Williamsburg City Manager Jack Tuttle emphasized a program of careful spending during the City Council’s winter budget retreat Saturday morning.
During the retreat, Tuttle and members of city staff briefed the City Council on the current state of the City of Williamsburg’s finances, and broke down a series of projections for the remainder of fiscal year 2015, which ends June 30.
Staff projected minor gains in the city’s revenue from meal and sales taxes, increasing 3.64 percent and 1 percent over last year’s rates, respectively.
It was a different story for room tax rates, which experienced a substantial drop in revenue over the summer. Revenue from room taxes decreased by 11.25 percent in June and 4.61 percent in July. A smaller drop of 2.75 percent also occurred in November.
Projections for the remainder of the fiscal year estimated a decrease in room tax revenue of 1.53 percent compared with 2014.
Tuttle said the losses from the summer slump likely meant the city’s revenues would come in lower than its operating budget. Projections also showed the city’s expenditures for fiscal year 2015 coming in under budget, mitigating the revenue shortfall.
The city initially budgeted $33.52 million in revenue for 2015, but current projections push that to $33.6 million. At the same time, the city’s expected expenditures dropped from $33.7 million to $33.3 million.
The June-July slump continues a trend Williamsburg has seen over recent years of declining revenues during the summer months — traditionally the city’s most lucrative period. Autumn and winter months have seen an increase in the city’s receipts from room, meal and sales taxes.
“The summer has been weak, and the growth has been over the shoulders,” Tuttle said.
Tax revenues from October were at their highest levels since 2010, while September and November exceeded their figures from last year.
Mayor Clyde Haulman noted the revenue from April and May had nearly reached the levels of the peak summer months of June-August in terms of revenue. Tuttle said that observation could be a strike against the so-called Kings Dominion Law, which prohibits school divisions in Virginia from beginning the academic year before Labor Day.
The state’s tourism industry has championed the law since it came into effect in 1986 as a boon to Virginia’s economy. The Virginia Hospitality and Travel Association estimates the law generates $369 million in economic activity in the state.
With its connections to tourism, leaders in the Historic Triangle have traditionally supported the law. Tuttle questioned whether that strategy should be reassessed.
“It makes me wonder if the region fighting the Labor Day thing is really smart,” he said. “I’m not sure it’s as critical as it once was.”
Vice Mayor Paul Freiling said shifting the summer season back several weeks to coincide with earlier school years could have a beneficial effect for the city in particular.
“If I’m considering a destination … if I’m thinking of going to Williamsburg or Virginia Beach, in August, it’s a no-brainer — I’m going to Virginia Beach,” he said. “In May, June, probably not.”
Staff members also briefed the City Council on the state of public salaries in the city. Deputy City Manager Jodi Miller said city employees had seen a total pay increase of about 5 percent. Employees in James City County received an increase of 4 percent over the same time, while those in York County saw a 5 percent increase.
While the city’s figures were comparable to the other Historic Triangle localities, Miller said the rest of the region saw a higher increase.
Tuttle said other contributions from the city, such as early retirement and health insurance, boosted employees’ total compensation to a fair market rate.
“I think we’re a little bit better off on the benefits, and a little bit lower on the pay, generally,” Tuttle said.
The City Council will be presented with a proposed budget for fiscal year 2016 from the City Manager at its meeting March 27.
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