Decline in city revenue causes budget decrease
March 26, 2010
In a presentation to Williamsburg City Council members Monday, City Manager Jackson Tuttle projected a significant decline in city revenues for the 2011 fiscal year.
According to Tuttle, the city can expect $31,077,012 in revenue during the coming fiscal year, a 3.2 percent drop from 2010.
“Until the city returns to the point where we return to a strong financial balance … we’re not going to be comfortable,” Tuttle said in a budget briefing last Saturday. “If we could get back to 2007 to 2008, that would change everything.”
Since peaking at $35 million during the 2008 fiscal year, city revenues have been on the decline, forcing across-the-board reductions in the city’s budget.
To accommodate a balanced budget, the city has been forced to cut funding for city departments by 3.4 percent and outside agencies by 8.1 percent. City personnel was cut from 185 to 182 positions. There will be no merit or cost-of-living raises for the second year in a row.
“Most of the cost reductions are coming out of city departments and outside agencies,” Tuttle said.
The most significant cuts are to city funding for Colonial Williamsburg and the Greater Williamsburg Chamber and Tourism Alliance.
The decreases are due in part to the city’s declining share of the Historical Triangle Room Tax. According to Tuttle, the city’s share of the tax has fallen to 38 percent — in the past, the city received over 50 percent of room tax revenues.
Room and meal taxes, garnered from the local tourism industry, are two of the city’s most important revenue generators. Five-percent room tax revenues have declined by over $1 million since 2008, but meal tax revenues have not been as severely affected.
At Monday’s meeting, the council decided to grant an additional $50,000 to the Tourism alliance, which would offset some of the cuts recommended by Tuttle.
“I would say that it is going to be a significant challenge to the organization,” Dick Schreiber, a representative from the Tourism Alliance, said. “We need to force the recovery, things that are new and lost money. That’ll mean going into our budget and find things that are weaker.”
In a presentation at the council’s work session Monday, Schreiber pointed out that total visits to Colonial Williamsburg and Busch Gardens drop well below weekend averages in May, September, November and December.
“For Williamsburg to succeed, we need to address these things,” Schreiber said. “If we could get those three to four areas back to where the averages are, that would be meaningful.”
The tourism alliance is not the only organization making cuts.
“We’ve trimmed down our expenditures to accommodate the declining revenues,” Director of Finance Phil Serra said. “We’ve always had a balanced budget.”
Tuttle also recommended introducing a $2 per-car fee at Waller Mill Park and cutting hours of operation at the local pool.
“We believe we’re at the bottom right now,” Tuttle said.
The city council will vote on a final budget at its May meeting. Budget updates will continue throughout the spring.