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City Manager Jack Tuttle released his proposed $51.6 million budget on April 1. He noted several positive trends for the city’s finances: property tax revenue should increase by 2.8 percent; intergovernmental revenue should be up 10.5 percent; and all other tax and fee revenue, taken as a whole, should be positive.
The biggest increase in spending will be the city’s contribution of $8.4 million to Williamsburg-James City County Schools, which it jointly funds with James City County according to a formula adopted last year. The city’s school population has grown for two years in a row, resulting in an 8.1 percent increase in school costs. Tuttle said the city’s contribution has increased by more than $1 million in two years.
The city also proposes merit pay increases of 2 percent, along with a 2 percent increase in pay ranges. The merit increases will be based on annual performance evaluations. In addition, the city’s health care costs will increase 4.9 percent.
The city anticipates revenues going up 3.2 percent, to $33.2 million. Spending is also up, rising 2.8 percent to $33.3 million. Tuttle proposes using $108,631 from the city’s reserve fund to cover the difference.
No tax or fee increases are recommended for 2014. Last year, City Council approved two tax increases. The real estate tax rate increased three cents, from 54 to 57 cents per $100 of assessed value. A tax on cigarettes went up five cents.
The budget does recommend a 5.5 percent rate increase for water and sewer, however. The new rate would go from $4.55 to $4.80 per 1,000 gallons, effective July 2013. Currently, Williamsburg charges less than any other locality in Hampton Roads; Chesapeake charges the most, at $10.90 per 1,000 gallons.
The city will add five full-time equivalent positions, bringing the total number of city employees to 188 (still down from 202 in 2009). The employees, who worked for the Williamsburg Redevelopment and Housing Authority, are being incorporated into the city budget. In addition, the Economic Development Office has a new position for an economic development officer who will also help manage the WRHA-owned Triangle Building.
The WRHA Board proposed City Council take over leadership of the organization in August, and Council approved changes to the authority’s structure at a February meeting. WRHA will reimburse the city for the employees’ salaries and benefits.
The city’s Capital Improvement Program projects $8.1 million in new spending, plus $836,177 in debt service payments, bringing the CIP total budget to nearly $9 million.
Real estate tax revenue is expected to rise 4 percent. New construction, mostly for Riverside’s Doctors’ Hospital, has offset the loss the city will take when the Hospitality House, a hotel on Richmond Road, is removed from the tax rolls. The College of William & Mary announced last month it plans to close on the Hospitality House in May, turning the hotel into student housing by fall.
To make up for the loss of tax and fee revenue from Hospitality House, Tuttle included a proposal for a $250,000 “Emergency Services Agreement.” In response to the sale of the hotel, Mayor Clyde Haulman told WYDaily last month the time might be right for the college to pay the city for providing emergency services to campus.
Similar agreements have become common in many college towns, including neighboring Newport News. In September 2012, Newport News City Council approved a Memorandum of Agreement to provide emergency services for Christopher Newport University. The agreement states CNU will reimburse the city for all labor costs associated with providing support for planned events, such as medical support for football games, within 30 days. At present, W&M does not pay the city for emergency services.
The city took a hit on room taxes, which decreased 4.4 percent from last year’s estimate. Meals taxes were slightly better, with a 0.4 percent increase. “These estimates remain below 2008 levels, reflecting continued weakness in the tourism sector, and an overly ambitious estimate for room tax last year,” Tuttle wrote in the budget message. Together, all sources of taxation will generate $26.9 million, a 1.1 percent increase from the current year.
The city is budgeting for nearly $9 million in Capital Improvements Program spending for 2014. The majority of the spending — $5.5 million – is a placeholder for the proposed Stryker Center. The city is accepting bids for the project until May, but City Council members haven’t yet agreed to definitely move forward with the project in 2014. The new CIP spending also includes $90,000 in information technology spending, $337,000 for vehicle replacements and $200,000 for contingency capital projects.
See the full budget proposal here.