Gaithersburg has trimmed its proposed Fiscal Year 2022 budget about 4% because of declining revenue during the COVID-19 pandemic.
Things could change during the fiscal year, however, depending on how quickly activities in the city resume, and when federal American Rescue Plan money is distributed, according to the city manager.
The city introduced its original budget for $73.2 million last month for the upcoming fiscal year, which runs from July 1 through June 30, 2022. City Manager Tanisha Briley said at the time that she expected the budget would be amended before the budget is adopted in June.
The amended budget, presented at Monday’s City Council meeting, is for $70.1 million. Briley said the cuts were necessary because the city faces an $8.2 million budget deficit.
The budget shortfall is related to declines in revenue from the city’s hotel and motel tax, admissions and amusement tax, parks and recreation revenues, and other sources of revenue related to activities curtailed by the pandemic.
With projected revenues for admissions and amusements in FY 22 down 25.7% and hotel/motel projected revenue down 35.1%, the city continues to “operate in an uncertain financial environment,” Briley said.
Property and income tax revenues are projected to remain stable or increase slightly, Briley said. Some sources of revenue might rebound in the second half of the fiscal year as COVID-19 restrictions are lifted.
“We’re cautiously optimistic that we’ll get back to those activities that we enjoy, which are activities that bring us revenue for the city. But we’re taking a very conservative approach to our budgeting for next year, so that we can pivot if necessary,” she said.
Expenses in the FY 22 budget include:
- Maintenance project costs of a parking garage in Olde Towne for $419,200
- Maintenance and operational costs of $154,567 for 16 S. Summit Ave., which is to become the city’s new police station.
- Implementation of a new hybrid election process for $148,635
- Funding for three new full-time positions within the city
Of the $3 million in cuts to the FY 22 budget, $2.2 million comes from the capital improvements plan, and $887,000 come from the operating budget.
A $4.1 million transfer from the city’s stormwater fund to the general fund is aimed at helping the city offset its projected revenue deficit for FY 22, according to the city’s website. The transfer repays a subsidy from the general fund to the stormwater fund that the city used in the past to reduce stormwater management costs.
Gaithersburg is expected to receive $11.3 million from the American Rescue Plan, according to U.S. Sen. Chris Van Hollen’s office. Briley said the funding can help offset revenue losses both from the current fiscal year and projected losses in the next fiscal year.
When asked about that funding by Council Member Neil Harris, Briley said there will likely be “strings attached,” but the city has yet to hear what they are from the Department of the Treasury.
Briley said later that the funding is likely to come in two “tranches,” with one happening during the current fiscal year and the other during the next fiscal year.
“While we do believe the legislation is written so that it should definitely have less strings attached than the CARES Act funding that came out,” she said, referring to a previous federal spending program, “there’s a lot of trepidation by cities waiting to hear what Treasury’s interpretation of the law is.”
The city is scheduled to hold two additional work sessions on the budget April 26 and 27 before adopting a final budget on June 7.
Dan Schere can be reached at firstname.lastname@example.org