Leesburg’s budget has taken a beating during the COVID-19 pandemic, but town staff told Town Council during its latest meeting that with careful planning, the town is poised to recover.
Council voted unanimously Oct. 27 in favor of a plan to refinance the town’s debt. Staff proposed to exchange the current interest rate for historically low interest rates and spread out $3.7 million in payments, while still paying off 85 percent of the current debt principal in 10 years as planned. As a result of the lower interest rate, fewer taxpayer dollars will go toward debt service.
“It positions us as a town to try to weather this storm,” Town Manager Kaj Dentler said. “We’re taking advantage of every opportunity that we have, creating every tool that we need in our toolbox to help us manage in this unprecedented situation.”
For the current budget, fiscal 2021, town staff made drastic cuts to reduce the shortfall from a predicted $7.2 million in July to a current prediction of $5.5 million, or 9 percent of the total budget. The town is covering the rest of this shortfall by freezing 18 positions, deferring the maintenance budget, refinancing and relying on a $1.65 million surplus from fiscal 2020.
“We have gutted to get here,” Dentler said during Monday’s work session. “We don’t have a sufficient snowstorm budget. We don’t have an emergency budget.”
Over the next four years, the town plans to adjust and carefully return to normal. For fiscal 2021, Dentler hopes to create a revenue stabilization fund that could help cover further emergencies. The town will also continue to restructure its debt service--taking advantage of its AAA rating to get good refinancing rates--and use anticipated CARES Act funding to reimburse police expenses on the order of $3 million and help cover the fiscal 2022 budget. The town also hopes to engage in some revenue sharing, such as with the proposed Microsoft data center announced late last year.
As for next year’s tax rate, Dentler intends to keep things trim.
“I’m coming in with a very lean budget,” Dentler said. “We’re just trying to get back to where we’ve been.”
If the town proposes a steady tax rate of 18.4 cents per $100 of assessed value for fiscal 2022, it would mean a slight increase in taxes due to inflation.