Fredericksburg faces spending cuts, staff reductions in the wake of coronavirus shutdown

The coronavirus is expected to take its toll on the Fredericksburg City budget.

City Manager Timothy Baroody is excepted to announce at a city council meeting on Tuesday that, since the economic shutdown, the city could lose as much as $8 million in revenue.

That has prompted the city to make some changes in the way it operates.

In a memo to the council, Baroody states:

Depending on the depth and duration of unemployment in our community, city staff estimates we could see between an additional 2 to 4 percent – $2 to $4 million – in current year revenue losses from other major sources as a result of potential widespread insolvency and business closures caused by the pandemic.

In total, City staff advises we prepare budget reduction options in line with a revenue shortfall scenario ranging from $4 to $8 million in FY 2020. At present the magnitude of FY 2021 revenue losses can’t be forecasted with any reliability; however, it would be prudent to identify from $10 to $15 million in spending reductions and deferrals that will hopefully be avoided through the delivery of significant intergovernmental aid.

The current 2020 budget year ends on June 30, and, for now, the city’s general fund bank balance still shows $101.8 million. Initially, the city was expected to take in $96.4 million in taxes, however, city officials say those projections could be lower.

An estimated target for revenue for FY 2020 is $90 million – pending additional information via City revenue collections over the next one to two months. During that time the City will also learn more about possible increases in federal assistance and state budget actions that affect the City’s operational and capital outlook.

As the city revenues fall off, it is also aiming to cut its spending in this year’s budget by $2.4 million. Some of those cuts could include slashing the amount of cash the city will give its schools by half a million dollars, instituting a hiring freeze, and cutting staff to save $400,000, and deferring a $50,000 payment to support the Rappahannock Regional Jail to fund operations of the jail — which is still operating during the coronavirus outbreak.

The Fredericksburg City Council will hold a remote meeting on Tuesday, April 14 at 7:30 p.m., which can be viewed online.