How the City can cut spending now to head off deficits later (OPINION)
Proposed changes to budget are not excessive or unreasonable, but provide a basis for caution while still maintaining a strong and safe Williamsburg
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My previous commentary on the city’s preliminary FY2027 budget presented an alternate forecast for the next 5 years. Using modest and reasonable changes in assumptions, I predict that the city’s current spending plans could quickly result in general fund deficits totaling $25 million, a shortfall that would require doubling the current real estate tax rate, or the use of our financial reserves, to resolve.
On top of that, the budget contains significant errors that I believe hide the city’s true financial obligations. These include at least $18 million in unappropriated monies mishandled across multiple accounts. The city’s debt analysis obscures total borrowing that will reach $101 million before debt service, up from $15 million five years ago. As I explained, healthcare costs, commitments for the regional sports center, library expenses, and school funding are all materially under-represented.
Prudent fiscal management for cities, as well as for households and businesses, is to live within your means. When the economic future is clouded and risky, we typically are conservative in our spending and limit our exposure to debt. The city’s leadership does not seem to agree, and as such, there are a number of problems and issues with the preliminary FY2027 budget.
While the city’s spending problem can’t be resolved in one budget, we can take steps with the current budget to mediate some of these increases. The following analysis presents both corrections to errors in the preliminary budget and suggestions for changes.
Cost-saving measures
Next, we must evaluate practical cost-saving measures and structural adjustments that can bring the city’s expenditures back in line with its actual growth and fiscal capacity.
Cuts to General Fund expenditures
Proposed General Fund expenditures, especially excessive personnel growth, as well as undisclosed regional subsidies (such as those to the Historic Triangle Recreation Facilities Authority), threaten the city's long-term fiscal stability.
While the city population has not grown in the past 5 years, k-12 school enrollment remained flat, and employment virtually unchanged; nevertheless the city has already added 35 new positions to the city government. Now they want to add another 14 positions, bringing the total new positions thru 2027 to 49.
Proposed new hiring includes adding 3 new police officers in addition to the 46 we already have, and another 3 fire fighters in addition to the 45 full-time and 23 volunteers we already have. This is despite a 5.8% reduction in police calls and the city has not disclosed the reduction in Fire and EMS calls. Adding additional personnel will institutionalize this cost for future years together with benefit costs which represent about 45% of salaries. Additionally, there is the cost of office equipment and supplies and the additional cost of providing additional office space. Overall, this is a cost which should be rejected considering the current anticipated economic uncertainty.
Despite the proposed increase in 14 full-time employees, the city proposes to increase both salary overtime and part time salaries, which is inconsistent. If additional positions are added, shouldn’t these costs be significantly reduced, say by 50%?
The support for the HTRFA and the regional sports facility is not identified in the budget. The city is committed to covering the debt service on debt of $79 million (except only the annual amount provided by other jurisdictions of $1.5 million) and covering the annual operating deficit. In recent years this has been debt service of $2.5 million per year and operating deficit coverage of $586,000. Additionally, the city provides administrative and accounting support to the HTRFA – the cost of which and status of reimbursement has not been disclosed.
Capital Improvement Plan cuts
In addition to the general fund items discussed above, there are several items in the capital improvement plan which should be revised or eliminated. Where are the proposed outside revenues for the following coming from? If they can’t be identified, why are they budgeted with equal costs?
The budget includes funding for a consultant of $300,000 this year and the same amount last year to prepare and facilitate the development of the city’s comprehensive plan. This effort was always done by city staff in the past, and in fact that was the announced plan when the current director of planning was hired.
The library has revenue coming from outside sources, hopefully Friends of the Library, totaling $4 million. James City County and York County have so far refused to provide funding.
The CIP includes the Trail 757 project at $3.5 million and a corresponding revenue amount; however, VDOT funding request has only been made for $2 million. The remaining identified funding of $1.5 million currently has no identified funding source and VDOT has not confirmed the award of $2 million.
The revenue from the Dog Street bollard (pedestrian safety) project is projected to come from grant money; however, no specific grant has been identified in the budget.
The Waller Mill public safety training facility has budgeted $1.5 million in revenue coming from outside sources but no specific outside source has been identified.
Flock camera installation at $45,000 and annual cost of $86,000 is unpopular and many construe as an invasion of privacy. Without popular support, the project should be deleted and these costs deleted from the budget.
The city’s preliminary FY2027 budget contains serious flaws that obscure its true financial picture, including unappropriated monies, misleading debt disclosures, unsecured capital revenues, and under-budgeted costs that together support a forecast of $25 million in general fund deficits. The corrections outlined above are not excessive; they are the minimum steps required for responsible fiscal stewardship.
About the Writer: During a 45-year career, Robert Wilson worked with senior leadership teams to develop and implement innovative strategic and business plans that have fostered growth and profitability. Mr. Wilson holds a BBA degree from the College of William & Mary, a MS in Finance degree from the University of Arizona, and a Doctorate in Management from the University of Maryland Global Campus.
A Williamsburg Independent editor used AI tools for formatting and clarity.
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