Taxpayers Benefit From Good Planning

The News 7 Advance
Published: May 27, 2008

Usually, the biggest complaint residents hear from City Hall or the seat of county government is that the budget is too tight, that there is simply not enough money to meet all the pressing needs of government. Tight budgets are often associated with projected expenses that exceed the revenues to pay for them.

For now, however, that is not the case in Lynchburg. And the good news comes as city officials put the finishing touches for the budget for the new fiscal year that begins July 1.

Despite falling sales tax revenues, the city expects to finish out the year well in the black. That’s because the sales and use tax on communication services is expected to rise by more than $1 million over previous estimates.

The city has also benefitted from high-yield investments that are expected to generate about $1 million more than projected when the current budget was written about a year ago.

Sales tax revenues, meanwhile, are expected to come up about $1.6 million short of projections made a year ago. That shortfall, of course, reflects the slowing economy caused in part by rising gasoline prices and lingering doubts about the mortgage crisis hanging over the housing industry.

The third quarter budget revisions should be welcome news for city taxpayers, as it is for finance officials at City Hall.

“I was a little worried when the sales tax kept going down, but I think it turned out to be a very stable fiscal year,” said Finance Director Donna Witt.

Revised sales tax estimates show the city will take in $14 million by the June 30 end of the fiscal year, or about $1.6 million less than anticipated in the budget.

But the communications sales and use tax is expected to help bail the city out of the sales tax shortfall. The taxes on telephones, cable television and satellite radios has seen significant gains over what the city was led to expect by the state, which collects and distributes the revenue.

The city is also reaping the benefits of a healthy collection of investments — the combined result of a new approach to those resources and decreased spending of bond revenues. More money to invest in pursuit of higher-yield investments has boosted returns on those investments.

The third quarter budget revisions also show an increase of some $525,000 in local real estate taxes for the year. Credit for that is going to last year’s reassessment, which has generated more revenues than projected.

The revenue increases come during the city’s great debate over whether it should have set aside about a third of the $1 million Community Development Block Grant money in the event the Bluffwalk Center is unable to make approaching payments on a federal loan backed by the city. The city had to make a six-figure payment on the debt on behalf of the downtown hotel and restaurant last August. 

Nonetheless, whenever a city’s (or county’s) budget comes in with more revenues than expenses, the result is good for the locality and its taxpayers. It reflects a prudent approach to spending on the part of the governing body and it reflects an excellent grasp of the budgeting process by those in charge of ensuring that sufficient money is coming in to cover the variety of expenses involved in keeping the city running smoothly.

Lynchburg’s government is generally blessed to have both of those ingredients.