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Budget committee tells town revenue is not the problem
By M.K. Luther -- firstname.lastname@example.org
FRONT ROYAL -- The town's current budget crisis is a result of spending, not a lack of revenue, according to a presentation from the Blue Ribbon Budget Committee.
The committee was formed to find $1.2 million in the fiscal 2012 budget and make recommendations on how the Town Council could improve the budget process.
Committee Chairman Matthew Tederick and panel members former Mayor James Eastham, former Finance Director John O'Neill, Wilma Swiger and Jim Kelly spent six weeks analyzing data before making a presentation at Monday's council work session.
Tederick, saying that the town was in "a spending crisis, not a revenue crisis," said that income had gone up during the past 10 years. However, the spending increase had been disproportionate to revenue, inflation and population increase, Tederick said.
From 2000 to 2010, the town had a population growth of roughly 8 percent, and inflation of 28 percent. The town's estimated population in July 2009 was 14,573. Revenue increased $13.6 million, or 68 percent, while spending increased by $13.2 million, or 66.9 percent.
"There had been a lot of spending going on, let's leave it at that," Tederick said.
The committee made 17 recommendations, including using a mid-year budget review, re-thinking civic spending, re-evaluating employee benefits, cutting departmental spending and creating a rainy-day fund.
The committee recommended establishing a minimum three-month cash reserve in the general fund. As much as $4 million from the reserve could then be transferred to the newly created rainy-day fund. The fund's unspent balance would be refundable to taxpayers by check, tax reductions or decreased fees.
"We believe you need to get a handle on the expenditure side of the budget and not be so concerned with the revenue side," Tederick said.
Over the years, administration took an increased role in the budget decision-making process and gave "limited information" to the council, Tederick said.
The committee recommended taking a more active approach and using the previous method of having department heads present individual budgets to the council.
"We believe the council used to have a much greater hand in the budget process," Tederick said. "A lot stopped as far as your planning and the way your budget was presented."
All town departments except the police significantly increased spending, Tederick said. The committee recommended looking for potential reductions in departments and possibly outsourcing some services.
The town spent $5.9 million for employee benefits in 2000, jumping to $10 million in 2010, with an increase from 146 full-time employees to 157 by 2011, Tederick said.
The town is spending $1.8 million per year for health insurance. By switching to a $1,000 deductible plan instead of the current $100 deductible, the town could save $328,452.
A 1-percent wage reduction would produce $108,000 in savings, Tederick said. The committee also recommended considering furlough measures and hiring freezes.
The committee also advised reviewing the amount the council spent on consulting and legal fees, which totaled $3 million from 2006. The town spent $682,000 on Blue Ridge Power, the town's electric consultants, and $182,000 for the solar project alone, Tederick said.
The committee also said the council should reconsider civic and community organization spending, such as funding for the Front Royal/Warren County Tree Stewards, the Blue Ridge Arts Council and Town Trolley, which totaled $167,500.
Mayor Timothy Darr, thanking the committee for its work, said the council would review the report before making any final conclusions on using the suggestions during the budget cycle.
"One thing I want to make sure is that everyone understands is that the recommendations are solely and only recommendations," Darr said.