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Danville, VA Local Government News and Announcements

Posted on: May 1, 2019

Council moves forward with new budget draft

Photo of Council Chambers

City Council on Tuesday evening agreed to move forward with a new budget draft that includes eliminating a proposed cigarette tax and cutting in half a proposed increase in the real estate tax rate.

Added in the latest draft were a one-percentage point increase in the hotel/motel tax – from 7 percent to 8 percent – and a $2 per night hotel/motel room occupancy fee.

The current budget proposal also includes updated revenue projections, an increase in the use of reserve funds, and an increase in the transfer of utility funds to the general fund. The increase in the transfer of utility funds is based on recovering increases not taken in previous years.

The changes were outlined in a special meeting of City Council last night.

City Council will hold a public hearing on the proposed tax increases — which also includes a 10-cent increase in the personal property tax — at its regular meeting on Tuesday, May 21. The meeting will begin at 7 p.m.

Budget changes

To pay for increased local funding for the Danville Life Saving Crew and Danville Public Schools, City Manager Ken Larking last month proposed the implementation of a 30-cent per pack tax on cigarettes and an eight-cent increase in the real estate tax rate from 80 cents per $100 valuation to 88 cents.

The cigarette tax was projected to generate $500,000 annually when fully implemented. The eight-cent increase in the real estate tax rate would have generated more than $1.75 million.

Under the latest budget draft, there would be no cigarette tax, while a four-cent increase in the real estate tax rate would generate nearly $900,000. A one-percentage point increase in the hotel/motel tax is projected to generate $155,000, and a $2 per night hotel/motel room occupancy fee is projected to generate nearly $260,000.

Higher revenue projections, use of reserve funds, and an increase in the transfer of utility funds to the general fund are the primary means that make up the difference between the new draft and the previous version.

With the changes, a $280,000 increase in local funding – from $80,000 to $360,000 – remains in the proposed budget for the Danville Life Saving Crew.

Also, an increase of $2.3 million or 11.2 percent in local funding remains in the budget for Danville Public Schools. The increase would push local funding for school operations to $22.6 million. The recommended budget also includes $3.36 million in bond proceeds to be used by the school system to pay for capital expenses like roof and HVAC equipment replacements and other building repairs. The bond proceeds also will pay for an information technology and robotics lab at George Washington High School.

As initially proposed, a 10-cent increase in the personal property rate remains in the budget.

Budget process

The proposed budget is a working draft for the next fiscal year, which begins July 1. City Council reviewed the budget throughout April.

Public hearings will be held in May and June, with the first public hearings taking place on Tuesday, May 7, on the budget for Danville Public Schools and proposed utility rate adjustments. The public hearing on the real estate and other proposed tax increases will be held at City Council’s meeting on Tuesday, May 21.

On June 4, City Council will hold a public hearing on the full budget. Final adoption is scheduled for the June 18 meeting.

Final adoption must take place no later than June 30. The final budget will serve as a framework for city operations from July 1, 2019, through June 30, 2020.

For utilities, there is a projected natural gas rate decrease of 4 percent. The average residential gas customer will see a 4.7 percent decrease in their bill.

Also, there is a $0.20 per cubic foot sewer rate decrease that is offset by a water rate increase of the same amount, which, when combined, would have zero impact on utility bills for customers who have both water and sewer service – the vast majority of customers.

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