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Henrico looks to close $100 million budget shortfall due to coronavirus

Officials propose extending public comment period, delaying adoption to May 12

Henrico officials are projecting a nearly $100 million shortfall as they revise the county’s proposed budget for fiscal 2020-21 to reflect the harsh economic impact of the COVID-19 pandemic.

With the Board of Supervisors set to hold a public hearing on the budget at today’s 6 p.m. meeting, County Manager John A. Vithoulkas will recommend delaying a final vote on the plan until Tuesday, May 12. That two-week delay is designed to give officials more time to explore options for reducing expenses and to allow additional public input at budgetfeedback@henrico.us.

Officials are exploring a revised proposed budget that would total $1.3 billion across all funds – an overall reduction from the original proposal of $1.4 billion. The revised plan, which remains in flux, would include an $894 million general fund for operations, with $509.9 million designated for Henrico County Public Schools (HCPS) and $384.4 million for general government.

The general fund budget would total about $99 million less than originally proposed to the Board of Supervisors on March 10 and $44.8 million less than the budget for the current year.

In revising the proposed budget, officials have sought to keep tax rates at current levels, maintain core services and preserve jobs.

“In just a few weeks, COVID-19 has dramatically changed how we work and has spurred a global economic downturn,” County Manager John A. Vithoulkas said. “While Henrico is better positioned than many communities to withstand these difficult times, we must be prepared to make difficult decisions and accept short-term sacrifices to ensure our community can weather this storm.”

So far, officials have identified $86 million in reductions to the proposed budget, which include:

  • A 5%, across-the-board reduction in operating expenses, which generates a savings of $9.1 million;
  • A suspension of $22.7 million in new capital projects. The only new projects that will continue are ones funded through the 2016 bond referendum, specifically Taylor Park, Deep Run Park improvements, Richmond-Henrico Turnpike improvements and Staples Mill Fire Station;
  • Holding vacant all open general government, excluding public safety, positions through fiscal 2020-21, which generates a savings of $5.6 million;
  • Additional reductions in the non-departmental, Public Works and Solid Waste budgets.

Officials anticipate sharp drops in consumer-driven tax receipts, particularly from sales, occupancy and meals taxes, as a result of stay-at-home orders as well as business reductions and closures.

To support small businesses in their recovery, officials plan to retain an original recommendation to increase the threshold for businesses to be exempt from paying BPOL (business, professional and occupational license) taxes. As recommended, businesses would not pay BPOL taxes on revenues up to $500,000, an increase from $400,000.

Officials anticipate a reduction in Virginia’s aid to localities, although the final impact will not be known until a state budget is adopted. Officials do not plan to include anticipated federal COVID-relief funds in the county’s revised proposal, noting that one-time revenues cannot sustain ongoing expenses. Given the economic uncertainties, the Department of Finance plans to re-evaluate the budget throughout the year and to request appropriations on a quarterly basis.

Today’s public hearing on the proposed budget will occur during the 6 p.m. meeting in the Board Room at the Henrico County Government Center, 4301 E. Parham Road. The public will be able to participate and provide comment remotely. The meeting also will be livestreamed. Additional details are online.

 
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