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City Manager Ken Larking has submitted to City Council a proposed budget that maintains basic services, continues to invest in City Council’s focus areas, and moves toward closing the long-term structural deficit.
No tax rate increases are proposed. Also, no new utility rate increases are proposed, but utility rate changes for places of worship that were scheduled to take effect a year ago but delayed are set to take effect in July.
In submitting his plan, Larking acknowledged the economic uncertainty caused by the novel coronavirus (COVID-19) pandemic. Coronavirus-triggered social distancing mandates likely will result in loss of revenue.
“In the short term, we expect losses in revenue associated with meals, hotels and sales taxes,” Larking said. “The long-term outlook is unclear. It is my understanding that the fundamentals of the economy were sound, with the exception of the coronavirus impact. Our hope is that we will quickly pick up where we left when social distancing requirements are lifted.”
Larking said that there are three options for replacing lost revenues. Staff is tracking COVID-19 costs for the potential allocation of federal emergency funds. The City also has a $3 million budget stabilization fund and sufficient reserves that are appropriate to use in response to emergencies.
As it stands now, the budget draft includes nearly $1 million for economic development projects, more than $850,000 for various capital projects, $500,000 for debt service payments, and $480,000 to bring City employees up to the minimum of the pay ranges recommended by a pay study. There is also $580,000 budgeted to continue the City’s pay-for-performance system, with average increases of 2% for employees, depending on performance.
For utilities, additional money is being set aside to accelerate the renovation schedule for electrical substations.
The proposed budget invests additional money in the City Council focus areas, which are public schools, crime reduction and public safety, and projects designed to grow Danville.
Danville Public Schools would receive an increase of $150,000 for its operational budget, bringing the total local funding for school operations to $22.8 million. The budget draft also includes $2 million in bond proceeds to be used by schools to pay for capital expenses such as roof and HVAC equipment replacements and other building repairs. Voters may also have a chance to vote on a proposed 1% local option sales tax for school renovation and construction by referendum in November.
New crime and public safety initiatives include expansion of the closed-circuit television camera system, purchase of new police equipment and continued replacement of fire apparatus.
To grow Danville, money is set aside for River District projects, streetscape improvements, international recruitment, blight removal and neighborhood revitalization, gateway improvements, park improvements and Welcome Center upgrades.
The proposed budget does not include additional revenue related to historical horse racing or casino gaming because much of that is unknown at this time. Last November, the citizens of Danville voted to approve pari-mutuel wagering or off-site historical horse racing, but Colonial Downs has not established a location in Danville. The General Assembly has adopted legislation to allow Danville to hold a referendum this November on whether to allow casino gaming in the city.
The City has implemented a number of cost-saving measures. The measures include changes to the employee health insurance plan, a dependent eligibility verification audit, operation of an employee health clinic, a tiered retirement system, and reorganization and reclassification.
The total proposed budget for the next fiscal year is $291.45 million for operations, capital and debt service, which includes all funds minus inter-fund transfers. This total is $10.18 million or 3.6 percent more than the current budget of $281.27 million.
The proposed budget is a working draft for the next fiscal year, which begins July 1. City Council will review the budget starting at its next meeting on Tuesday, April 7.
Public hearings will be held in May and June.
Final adoption must take place no later than June 30. The final budget will serve as a framework for city operations from July 1, 2020, through June 30, 2021.