In Leesburg, cautious optimism on budget

Town officials forecast an increase in revenue but not in costs -- if Virginia cooperates

Leesburg officials released fairly rosy budget projections last week that count on revenues rising and costs staying flat next year. The preliminary forecast, if it pans out, will mean a local government that is in stronger financial shape than the county and state.

Town Manager John A. Wells pointed to some early signs of recovery in a memo he sent to the Town Council on Oct. 27. He and Norm Butts, town finance director, said residential foreclosures have declined, total retail sales seem to be rebounding and revenue from the meals tax is higher than had been expected. Some construction in the pipeline could increase the tax base going into next year, he said.

"We're on a very solid foundation going forward," Wells said. "It doesn't mean we don't have work to do. . . . We're in as good a place as we can be."

Wells and Butts estimate that revenues will come in at $44.2 million to $45 million and that costs will rise only slightly, to between $45.7 million and $46.4 million.

Wells declined to provide a projected deficit, saying it would be too preliminary, and he cautioned that revenue projections remain fluid.

He also warned that transient occupancy tax revenue, mainly from hotels, is trending lower and that assessments for retail and commercial property will decline on average.

Based on the current assessment information, Wells said, tax bills for the average homeowner will stay constant or fall if the tax rate remains the same.

Early cost estimates take into account no growth in compensation for any employees.

Town officials have touted cost-control measures. Vacancies that open when someone leaves the town are not filled for at least three months. Wells personally approves all travel. An energy conservation program has helped control costs. Town administrators are rebidding employee health insurance. They are also looking at an early retirement program that could provide longer-term cost savings.

The official budget will be proposed in February for fiscal 2011, which will begin July 1. Wells said he will present monthly updates to the town council.

Decisions that need to be made in Richmond about balancing Virginia's budget could have an adverse impact on the forecast, Wells said.

"The state needs to balance their budget without causing a problem for local governments, and that seems to be a challenge we haven't got past yet," he said. "We're always worried about that."