Windsor FY21-22 budget proposal introduced

Published 5:24 pm Tuesday, May 18, 2021

Windsor Town Manager William Saunders made the initial presentation of his fiscal year 2021-22 budget proposal to the Town Council on May 11, highlighting a budget that is balanced in both the general fund and water fund without cutting services. It includes no changes to the current real estate tax rate, personal property tax rate or the meals tax rate, but there is a recommended increase in the water rate.

In the proposal’s revenue and expenditure summary, Saunders stated revenues and expenditures for the general fund were each $2,060,688.19, and for the water fund, each was listed as $1,230,000.

The document Saunders introduced May 11 included his proposal for the operating budgets for the general fund, the water fund, the space needs fund and the Windsor Town Center as well as his proposal for the five-year Capital Improvements Plan for FY 2021-22 through FY 2025-26.

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The proposal document can be accessed online at Draft Budget_PDF 2021-05-10.pdf.

The general public hearing on the budget is set for May 25 at 7 p.m. The public hearing on the tax rates is set for June 8, and the Town Council may vote to pass the rates during that meeting as well.

“This budget proposal comes with some uncertainty due to the unknown financial impacts of

the COVID-19 pandemic, although it is hoped that we have already seen the majority of its impacts,” Saunders stated in the document. “Some disruption in our normal revenue streams due to the financial hardships experienced by our citizens during these uncertain times may continue. Council should continue to watch this situation closely.”

He noted that the budget includes a $50,000 contingency due to these and other uncertainties in FY 2021-22.

“I recommend we maintain our current rate of real estate tax at 10 cents per $100 of value,” he said to council members. “However, we will need to continue to review this rate in upcoming years as we serve our citizens in the best way possible.”

He also recommended the town maintain its current personal property tax rate of 50 cents per $100 of value.

The Isle of Wight County commissioner of revenue is responsible for conducting the assessment of real property values within the Town of Windsor, Saunders noted in the proposal document, and the county conducts this assessment approximately every two years. A new assessment is expected to take place in 2022.

“Based on information from the commissioner of revenue, we can expect our real estate values to increase by 2.5%,” he stated. “One penny on our real estate tax rate generates approximately $21,000 in real estate tax revenue for fiscal year 2021-22.”

He indicated the commissioner of revenue also determines the value of personal property and machinery and tools in Windsor, adding that the commissioner has estimated a 25% increase in personal property values and a 5% decrease in machinery and tools values.

“I recommend maintaining our current rates of 50 cents and 25 cents per $100 of value, respectively,” he stated.

A pie chart in the proposal document shows the largest source of revenue for the town is “Other Local Taxes,” representing 37% of the pie.

Saunders stated in the document that the “Other Local Taxes” category of revenues contains Windsor’s second-largest source of revenue — the meals tax.

“As a category, it generates more revenue for the town than the general property tax category,” he stated. “I am recommending we maintain our current 6% tax rate for this revenue source.”

Included in the 2021-22 general fund revenue is a payment from the water fund for indirect services the general fund provides the water fund, Saunders stated. The water fund also pays the general fund to cover a portion of the salaries of the employees that spend time working for both funds.

“The water fund’s indirect payments to the general fund are adequate, and the general fund

does not subsidize the water fund,” Saunders stated. “The payments from the water fund for indirect costs and salaries total $318,031 for fiscal year 2021-22.”

The total salary cost for the town as a whole is $840,453.45, he stated. The general fund portion of the salaries is $605,212.26, and the remaining $235,241.19 appears in the water fund.

Included in the proposed general fund budget is a police vehicle at $45,000, Saunders highlighted in the proposal document. Funds are also set aside for the initiation of the assessment of the Comprehensive Plan to determine if a five-year update is warranted.

“There is no funding for the space needs fund in FY 2021-22,” he stated.

Amid a discussion of the water fund budget in the proposal document, Saunders made it clear the water fund budget proposal does not contain any financial assistance from the general fund. He stated the town has essentially only one source for water revenues — the sale of water to its water customers.

“We must routinely evaluate our water rate, and make adjustments as necessary,” he stated.

In the proposal, he recommended increasing Windsor’s current water rate of $7.50 per 1,000 gallons, with a minimum bill of $26.25, to $7.75 per 1,000 gallons, with a minimum bill of $27.13.

“This increase was slated for last fiscal year but was not implemented at that time,” he stated.

Saunders explained in the document that accounting principles require governmental enterprise operations, such as Windsor’s water fund operation, to not only show depreciation as an expense but also to fund the same.

“This process provides the owner of the enterprise operation with a method to fund the replacement of the physical assets of the system as these assets wear out or become obsolete,” he stated.

Windsor has made great strides in recent years to fund a larger portion of depreciation, he noted, and the proposed budget funds depreciation at 60%.

“The major capital project included in the water fund this year is a water main

upgrade/replacement for Duke Street and Virginia Avenue,” he stated, referring to an item in the CIP that has a price tag of $620,000 for fiscal year 2022. “This project will allow the town to upgrade our existing water lines in the area to provide better service as well as fire protection along Virginia Avenue where there currently is none. This project is funded with fund balance.”

Saunders also shared what to expect from his Five-Year Capital Improvements Plan.

“The CIP should not be a ‘wish list’ of projects; instead, it should be a realistic program of projects that the town intends to undertake within the next five years,” he stated. “As such, in developing the CIP, we must take into consideration the town’s ability to finance these projects. I am recommending a CIP that fits within the town’s financial capabilities for the next five years.”

The largest amount listed in the CIP for the general fund is $320,000 slated for fiscal year 2022 to pay for the Windsor Town Center roof replacement. This is slated to be funded with fund balance, according to the CIP.