Finance director: revenues tracking to budget but interest income declining; council approves several supplemental appropriations and a bond reallocation
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Summary
Finance staff told council major revenue sources are generally meeting or exceeding budget estimates, though interest earnings are falling as ARPA funds are spent; council approved supplemental appropriations for schools and city grants, an appropriation of bond interest proceeds, and a reallocation of roughly $800,000 in bond proceeds.
Finance Director Larry Props presented a high‑level revenue outlook to council on Feb. 25 ahead of the formal budget proposal. He reported that, through January, most major revenue sources — property taxes, sales tax and meals tax — are tracking to meet or exceed the current fiscal‑year budget projections. Key points from the presentation:
• Property taxes: Collections (including delinquent real estate and personal property) were ahead of budget projections for the year; staff noted growth in assessed values is expected to add revenue in the coming budget year. Props flagged potential volatility in vehicle values and said the city may need to consider raising the personal property tax rate toward pre‑COVID levels if values continue to decline.
• Local taxes: Sales and meals taxes were above last year’s totals (sales tax roughly +2.2% year‑over‑year; meals tax roughly +4.2% year‑over‑year). Lodging tax appeared slightly below budget projections but staff noted year‑over‑year lodging receipts remain above prior years.
• Interest/use of money: Interest income has decreased recently because market rates have declined and the city is spending down one‑time sources such as ARPA funds. Props said interest earnings have helped fund one‑time capital needs and staff will return with suggested uses for remaining interest proceeds.
Following the presentation, council took several formal fiscal actions. Motions and votes approved the following appropriations and reallocations:
• Supplemental appropriation to Harrisonburg City Public Schools of $375,000 to reflect local, state and federal grants received after the budget was adopted.
• Supplemental city appropriation of $188,408.85 for various receipt items: a $50,000 donation for Parks & Recreation (Swim for Sadie), a $20,000 Sentara grant for the Navigation Center, $29,000 reimbursement for Navigation Center furniture, and $89,000 cost share for a public‑works generator.
• Appropriation of bond interest and related proceeds totaling $642,296.54 for bond‑funded projects.
• Reallocation of about $800,000 in series 2021 bond proceeds: staff reported the street portion of Rocktown High School construction came in under budget and the surplus will be moved to the Shenandoah River water project which requires additional funding.
Props told council the general fund remains in good shape for operating needs but stressed the city should be cautious as one‑time revenue sources taper and interest earnings decline.
