The Gaithersburg City Council on Monday unanimously approved a $70.6 million budget for Fiscal Year 2022, which starts July 1.
The budget is 3.7% lower than the one initially introduced on March 15. The council cut back on spending due to expectations that revenue losses related to the COVID-19 pandemic will continue into the next fiscal year.
The city trimmed the budget in April from $73.2 million to $70.1 million due to a city budget deficit of $8 million, City Manager Tanisha Briley said at the time.
The deficit is related to declines in revenue from sources such as admissions and amusements taxes and hotel and motel taxes because those activities have been curtailed by the pandemic.
The final budget adopted on Monday is slightly higher than the one the city amended and presented in April because of changes in state and federal grant revenues and an increase in tax duplication revenues, Director of Finance and Administration Kim Francisco explained.
“The final budget no longer includes any reappropriation of fund balance,” she said.
Gaithersburg’s property tax rate of 26.2 cents per $100 of assessed property will stay the same next year. However, some residents could pay higher taxes due property reassessments.
About one-third of properties in Montgomery County were reassessed at the end of 2020 and collectively increased more than 9% in value (Maryland divides its assessments into three-year periods). Gaithersburg was among the communities included in the geographic area that was reassessed.
More than 78% of the properties assessed in this area of the county increased in value, including more than 83% of residential properties, according to the Maryland Department of Assessments and Taxation.
Residents’ property tax bills increase as assessments increase, unless the city lowers the tax rate.
The increases in revenue from the budget presented in April include:
- A $500,000 state grant for a project to upgrade the field at Robertson Park to turf. The money was originally supposed to be received in Fiscal Year 2021.
- A $700,000 state grant for improvements to Pleasant View Park and the construction of a pedestrian bridge over Great Seneca Highway
- $183,923 from Montgomery County revenue sharing for duplicate services due to an updated county formula for tax duplication that increased the amount of money sent to municipalities.
- $44,400 in projected increased revenue due to updated reopening guidelines
The city has increased expenditures in the general fund more than $29,000. That includes increases in contracted mowing services, in information technology projects and in parks, recreation and culture expenses.
Expenditures in the capital budget increased $2.2 million, a good portion of which is for the construction of the city’s new police station and council chambers at 16 S. Summit Ave.
Gaithersburg is receiving $11.5 million from the federal American Rescue Plan.
Briley said last month that the city has received the first half of the money and it shows up as revenue in current budget. However, the city could redirect the money for spending in FY22, she said.
On Monday, Francisco said the city would receive the second half of the American Rescue Plan funds in FY22.
“The revenue that will be recognized in FY22, however, will be determined based on a revenue-loss calculation combined with the impacts of the finalization of the treasury guidance. It is not included as part of the FY22 budget that we are adopting today,” she said.
The city is creating an internal work group to determine how best to use the funding.
Dan Schere can be reached at firstname.lastname@example.org