Rockville leaders want to rework budget plan because of health crisis
Staff expected to reintroduce proposal to council on April 13
Top row, from left: Mayor Bridget Donnell Newton, Council Members Monique Ashton and Beryl Feinberg. Bottom row, from left: Council Members David Myles and Mark Pierzchala
Photos from city of Rockville website
The Rockville City Council is looking at cutting its proposed $144.2 million budget for Fiscal Year 2021 as the coronavirus continues to rock the economy.
At their meeting Monday, city leaders directed the staff to review the budget plan and find ways to save money.
City Manager Rob DiSpirito said the economic impact of the public health crisis is becoming real. Revenue projections for the next fiscal year might have to change, he said.
The FY21 budget was proposed with a 3.8% increase in spending — more than $5 million — from this year. The fiscal year begins on July 1.
No changes were proposed in the property tax rates. For more than 25 years, the rates have stayed the same or dropped. The current rates per $100 of assessed value are 29.2 cents for real property and 80.5 cents for personal property.
Stacey Webster, the city’s budget and management director, laid out several options and changes that could be made to the budget.
“This is really an unprecedented time and we really need to be conservative due to the high amount of uncertainty related to this health crisis,” she said. “We could prepare many different scenarios, but the fact of the matter is things are changing daily. The size and scope of the pandemic and the long-term impact on our community … are unknown.”
The staff is no longer recommending an additional $591,000 in tax duplication revenue from the county “with the understanding that the county will also likely be cutting their budget,” she said. Tax duplication revenue is the county’s reimbursement of services, such as maintenance and improvements to infrastructure, that the city provides with its own tax money.
The Montgomery County Council on Tuesday discussed the potential need to modify its proposed $5.9 billion budget for FY21.
In Rockville, a reduction of about $900,000 will be needed because of less revenue from several sources, Webster said. Those include the hotel-motel tax, the amusement tax and interest earnings.
Webster outlined several options for the council.
First, the city could hold off on creating new positions. These would account for about $340,000 in the proposed budget. These could be revisited after the first quarter, when there’s a better sense of revenue, Webster said.
The council could also delay employee raises and salary adjustments. Employee compensations include a 1% cost-of-living adjustment and an average 3.5% in performance-based pay, which adds up to about $400,000.
Webster said the council would also eliminate or reduce other increased spending in the budget and could reduce the capital improvements program funding, which is a long-range plan for improvement projects.
Funds that could be used to cover additional coronavirus-related expenses for both this fiscal year and the next include: unused snow removal funds; the city manager’s contingency fund, which is normally $350,000; any salary savings from unfilled positions; and $3 million in an unassigned fund balance.
DiSpirito said he asked the departments to thoroughly review their current spending. He also placed a hiring freeze on all positions except for essential services. In addition, he is looking at screening purchases more carefully.
“We do anticipate revenue reductions across the board,” he said. “I think we can come back with some options, some modifications for you to consider that may be high-value, high-dollar content.”
Council Member Mark Pierzchala suggested that the uncertain economic period might be a good time to do capital projects since contractors might charge less..
Council Members Monique Ashton and David Myles wanted the option to come back to the budget and make adjustments if needed during the next fiscal year.
Webster said the council can make an amendment to the budget at any time.
“At this point, it would be my recommendation to go with a more conservative approach at this point,” she said.
Pierzchala and Council Member Beryl Feinberg said they went through the budget and would send their suggestions for changes to the staff.
Briana Adhikusuma can be reached at email@example.com.