat by a roughly $200,000 decrease in funding for the Rappahannock Juvenile Detention Center.


Council members will hold work sessions on the budget in the coming weeks. A public hearing is scheduled for April 15 at 7 p.m. in City Hall.