The Town of Leesburg is ending the fiscal year on better financial footing than expected, while the prospect of substantial help from the federal government looks bleak.
Jason Cournoyer, management and budget officer for the town, addressed the council with a close-out look at the fiscal year 2021 financial picture at its Monday night work session. The revenue shortfall picture improved by about $600,000 from the council’s last financial update, to a total shortfall of $4.6 million. The shortfall was caused largely by declining revenues during the COVID-19 pandemic.
Cournoyer attributed the improved outlook to a better return than expected on personal property taxes, which he said had a lot to do with the reassessment of vehicles in Loudoun, as well as the new partnership between the town and county where Loudoun handles tax collection for the town. Business, Professional and Occupational License (BPOL) fees have also increased by almost $400,000, and sales and use taxes were also up more than $100,000. Still slow to recover, in spite of facilities reopening, are the fees the town generates from its parks and recreation facilities, which remain down from projections by almost $250,000.
The town government remains on track to offset its shortfall due to a series of expenditure reductions and overall belt-tightening put in place by Town Manager Kaj Dentler shortly after the pandemic arrived stateside last March. Included in that are staffing positions that remain frozen, at a savings of almost $1.5 million. Dentler said he anticipates beginning to advertise those positions in the late summer or early fall.
On the Utilities Fund, the outlook is positive, with revenues expected to outpace expenditures for the current fiscal year, resulting in a small surplus. Cournoyer said utility account delinquencies are also down about 50% since the last report to council in January, for a total of about $330,000.
News has not been nearly as positive when it comes to federal help, however. The town received word in May that, due to a change in classification by the U.S. Treasury Department, Leesburg’s allocation from the American Rescue Plan Act would be far less than originally anticipated.
Shortly after Congress passed the final version of the bill in March and sent it off to President Joe Biden to sign, Leesburg, like other localities, was provided with an estimate of their funding allocation courtesy of the House Committee on Oversight and Reform. That estimate showed Leesburg classified as a non-entitlement unit, or a local government that does not receive Community Development Block Grant funds directly from the Department of Housing and Urban Development. In that initial estimate, the town was expected to receive more than $48 million.
However, when the final U.S. Treasury distribution list was released in early May, Leesburg’s classification had changed to an entitlement community because of its population surpassing 50,000 residents in the 2010 Census. That change in classification means the town now is estimated to receive only $5.9 million in ARPA funding.
Cournoyer said this week that Leesburg has received its first American Rescue Plan payment—50% of the town’s allocation, with the other 50% expected no sooner than 12 months from now. But that has not stopped Burk, council members and town staff from reaching out to the town’s state and federal representatives for help.
Burk said Monday the state representatives she has spoken with seemed more optimistic that Leesburg’s classification could be reconsidered.
Looking forward, Cournoyer acknowledged that town staff may have to reevaluate the capital construction budget, with supply chain issues causing construction costs to skyrocket.
“You may see some proposals for increased contingencies in fiscal year 2023 capital projects,” Cournoyer said to the council. “It’s hard to tell if this is a short term, mid-term or longer term trend especially with material costs.”
He noted, however, that development projects do not seem to be hampered too much by higher costs, as many projects are moving dirt.