Gloucester County reports midyear budget on track but flags slowing revenue growth

Gloucester County finance staff presented an unaudited midyear financial report to the Board of Supervisors, saying major revenue sources are on track but past double‑digit growth is easing.

The presentation by Miss Keller Williams, the county finance presenter, highlighted that general property taxes make up 61% of general fund revenue, other local taxes 20% and state revenue 12%, and that real estate revenue was reduced in the FY25 budget by $640,000 (about 2%) following shortfalls in FY23 and FY24. "A full copy of the financial statements is provided in the board packet on page 30," she told the board.

The nut graf: the county’s headline message was that current collections and spending through midyear align with the adopted plan, but staff warned several growth drivers that boosted recent revenues — notably lodging, meals and sales taxes and interest earnings — are showing signs of normalization, which will shape budget planning for FY26.

Keller Williams said real estate collections through the midpoint of the year were at 49% of budget, similar to the midpoint for the prior two years, and personal property collections were at 44% of budget. "So in fiscal year 24, at this point, we had collected 45% — we're about 1% less this year," she said, noting vehicle values drive personal property revenues. She also noted growth in veterans' tax exemptions is exerting downward pressure on property tax receipts.

Sales, meals and lodging taxes have been strong in recent years but are flattening. Keller Williams showed year‑to‑date collection rates near 49%–53% across those sources and said the county’s recent double‑digit percentage growth has moderated toward long‑term rates nearer 5%.

Interest income, which rose sharply in recent years, is also trending down from recent peaks. Keller Williams reported interest earnings for the school sales tax fund were about $1.2 million for FY24 and said interest rates had fallen from a high near 5.27% to about 4.7% as of February. She confirmed sales‑tax interest is tracked separately from the school fund and remains in that fund.

On expenditures, the general fund was about 46% spent at midyear. Keller Williams said much of the underspend reflects vacancies and timing (for example, the county’s insurance is paid up front). She said the county budgeted $400,000 in vacancy savings for FY25 and currently expects to exceed that amount modestly; health‑insurance savings were budgeted at $107,000 and are now projected nearer $229,000 if current trends hold.

Keller Williams highlighted known cost pressures heading into FY26: rising maintenance and contractual costs from inflation, higher health‑insurance premiums (initial estimates had been 26.1%, later reduced to 12.5% after negotiations), possible salary study/market adjustments and requests for new positions. She also noted the county is monitoring potential additional state school funding from the General Assembly and that an estimated $3.3 million of excess fund balance is available for one‑time use in FY26 based on audited FY24 results and budgeted uses.

Board members praised the clarity of the presentation and asked follow‑up questions about the drivers of the post‑pandemic revenue boom. Keller Williams told the board the sharp growth after COVID was driven largely by spending rebound and travel (lodging) and that some portion of the lodging increase is attributable to short‑term rentals.

Keller Williams said next steps include presenting the FY26 recommended budget to the board on March 17, adoption of the budget on April 30, and a third‑quarter financial update in May.

The report contained no formal board action; the presentation was received for discussion and will inform upcoming budget deliberations.