Hampton City Manager Presents Recommended Budget for FY08April 16, 2007Hampton City Manager Jesse T. Wallace, Jr. today presented his Recommended Budget for the city, for Fiscal Year 2008 totaling $435,628,725, a 7.6 percent increase over Fiscal Year 2007. The local contribution to Schools totals $66.6 million. When state and federal funding are included, the Hampton City Schools budget is $205.1 million, a 1.98 percent increase. The relatively small increase in the School System's budget is the result of a major decline in state sales tax revenues and other state funds associated with declining student enrollment. However, the City's contribution to the Schools increased by $3,803,283, or 6.2 percent. The recommended budget protects existing city services while funding many critical enhancements. It also reduces the real estate tax rate a full 6 cents, to $1.08 per $100 in assessed value. This is the fourth time in four years that staff has proposed a real estate tax decrease. Since 2004, the property tax rate in Hampton has been lowered 13 cents, not counting the recommendations for the coming year. With this year's proposed decrease, the total reduction is 19 cents. The Manager's recommended budget is based on an improvement in city revenues overall including personal property, meals, lodging, recording fees and interest income, to name a few. In addition, a number of internal measures - most notably the use of the city's fund balance to support the capital budget and other one-time expenses, and the deferral of some capital projects -- have also been a factor. To minimize the impact on tax payers, Hampton City Council last year established a financial guideline on the amount of revenues the City would typically generate from real estate taxes. The financial guideline limits growth in current real estate taxes, net of new construction, to resident income growth. The number is derived from a four-year rolling average of annual income growth for Hampton residents as reported by the U.S. Bureau of Economic Analysis. This year, that amount is 5.2 percent. To adhere to the financial guideline this year, based on a projected 15 percent increase in property assessments, the City would need to lower the tax rate by 9 cents. However, because of the financial challenges of funding the construction of two new PreK-8 schools, the Manager's recommended tax rate calls for a tax rate reduction of 6 cents. This 3-cent impact for new schools construction was identified in 2004. At that time, the Schools Investment Panel, comprised of citizens, elected officials, and City and Schools staff, had determined that a rate impact of between 2 to 4 cents would be required to support the new schools. Research indicates that the PreK-8 concept makes the transition from elementary to middle school easier for students, with the potential to result in improved student achievement. The plans call for the schools to be built on the sites of the old Sentara Hampton General Hospital on Victoria Blvd., and adjacent to Bethel High School, in 2009. Cost for the new schools is $116 million. An additional $2.9 million per year - above and beyond traditional School maintenance costs - is also planned for other existing school enhancements. Along with $4 million from the city's fund balance that was dedicated, the resulting revenues from this tax rate would be placed in a debt reserve account. This account will be used to mitigate debt service obligations in subsequent years. Hampton City Schools will also contribute $2 million annually to help pay the debt service. The Commissioner of Revenue has proposed re-benchmarking the elderly and disabled tax relief program to assure that the city's most financially vulnerable residents have even more tax relief opportunities. The new budget would increase the income limits for tax exemptions as follows:
Further, under the recommended budget, the city would increase the exemption asset level from $100,000 to $200,000 and the freeze asset level from $175,000 to $200,000. Cost for re-benchmarking this tax relief would be $300,000. The 6-cent tax rate reduction, the 3-cent dedication for school construction, and the elderly and disabled tax relief enhancements consume all but $518,921 of the money identified in City Council's funding formula. However, that remaining amount is insufficient to do a full penny of tax relief. Given that, the City Manager's recommended budget proposes investing the remaining funds in a high technology research development partnership to be facilitated through the Hampton Industrial Development Authority and Hampton University, as well as funds to the School System based on the local funding formula. In summary, the recommended budget's compliance with City Council's financial guidelines is as follows:
Other city service enhancements included in the Manager's recommended budget include the addition of 5 new police officers, 9 new firefighters, 2 new 911 dispatchers, additional maintenance crews for public right of ways and schools, enhanced neighborhood street lighting, and funding to support the behavioral management component of the School System's new alternative for students with disciplinary issues. City employees would receive a merit salary increase and see a proportional share of health insurance premium costs to be covered by the city. Increased flood incidents in some parts of Hampton have been an area of focus for the city. Determining ways to mitigate this flooding will require extensive studies and evaluation. While the city is committed to finding long-term solutions, it has been determined that an expanded drainage maintenance and flood prevention program is one important initiative that can be undertaken in the immediate term. To facilitate this, the storm water fee would be increased by $1.00 per month per equivalent residential unit. This means that homeowners will pay $12 more a year to enhance off-street ditch and drainage canal maintenance, and to fund new construction of future drainage improvement projects. The storm water fee in Hampton has not been increased in several years. Hampton's present rate is considerably lower than peer localities. Another new initiative in the Capital Budget is the Flood Assistance Program which, in the next Fiscal Year, provides for the purchase of 3 properties that have experienced flooding in their living space. Late last year, impacted home owners were encouraged to apply for this program. At that time it was noted that funding would be provided to those with the greatest need, based on available dollars. The City Manager, in his proposed budget, has allocated $500,000 for this program. The need to create navigation improvements on Hampton's waterways has been identified as an important priority. As an initial step the city in November 2005 entered into a contract with a consulting firm to begin the necessary permitting process with the Army Corps of Engineers, the Virginia Marine Resources Commission, and the Virginia Department of Environmental Quality with the intent to undertake navigation improvements on the upper reaches of Hampton River. Since then, a number of detailed and technical field studies have occurred as well as consultation with marine contractors regarding the most efficient methods of dredging for this project. A public meeting and questionnaire were also undertaken to determine the extent of navigation difficulties residents are experiencing, their desire for tertiary channels to private piers to be included in the permit application, and their willingness to pay for dredging of connecting private channels. The permit application, scheduled to be submitted this summer, will include dredging of the main channel of the river as well as dredging a portion of the tertiary channels. However, the portion from the private piers to the city dredged channel will not be paid for by the city. The Manager's recommended budget for FY08 calls for $1.7 million from the Capital Budget to accomplish this work. In future years, it is the City Manager's intent to address other important navigation improvement projects in the city, following this initial work. For some time, citizens have expressed a desire to be relieved of the annual ritual of removing and then replacing the burdensome decals on their windshields. The Manager's recommended budget supports the elimination of the requirement to display a city decal on vehicles. Approximately $3 million in revenue presently is generated by decal sales. In their place, a local license registration fee would be implemented. To assure that the collection ratio for these revenues remains the same, approximately $347,800 is included in the recommended budget for additional mailings and the increased use of field inspectors by the Treasurer's Office, using the license plate reader and other tools available to them. "In summary, this recommended budget invests in the protection and continued enhancement of our city's families, neighborhoods, business sector and quality of life," said City Manager Jesse T. Wallace, Jr. "In addition, it reduces the real estate tax rate for the fourth straight year." Copies of the Manager's recommended budget are available in Hampton Public Libraries. You can also visit www.hampton.gov/budget for more info. Public hearings will occur in City Council Chambers, 22 Lincoln St., at 7:30 p.m. on April 25, May 2, and May 9 with the adoption of the FY07-08 budget occurring after the May 9 public hearing.
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