COLONIAL HEIGHTS — Colonial Heights has proposed a total budget of $74.9 million for fiscal year 2014-2015, a less than 1 percent increase in the budget from the previous year.
The proposal includes a two-cent increase in the real estate tax rate to meet an increase in the city’s demand for services.
The council recently approved two new full-time and two new part-time sheriff’s deputy positions to help with security enhancements established through the new courthouse, which could have three courtrooms operating simultaneously, in addition to a reduction in allowable part-time hours enforced through the Affordable Care Act.
Next year’s costs related to this increased staffing exceed $200,000, and the budget proposal states that “this item alone necessitates a permanently increased revenue stream if we are to absorb these new annual costs without adversely affecting other city services.”
Effective Jan. 1, 2015, a proposed two cent increase in real estate taxes, up to $1.16 per $100 from $1.14 per $100, is expected to create additional revenue for these services.
Colonial Heights City Manager Thomas Mattis said that each penny on the real estate tax rate is expected to generate $150,000 worth of revenue, and that the increased rate would additionally benefit the public school system because a tax-sharing agreement stipulates an equal division of revenues.
Although the tax rate would only provide a half-year benefit since the fiscal year will be halfway over by January 2015, the city will be able to utilize $120,000 of a one-time Courthouse Security Funds grant to cover the remaining costs needed to fund these extra positions for the upcoming fiscal year.
“It’s never a good time for the city manager to stand up and say we need to raise taxes, but we’re just in a situation this year where we’re trying to make sure that we’re able to continue to maintain the service level expected by our community,” Mattis said at a council meeting on Tuesday night.
Mattis estimated that approximately 90 percent of the budget stands to maintain the city’s services and operations as they are.
Nearly half of the proposed budget will be appropriated for public schools, over 17 percent will go toward public safety and the court system, approximately 11 percent for city services and 7 percent for employee benefits.
Mayor C. Scott Davis said that he was not currently in favor of the tax rate increase following the presentation of the budget proposal on Tuesday, mentioning the possibility for re-appropriation from other funds or alternative measures to prevent the need for a tax hike.
The budget proposal includes funding for 351 city employees, 253 full-time, 50 part-time and 48 seasonal positions, for which no increased salaries are included in the budget.
Mattis emphasized that the city has a difficult year ahead in allocating funds for the increase in demand for services.
More than a third of the proposed general fund operating revenues are expected to come from real estate taxes, followed by retail taxes and food/lodging taxes at 14 percent each.
“We’re not projecting revenue growth like we’d like to see,” Mattis said, before emphasizing that Colonial Heights is still in a stable financial position.
Mattis said that both the revenues earned from retail taxes and food/lodging taxes are the usual sources for being able to fund new services in the budget, but they are variable in nature and haven’t shown any upward trends recently.
“We’re having difficulty developing any growth patterns with confidence that we think will yield any significant new revenue for us into the next year,” Mattis said.
Lodging revenues were consistently over $100,000 throughout 2012, but dropped to as low as $50,000 in December of 2013, and Mattis said they are not anticipated to return back to the 2012 levels.
Aside from the proposed property tax increase, the budget does not include any deficit spending, staffing or service reductions, major policy changes or unpaid holidays.
The council will continue to work on the budget, which can be viewed on the Colonial Heights government website, in the next couple of weeks and there will be a public hearing on the proposed budget on April 29.