Vienna’s budgetary numbers look promising for fiscal 2022, but the Town Council plans to hold back some funds just in case circumstances go sideways again.
“It’s Council’s intent to freeze a portion of the budget, 2 percent, as a pandemic hedge,” said Finance Director Marion Serfass. “They will release it if financial conditions warrant.”
Vienna Town Manager Mercury Payton has proposed a nearly $43.2 million fiscal 2022 budget that is 5.3 percent higher than the current pandemic-adjusted fiscal year’s, but 1 percent below last year’s proposed budget.
Payton for the seventh straight year has proposed leaving Vienna’s real-estate-tax rate at 22.5 cents per $100 assessed value. Each cent on the rate equals about $562,700 in revenues.
Given that residential properties’ assessments rose 5.6 percent this year, the average bill would rise $94, or 5 percent, to $1,963. Council members are considering cutting the tax rate by 0.25 cents, which would reduce the average increase by $22 to $72.
Vienna residents also pay Fairfax County’s real-estate tax. County Executive Bryan Hill has proposed a 1-cent cut to the county’s tax rate of $1.15 per $100, but homeowners on average still would pay $224 more because of higher assessments.
Assessments of Vienna’s commercial properties, mirroring the trend elsewhere in Northern Virginia, declined an average of 2.2 percent this year. The town’s 6.6-percent commercial-vacancy rate at the end of 2020 was less than half the county’s 13.8 percent rate.
Like their Board of Supervisors counterparts, the Council will advertise the tax rate at current levels to give members additional flexibility during budget negotiations this spring. The Council may adopt a tax rate that’s lower than the advertised one, but not higher.
Vienna officials expect revenues to rise by more than $1.7 million in fiscal 2022, with $506,100 more in real-estate taxes, $411,000 in increased parks-and-recreation activities, $400,100 in additional state funding and $206,500 more in sales and business-license taxes, plus a $400,000 transfer from the water-and-sewer fund to the general fund.
Some revenues are down. Officials expect interest paid on cash deposits to decline by $86,100, that the use of prior-year reserves will go down by $50,000 and that the town will lose about $66,730 from other revenue sources.
Because of the pandemic, town officials last year eliminated pay increases for employees and discretionary spending by the town government, including travel, education and training.
However, because of improved conditions, savings from cost cutting and job vacancies, and higher-than-expected revenues from the state, Payton proposed giving all employees 3-percent salary increase starting April 1 and 1-percent pay raise in fiscal year 2022.
However, Council members have indicated a desire to freeze about $530,000 of the budget, which would postpone the pay raises, some parks-and-recreation expenditures, and travel and training costs until the town’s financial situation stabilizes.
Higher projected revenues will allow the town to hire two new employees: a full-time marketing assistant in the Economic Development Division and a parks-maintenance worker. Officials also expect employees’ health-insurance premiums to decrease by 4 percent.
With more federal money likely coming down the pike, the Council plans to put about $40,000 more in budget to support platforms for virtual meetings and finance some overtime to ensure compliance with social-distancing constraints, for example at farmers’ markets, Serfass said.
Expecting that activities will return to “normal” in the first quarter of fiscal 2022, town officials are projecting that revenues from many categories will go back to pre-pandemic levels.
Some planned vehicle purchases, which staff postponed last year, are back in the proposed budget. Officials are proposing to replace 10 vehicles that serve general-fund agencies, including four police cruisers with in-car police radios, plus two water-and-sewer vehicles, including a $380,000 sewer jet.
Meals-tax revenues for fiscal 2021 have equaled about 80 percent of the amount collected in the previous year, but this was an improvement from the 50 percent officials expected. Although town officials project that meals-tax revenues will rise 10 percent to $2.4 million in fiscal 2022, that figure is far below the $3 million forecasted for fiscal 2021 before the pandemic hit.
Vienna officials expect meals-tax revenues to recover to pre-pandemic levels by fiscal 2023. Meals-tax proceeds finance the town’s capital improvements.
The proposed budget would increase the water-and-sewer fund by $622,550, or 6.1 percent, to pay for higher sewage-treatment costs and planned salary increases. Water rates would rise 1 percent and sewer rates 10 percent, resulting in a $47 annual increase for the average customer.
“The plan will invest in the water-and-sewer system’s infrastructure,” Serfass said.
The town’s debt-service fund would decrease by $159,160, or 2.9 percent, under the proposed budget. Vienna did not issue any new debt in fiscal 2021.
The Council will hold public hearings on the budget and water-and-sewer rates April 12 and the tax rate on April 26. The Town Council then will adopt all three items on May 17 and the budget will take effect July 1.
“Virginia localities are required to develop a balanced budget by June 30 each year,” Serfass said. “Council encourages residents to attend the public hearings, which can be done by Zoom. They can go to our Website for more details.”