Richmond ended the last fiscal year with a projected budget surplus of $15.4 million, according to a new financial report.
The surplus is the result of higher-than-projected tax collections and lower-than-expected spending in City Hall during the fiscal year that ran from July 1, 2018, to June 30, according to the report Mayor Levar Stoney’s administration sent to the City Council. Stoney wants to direct nearly half of the surplus to cover the first cost-of-living increase for city retirees in 11 years.
“I’m pleased our revenues and collections are projected to exceeded previous estimates, and that the efficiencies and savings we were able to find throughout the administration will allow us to propose giving our retirees the cost of living increase they not only need but surely deserve,” Stoney said in a statement.
As of the end of March, several city departments were on track to end the fiscal year with deficits. Stoney’s administration recommended, and the council signed off on, midyear budget transfers totaling $8.5 million in May.
By moving money from departments that were running under budget to departments that were running over budget, the council rebalanced the budget and staved off potential shortfalls in several departments.
The Stoney administration recommended that $7.2 million of the end-of-year surplus go to the Richmond Retirement System to cover a 1% cost-of-living-adjustment for city retirees.
Stoney also wants to restore $963,000 of the surplus to fund capital projects the council stripped from his proposed spending plan for the fiscal year that started July 1. Those projects include improvements to city-owned community centers and increasing access to the James River for people with disabilities. This would also require council approval.
The rest — about $7.1 million — would be divvied up according to the council’s policy, with portions used to cash-fund capital projects or directed to the city’s rainy day fund.
The unaudited numbers in the Aug. 15 report could change. The final figures will be reflected in the city’s Comprehensive Annual Financial Report, a technical snapshot of a locality’s revenues and expenditures that is due to the state later this year.
News of the projected surplus comes after a heated budget season that saw the nine-member council that controls the city’s purse strings clash with the Stoney administration, which is responsible for proposing the city’s annual spending plan.
At the center of the rift was a 9-cent real estate tax hike Stoney built his budget proposal on. He said at the time it was necessary to fix roads, improve city services and increase funding for city schools. The council rejected the increase, but made other cuts to preserve spending Stoney proposed on those priorities.
The city collected $9.3 million more in real estate taxes than it budgeted for last fiscal year, the report states. Personal property, machinery and tools, business licenses and lodging taxes also came in over budget. So, too, did meals taxes tied to a rate hike Stoney proposed in 2018.
The increase, from 6% to 7.5%, was projected to generate $9.1 million in new revenue that the city could use to make debt payments on $150 million to build three new schools. The city collected roughly $9.3 million tied to the increase, about $200,000 more than was originally budgeted, the report states.
Stoney said the higher revenues showed the tax increase was a “sound approach” to financing school construction. The meals tax increase paid for a new George Mason Elementary in the East End, as well as a new E.S.H. Greene Elementary and Elkhardt-Thompson Middle in South Richmond. Construction on the schools began this year.
City officials said they will open in September 2020 and cost a combined $146 million.