Town will delay FY-2021 tax rate vote, final budget transfers amidst COVID-19 questions

On Monday evening, April 9, the Front Royal Town Council went through a multi-faceted exploration of potential tax and utility service revenue shortfall consequences of the COVID-19 pandemic and emergency response to that public health threat. If some are questioning the necessity of the governmental response closing “non-essential” businesses to facilitate “social distancing” to stem the spread of the newest strain of Coronavirus, the town’s elected officials are questioning how to best deal with projected revenue shortfalls in the final three months of the current fiscal year, as well as the now-being-developed FY-2021 budget.

Mayor Eugene Tewalt at the Front Royal/WarrenCounty Emergency Response Briefing on April 9, 2020.

And while earlier in the day at a Joint County-Town Emergency Management Team briefing Mayor Gene Tewalt referenced the possibility of a $2-million shortfall in the final three months of the current Fiscal Year 2020, three scenarios presented by Interim Town Manager Matt Tederick and Town Finance Director B. J. Wilson described potential shortfalls ranging from $2 million, $2.7 million and in a worst-case scenario $3.4 million dollars.

Of those three scenarios coupling potential lost meals and lodging tax revenue scenarios with bad debt on non-payment of Town utility bills, Tederick told the town’s elected officials Scenario 3 with its $2 million shortfall, the most likely, though he added a combination of Scenarios leaving the Town facing somewhere between a $2 million to $3 million shortfall a possibility.
Also during the work session, a council consensus was reached to forward a resolution waiving penalties and interest on overdue real estate and personal property tax payments for 90 days. And council ultimately agreed to delay a second, binding vote on Fiscal Year 2021 tax rates past its advertised Monday, April 13, date. Staff and council will add work sessions and special meetings as necessary to allow a vote to set those rates by Monday, April 20, one day before a cited April 21st deadline to do so.

Facing a revenue crisis of unknown dimensions, the council’s intended direction appears to be to look toward further departmental operational and capital improvement cuts, coupled with cuts to utility rates in the coming fiscal year. That latter decision would come directly following water-sewer rate consultant Stantec’s recommendation of a 2% annual hike over a five-year period to meet those Town utilities operational costs.

Council also appears committed to maintaining, if not expanding tax cuts in the coming fiscal year, coupled with continued use of general or enterprise/utility reserve funds. Some of those reserves have been referred to as a “slush fund” by Tederick since the council’s round of interim appointments of him as first, mayor in June 2019 and then town manager following Tewalt’s special election November 2019 mayoral victory in a two-man race with fellow former-Mayor Hollis Tharpe.

How these combined revenue-cutting scenarios might impact the Town’s long-term financial situation may have been reflected in two joking comments the interim town manager made about Town Finance Director Wilson being given CPR by the town attorney or “flopping on the floor again” as discussions of revenue cuts to meet revenue shortfalls progressed.

Social Services Director DeAnna Cheatham at the Front Royal/WarrenCounty Emergency Response Briefing on April 9, 2020.

As pointed out by County Social Services Director DeAnna Cheatham at the joint Emergency Management briefing earlier in the day, it is specific portions of the community’s citizenry employed in the most vulnerable “non-essential” small business environments, many who live paycheck to paycheck who face the most financial jeopardy from the COVID-19 situation. However, council’s stance appears to be to spread cuts to Town service and utility costs, as well as real estate or personal property taxes, across the board to all citizens, regardless of whether they have been impacted by COVID-19 emergency measures; or their financial ability to absorb any such impact.

Recently appointed Council member Lori Cockrell suggested bringing department heads in for work session review of suggested cuts to their budgets to get their perspective on any administratively proposed cuts. Council has 11 days to make final decisions. And as Tederick told them several times Thursday evening, he is looking for their direction as to final recommendations on tax rates and budget transfers.

Future of Town central water-sewer rates and fees put on table