Gaithersburg’s proposed fiscal year 2021 budget is 5.4% higher than this year’s. But the outbreak of the coronavirus disease, or COVID-19, means that revenue projections could change quickly, the city manager said.
The proposed budget, introduced at the city council’s March 16 meeting, is $71.97 million, up from $68.3 million in the current fiscal year. The fiscal year begins July 1.
The proposed FY 21 budget increases spending in human resources, information technology, parks, recreation and culture, the police department, and public works, among other areas.
But the budget, City Manager Tony Tomasello said Thursday, is based on revenue forecasts that were made in January and February, before the coronavirus hit.
“And then eight weeks later, everything utterly changed,” he said.
Gaithersburg’s proposed budget projects that local tax revenue will increase from $31.6 million this year to $33.6 million next year. This figure, Tomasello said, is likely to take a hit due to the fact that many local sources of revenue are either closed or have seen sharp declines in business due to the virus.
“Right off the bat, you’re talking about things that are transactional. The hotel/motel [tax], admissions and amusement tax, places like Dave and Busters, which is closed …. They were a big revenue generator,” he said.
Additionally, intergovernmental revenue had been projected to rise from $19.1 million to $20.4 million last year. But that too will likely change, Tomasello said, because a large part of intergovernmental revenue is income tax, which will be hurt by mass layoffs and furloughs.
Tomasello said the reassessment of properties could also change revenue.
“You’re gonna see some reduction in the value of the commercial base. And people’s houses get reassessed in a three-year cycle, so you could see some reduction there,” he said.
The budget, as initially proposed, kept the property tax rate of 26.2 cents per $100 of real property and 53 cents per $100 of personal property the same. Tomasello said this will not change during the budget reconciliation process.
What’s more likely, Tomasello said, is that seven or eight new positions the city was planning to add will be on the chopping block. The positions, he said, are in public works and project management, as well as at least one police officer.
“I frankly will be surprised if those move forward,” he said.
Tomasello said some city employees might not receive an annual raise.
“It hasn’t been determined because we don’t really know what revenue is yet,” he said.
The City Council is scheduled to hold a public hearing on April 20. Tomasello said that will be done virtually since the council chambers are closed to the public during the COVID-19 pandemic. Rockville and Takoma Park have also held virtual public hearings, he said.
A work session with the mayor and council is scheduled for April 27, and a vote on adoption is scheduled for June 1.
Gaithersburg’s budget generally does not change much, Tomasello said, but this year is different because of COVID-19.
“We’re not at the peak of this [health crisis] yet, and it’s really hard to tell where this is going economically. You’re just dealing with the human toll at this point,” he said.
The 2008 recession, Tomasello said, was severe. But because it occurred in the fall, city leaders had time to prepare for reduced revenues when crafting the budget for introduction in the spring.
“In my 25 years, I haven’t seen anything like this,” he said.
Dan Schere can be reached at daniel.schere@moco360.media
