Council Approves Budget

Council Approves Budget

Exiting Town Council approves budget for fiscal year 2007

Voting down a proposal to increase Herndon’s meals and transient occupancy [hotels] tax while consequently raising residential taxes slightly higher than the advertised rate, the Town Council modified the town’s proposed budget for fiscal year 2007 before approving it during a public forum last Tuesday night.

The decision might prove to be one of the last made by the exiting Town Council, as five of its seven seats will be filled with new faces when the town’s recently victorious candidates take office on July 1, the first day that the budget will go into effect. The budget calls for expenditures of more than $45 million for fiscal year 2007, a 22.6 percent increase over the previous year, according to town figures.

The budget approvals were made by a minimum four-member majority vote, as the resignation of council member Steve Mitchell earlier this month left one of the seats vacant.

THE COUNCIL BEGAN the process of amending and approving the budget when they voted 5 to 1 to strike down a proposed increase to the meals tax from 1.5 percent to four percent, and the hotel tax from six percent to eight percent.

Council member Ann Null was the only member to vote against the rejection of the meals and hotels tax.

The increases had been suggested by town manager Steven Owen in the proposed budget as a method of diversifying tax revenue so that property tax rates could be lowered even further to lessen the sting brought on by increases in assessed property value in Herndon in recent years.

Vetoing the decision to increase these tax rates eliminated $700,700 of estimated revenue to the town, according to figures in the budget proposal.

"While I do believe in revenue diversification and increases to the meals tax as a source for that, I’ve been persuaded," that now is not the right time for an increase, said Mayor Michael O’Reilly. "The increase in gas prices and the [subsequent] decrease in the amount of disposable income available to families, I think that the restaurant industry would take a hit from [an increase to the meals tax]."

"After finally getting back to what looks like the levels before 9/11, it may not be the right time," for an increase to the meals tax, he added.

"I’m blessed and I’m very happy, thank you very much to the mayor and the council members," said Jimmy Cirrito, owner of Jimmy’s Old Town Tavern in downtown Herndon, who had lobbied the council aggressively during the public hearings on the budget against the idea of a raise to the meals tax. "I’m very grateful … it was just what we needed."

TO OFFSET the gap in some of the revenue left in the absence of a meals and hotels tax increase, the council voted 4-2 to raise the advertised property tax rate from 23 cents per $100 of assessed value to 24 cents per $100 of assessed value.

Council members Null and Dennis Husch cast the two votes against the proposal, calling unsuccessfully to defer the decision to a future meeting so that other options for revenue generation could be weighed.

The 24-cent rate is a decrease from last year’s rate of 25 cents per $100 of assessed value.

The decision to add an extra penny to the proposed tax rate will generate approximately $434,800 of income, according to Owen.

The owner of a residential property with a total assessed value of $500,000 would pay $1,200 in property taxes under the adopted tax rate, as opposed to $1,150 that he or she would have paid under the proposed 23-cent rate.

"While I’d like to see [the real estate tax rate] lower," O’Reilly said, it would be impossible to meet the town’s budget necessities, "since there is no other revenue stream without diversification."

To account for the remaining lack of revenue, the council unanimously rejected a proposal to eliminate the $20 vehicle decal requirement, citing not just the $321,000 of extra revenue generated by the program, but as an indirect way to investigate overcrowding.

"When you talk about overcrowding enforcement, [our inspectors and police officers] can look at all the vehicles in the town and see where they’re registered," Owen said. "If we see several cars parked outside of a house registered to the same address, we can figure out pretty quickly that these people … are all living in the same house."

"There may be some limited benefit [to eliminating the decal requirement], but I don’t see a need after the meals tax revenue was eliminated," O’Reilly said after voting against the proposal for elimination. "If the meals tax was there, we might be able to get rid of it."

"There were not a lot of people coming out to these meetings saying ‘you got to eliminate [the decals],’" he added. "Quite frankly I see it as a revenue generator and it needs to remain."

THE DEMAND FOR MORE revenue is the result of a budget that calls for nearly 25 percent more in town expenditures for fiscal year 2007, with the majority of these increases going to cover salary raises to Herndon non-elected municipal employees and police officers as well as a more expensive yearly Capital Improvement Program.

The 55 Herndon employees who are sworn in — police officers — will receive a 4.25 percent increase to their annual salary to cover increases to the cost of living, according to Linda Simmons, the town of Herndon’s director of Human Resources.

They will also be eligible for merit-based raises upon annual evaluations that the town has budgeted to be an average of 5 percent per employee

Herndon’s 222 non-sworn employees who are not elected and not of seasonal status will receive their first opportunity for a cost of living adjustment since fiscal year 2004, when the pay scale was last adjusted, as the minimum annual salary was bumped up by 4.25 percent at every position. Those falling below the new minimum yearly salary amount would be bumped up to the new minimum level, according to Simmons.

All non-sworn employees will also be eligible to receive merit-based raises upon their annual evaluation, with the average amount budgeted for 4.5 percent for each town employee, Simmons said.

The raises to town staff salaries are imperative in keeping the most experienced and skilled employees in the town, vice mayor Darryl Smith, who did not run for re-election, said.

"I think we have outstanding employees here in town and I think they deserve," the raises, said Smith, a former Herndon police officer. "If my wife needs to call the police or the town, I want to know that we have the top-flight response that we have here in Herndon right now … I intend to keep them here."

THE CAPITAL IMPROVEMENT Program includes about $2.24 million earmarked for improvements to Runnymede Park and the construction of the Runnymede Park Nature Center and $706,000 for improvements to the downtown roadways, according to budget figures.

The design and planning phase for a local skate park has also been moved up as the town approved $25,000 in funds to fiscal year 2007 and allocated $150,000 in construction funds for fiscal year 2008 after local skateboarding and other street sport enthusiasts appealed to the Town Council in large numbers over several weeks of public budget hearings.

Although the park is slated for completion sometime in 2008, it could be finished before then, according to Owen.

"It is a question of money … and finding a place in Herndon that would be an appropriate place for putting the [skate] park," Owen said. "If there’s enough momentum, if some grant money [from outside sources] is found, and we can find a location that everyone likes … it is definitely a possibility," that the skate park will be completed sooner.

The budget will go into effect on July 1, the same day that the newly-elected Town Council takes office.