On Monday, Richmond City Council approved a revised budget for fiscal year 2021 but said it will need to revise the spending plan regularly. Mayor Levar Stoney unveiled his original proposal in early March (pictured here), but the onset of the coronavirus pandemic has forced the city to cut its spending and expect leaner tax revenues. (Photo by Rodrigo Arriaza)
When Mayor Levar Stoney unveiled his proposed city budget for the coming fiscal year in early March, he called it an “exercise in compromise,” adding that it represents “an attempt to balance everything we need and want with what we actually have.”
If that assessment was true then, it’s even more true now as the city grapples with spending cuts and projected revenue shortfalls caused by the COVID-19 pandemic’s toll on the local economy. Richmond City Council on Monday adopted a revised spending plan for fiscal year 2021 but added that it will require monthly revisions as the pandemic’s long-term impact comes into focus.
“This amended budget before us is the very first in many amendments that will be necessary considering the pandemic’s impact on our community at all levels,” said Council President and 7th District Councilwoman Cynthia Newbille. “This is not a one and done. … This is an ongoing amendment process that we’ll have to be diligent about and strategic and be informed in terms of any amendments that we put forth.”
The adopted $744.1 million budget is $38.5 million less than Stoney’s pre-coronavirus proposal and a $2.1 million decrease from the city’s 2020 budget. The city has already implemented a hiring freeze for all nonessential staff positions, and in fiscal year 2021 it will nix planned spending including a 2% salary increase for city employees, step pay increases for public safety personnel and funding for 12 new city employees. Planned utility rate increases were also scrapped.
Funding for Richmond Public Schools also will be reduced by $10.3 million, but RPS will still see an overall $6 million increase over funding received in the current fiscal year.
The budget was adopted in a 5-4 vote; 2nd District Councilwoman Kim Gray, 3rd District Councilman and Vice President Chris Hilbert, 4th District Councilwoman Kristen Larson and 8th District Councilwoman Reva Trammell were in opposition. They said Council should delay its vote until the end of the month to better publicize its now-virtual meetings to the public, further review incoming data and tweak the spending plan.
Alongside cuts, city staff expects revenues from property taxes and other local taxes to drop by 5% to 15% in the upcoming fiscal year. Real estate tax revenues are projected to take the steepest drop at $17.3 million, followed by an expected $5.5 million decline in business license tax earnings and $4.7 million in lost meals tax revenues as the coronavirus forces restaurants and other businesses to close their doors.
Hilbert argued that the drop in meals tax revenues could be worse than expected.
“We are known as a foodie town, and these restaurants and bars have been closed — and hopefully they’ll open up — but the fact is just because they’re going to open up doesn’t mean that people are going to go out. At best, they’re going to be able to operate at 50% capacity,” he said. “I just believe that a 10% hit on [meals tax revenues] is wildly optimistic.”
Proponents, meanwhile, said the revised budget gives staff members from Council and Stoney’s administration a base to work from as they track incoming revenues and evaluate adjustments regularly.
“I very much see this as the start to a beginning, not an end to these discussions,” said 5th District Councilwoman Stephanie Lynch. “Certainly, we have a number of needs that are going to arise and that have existed in our city for decades that we will have to address, and it will be even more challenging in the face of budget shortfalls.”
Lynch pitched the only major alteration to Stoney’s budget plan, which will move $300,000 from an anti-smoking program to a COVID-19 emergency fund focused on housing affordability.
In a statement after the meeting, Stoney thanked Council for its commitment to reevaluate the budget as the city prepares for uncertain times ahead.
“This budget is not the budget we first proposed, nor is it the budget we wanted, but it’s the budget we have to live with in light of these most difficult and challenging times,” he said. “Amid the uncertainty of this pandemic, we must be prepared to make adjustments as we go, and we fully expect to do so in the coming months.”
The new budget will take effect on July 1 and ends on June 30, 2020.
