Herndon Town Manager John “Ed” Moore and Town Finance Director Mary Kemp repeatedly stressed the importance of not overemphasizing a 21.5 percent increase in the FY 2003 town budget over the FY 2002 budget.
“There are major capital projects on the burner and one-time events” that need to be taken into consideration, said Moore. Three projects will generate $6.125 million – funds that will come into the town and then be spent just as quickly that are not entirely taxpayer generated.
Bond proceeds to the tune of $4 million are earmarked for Phase I of the new public safety center. Taxpayer involvement will be on the repayment of the bonds with interest. The sale of town-owned property at 1021 Elden Street will generate $2 million and a $125,000 grant from the Virginia Department of Conservation and Recreation will go towards renovations at Runnymede Park, said Kemp.
Runnymede Park is slated for $725,000 in budgeted funds. The renovations are “sorely needed and long overdue,” said Town Councilman John De Noyer. “The cost are modest as park improvements go,” and will include the future nature center, handicapped trail, picnic shelters and an amphitheater that will seat up to 75 people. Additionally, $70,000 is slated for the future Chandon Dog Park.
The revenue category “Other Sources” is up 400 percent due to the influx of the $6.125 million that will be spent on the projects mentioned, said Kemp. The expenditure category “Interfund Transfers” is up 477 percent as that is used to finance the General Fund’s portion of capital improvements, she said.
THE GENERAL FUND is the day-to-day operations, minus the enterprise funds which are self-sustaining, supported by user fees. In that category, the most glaring increase is with the downtown-parking fund – also know as the Shared Parking Program. Money has been earmarked for the purchase of land on the north side of Elden Street for a parking lot. With the Shared Parking Program, businesses lease parking spots from the town in order to provide customer parking without having to provide parking at the business location.
“This is good. We’re using recurring revenue to fund a part of the Town’s Capital Improvement Program [CIP] for FY 2003,” said Kemp. [See box for major CIP projects.]
One area that is down is in overall development in the town. This is evidenced by budget decreases in the Water and Sewer Fund as well as the Permits and Fees revenue projections for FY 2003. “They are related as far as overall development,” said Kemp.
Fewer commercial buildings are being built due to a sluggish economy. With some dot-coms going out of business and additional defense industry moving in to the area due to its proximity to Washington and Dulles Airport, “this transition will take 18 months to two years to be realized,” said Kemp.
Yet, Moore is pleased with the FY 2003 budget. “This budget accommodates additional costs in public safety since the events of Sept. 11. We’ve paced the quality of development of the downtown area. We’ve maintained service levels for services provided,” said Moore referring to police protection, refuse and recycling collection, water and sewer, administration of streets and snow removal. Town residents also get a break on fees at the community center and golf course.
“THE TOWN’S BEEN in an excellent position for a number of years. We have an improved credit rating – one of the most highly rated towns in the commonwealth. And that spells savings — we get favorable interest rates,” said Moore. Moody’s upgraded the town’s rating from A1 to AA1 and Standard & Poors upgraded the town’s rating from AA- to AA.
The town is in a good financial position, said Kemp, buoyed by an undesignated fund balance of $7.4 million, a figure that ought to be “no less than 10 percent of the recurring General Fund expenditures for the subsequent fiscal year.”
That money should be set aside in reserves for “unexpected hits,” said Moore. “We’re well above that,” he said. Based upon about a $23 million expenditure, that translates to about a 32 percent undesignated fund balance.
That does not sit well with Town Councilman Dennis Husch who is calling for a five cent reduction in the town’s tax rate from $.32 per $100 of property value to $.27. “If we do nothing to the budget, how much money are we going to collect from July 1, 2002 to June 30, 2003 that is going to go in the undesignated fund balance?” he asked rhetorically. “Far more than the $1.2 million the five cent tax decrease will save,” he said.
“Why should the town get that money and not allow the people to keep what’s theirs?” asked Husch. “I believe there is more than sufficient justification to reduce the town’s real estate tax rate by five cents. To do anything else would be to continue to collect taxes that are not needed to deliver the required services.”
EACH PENNY of a tax rate reduction is valued at $247,000, thus Husch’s call for a five cent decrease would equal a $1.235 million budget reduction.
One suggestion Husch made to save money involves combining two projects that could benefit each other in the long run. There is $1.2 million slated for the purchase of land for Phase I of the future cultural arts center in FY 2003. There is an additional $1.35 million targeted for the shared parking lot. That totals $2.55 million. Husch’s proposal is to budget $1.4 million for the purchase of land that could be used for surface parking today that could also be used for the cultural arts center when that decision is made. A parking garage could then be built at the arts center or on the Station Street parking lot. That suggestion alone would save $1.15 million, $50,000 shy of the $1.2 million savings that would be realized by trimming five cents of the tax rate as Husch suggested.
Mayor Carol Bruce also believes there should be a cut in the tax rate. “My preference would be to find a way to make some cuts,” she said without specifying where, having just received the budget proposal last Friday.
“I’d like to see two cents gone — it’s probably doable. It’s not a whole lot, but it’s a statement. Beyond that, what are we willing to cut? I hope we will be able to do it. Elections aside, a penny or two will not compensate for the 18 percent real estate tax increase dumped on us by the county. Herndon got hit as hard if not harder than any other part of the county,” she said.
“I think the rate should be lowered some,” said Councilman Harlon Reece. “It’s something we have to broach carefully. This is the third year in a row residents have experienced an increase is assessments, and ultimately an increase in the taxes paid,” he said.
De Noyer disagrees, however. “It would be unwise to cut at this point. A reduction is equal to a modest night out,” he said of a potential reduction that could be realized by an individual taxpayer.
Agree or disagree, Town of Herndon residents will have their say at the Town Council public hearings of Tuesday, April 9 and 23, at 7:30 p.m. at the Town Council Chambers located at 765 Lynn Street.