By Sarah Vogelsong
City Manager Mark Haley presented Hopewell’s “first crack” at a budget April 4, revealing a shortfall of between $65,000 and $388,000 if City Council’ requests are funded.
Hopewell is beginning its budget process later this year than in prior years because of the urgency of completing the city’s Comprehensive Annual Financial Report for 2015, a state-mandated document that is 16 months late. The city manager previously instructed the Finance Department to back-burner the budget in favor of completing the CAFR.
Haley’s $52.3 million budget proposal takes into account a request by Hopewell City Public Schools for an additional $515,179 in funding, municipal employee pay scale adjustments costing $162,650 and health insurance increases of $148,700, 1 percent to 2 percent cost-of-living adjustments and the addition of 15 new positions.
Six of those positions would be for the Bureau of Fire, which has requested more firefighters to replace responders who previously contracted with the Hopewell Emergency Crew to provide services. The other positions include two downtown beat police officers, a rental inspector, two additional Finance Department employees, a grant writer, an engineering analyst and two additional real estate assessors.
To offset those expenses, Haley pointed to anticipated growth in the city’s industrial sector, including an expected industrial announcement and a potential $100 million expansion of an existing business. As well, the enterprise zone machinery and tools tax rebates that Honeywell, WestRock and Ashland currently receive will be expiring in the next one to three years, triggering revenue increases.
Due to the addition of business downtown, increases in sales and meal taxes are also expected in the upcoming fiscal year, Haley noted. At the same time, Hopewell will once again begin receiving revenues from fines imposed by local police patrolling Interstate 295, with the proceeds expected to be about $600,000.
Looking longer term, Haley told City Council that FY2018 will be the last year before long-term debt begins “a gradual but steady decrease,” with 58 percent of Hopewell’s long-term debt on track to retire in the next decade. Real estate assessments have also been leveling out and are showing signs of increasing in the future.
Nevertheless, with the need for more funding in the upcoming year, Haley recommended that council consider raising both the real estate tax and the meals tax.
The real estate tax increase would bring the current rate of $1.13 per $100 of assessed value up to $1.17 per $100, a rate still less than that imposed by Colonial Heights ($1.20), Petersburg ($1.35) and Richmond ($1.20). According to Haley, that would increase revenues by just over half a million dollars.
A meals tax increase from the current 5.5 percent rate to a 6 percent rate would bring Hopewell’s tax to the same level maintained by Colonial Heights and Richmond while still remaining below Petersburg’s 7 percent meals tax. Such an increase is expected to generate an additional $200,000 in revenue.
Even if Council passes the proposed tax increases, however, the city will still be short $387,781 if it funds all of the department and school requests. Eliminating one proposed downtown police officer, one extra Finance Department position, the grant writer, the engineering analyst and one extra real estate assessor would bring that shortfall down to $64,781.
“We need to find some areas to push and tweak a little more,” said Haley.
In terms of capital needs, Haley proposed a $10,200,000 budget, with $2.5 million going toward the completion of planned infrastructure projects that would fix curbs, drains and similar issues; $1.2 million toward an unannounced economic development purchase; and $6.5 million toward the new fire station.
Borrowing that amount, he cautioned council, would require the body to waive its self-imposed rule limiting its debt ratio to 5 percent of municipal assets. However, he pointed out, the city’s debt ratio would be projected to remain at an elevated 5.1 percent level for only two years before dropping down into the target range again and would never approach the state’s 10 percent limit.
City Council made few comments on the proposal April 4.
A work session on the capital improvements plan and a public hearing on the proposed tax rates have been scheduled for April 11.
• Sarah Vogelsong may be reached at email@example.com or 804-722-5154.