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Significant losses in this year's revenue has the City of Galax rethinking its expenditures for the 2008-2009 budget — including holding off on renovating the Galax Farmers' Market, obtaining a city street sweeper and moving forward with water and sewer projects.
Meals tax revenue was down by 9.59 percent, dropping from $598,522 to this year's $541,098, according to the Nikki Shank, the city's director of finance.
Because of fewer land transfers and fewer home purchases, court fees were down significantly. At this time last year, the city had collected $73,393. This year, it has only taken in $57,959.
General property tax collection — which includes machinery and tools, personal property and real estate taxes — has shrunk from $3,250,601 to $3,190,275, a difference of $60,326.
This year's general property tax collection doesn't even include losses caused by the B.C. Vaughan furniture plant's closing last year. Shank said B.C. Vaughan plant's machinery and tools tax contributed $77,953 to the city's revenue stream, which will affect the 2009-2010 budget.
Sales and use tax dropped by $6,926, from $1,194,952 to 1,188,026.
Despite a major decline in this year's revenue, the deficit for the prior fiscal year was a bit larger. The January 2008 deficit was at $340,391. For this year, it stands at $256,391 — an $84,000 difference.
The reason for last year's significant debt, however, is possibly due to the purchase of a new $100,000 garbage truck and a $467,592 payout to the regional broadband Internet project, said Shank.
Shank said deficiencies in revenues began setting in only a couple months ago, when unemployment began to rise. According to the Virginia Employment Commission, Galax's unemployment rate for December 2008 was more than 10 percent — nearly double the state average.
So this year's decline in revenue and other economic challenges has the city focusing on reducing costs and reconsidering any large payouts.
In prior years, Shank said that, if items had been budgeted, the city's department heads were allowed to go forward with any large purchases. But this time, department heads have to seek approval for any expense over $10,000.
“If we can make do without it, that's what we're are going to have to do,” said Shank. “But we do realize that somethings are necessary.”
For example, the finance department plans to get new software, which has been budgeted for $100,000. Shank said the department's current software is far outdated.
One item being eliminated from the 2008-2009 budget is a street sweeper, costing nearly $100,000. The street sweeper would improve the appearance of the area by sweeping away debris left in the city streets.
“If we are trying to attract tourists, we need to cut back on trash and debris in our streets,” said City Manager Keith Holland. “But right now, it's a luxury we can't afford.”
Holland said it's a capital project that the city should reconsider in the future.
The City of Galax and the Galax Downtown Association have worked to revitalize the Galax Farmers' Market for about a year by adding new signs, new paint and bike racks.
About $40,000 had been budgeted this year to add new seating and some landscaping at the venue. However, continuing the rejuvenation of the market may have to hold off for a while, said Holland.
“We're keeping a close look on revenues,” said Holland. “We're looking at every way we can to bring the budget into the black for this year.”
Other major projects in the 2008-2009 budget include the construction of Chestnut Creek School of the Arts, a $683,643 item; the Wired Road broadband project, a $321,000 project; and the downtown revitalization project, a $560,500 budgeted component.
This fiscal year, at least $93,000 has already been spent on the CCSA project; $230,660 for the downtown revitalization project; and $288,535 for the broadband project.
As for the 2009-2010 budget, “we're waiting to see what the General Assembly is going to do,” said Holland. “We need to address some real infrastructure problems.”
Water and sewer projects throughout the city are not going to get too far this year, he said.
The city had budgeted $202,000 for a water pressure project on Glen Ridge Road; $30,000 for a water project on Spring and Cox streets; and $179,000 for a project on Stanley Street.
All will have to wait until later.
Holland said some city vehicles will need replacing soon, but “we're trying to get as much life as we can out of the vehicles,” he said.
“[Infrastructure systems] are probably going to get worse, and we need to fix them,” said Holland. “But we're doing the best we can.”