The true impact of the Richmond Common Council’s rejection of the administration’s 2013 budget remains a bit murky.
One thing is clear: The city will not receive $500,000 in state-allowed revenue growth that was to be used to build the city’s cash reserve. But the impact of that will not be truly known until the city receives its December settlement of property taxes, which will be affected by tax caps and tax refunds.
“The biggest thing is we’re going to lose that growth,” city controller Tammy Glenn told the Richmond Common Council at its meeting Monday. “We may really need it next year.”
Council members in October rejected the proposed budget, citing ongoing concerns over health insurance costs and the administration’s lack of progress in settling on a contract with city unions.
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What will be lost is modest revenue growth. The state this year allowed municipalities to increase their budget, and therefore increase property taxes collected, by 2.8 percent. But that amount was lost when council voted 5-3 to reject the budget.
That vote forces the city to revert back to its present-year budget.
The move will not affect significantly the city’s tax rate, which will stay at $1.5545 per $100 of assessed value on property next year as opposed to the $1.5520 proposed for 2013.
But Glenn said two city funds — fire pension and parks and recreation — will run out of money in 2013. The city can borrow from other funds to keep those two solvent next year but must pay back the money by year’s end unless council passes an emergency ordinance to receive six additional months to repay the loan.
In December, the city will learn what it receives in its property tax settlement, an annual surprise that might make budgeting a challenge.
“That’s when we’ll know the impact of the tax caps and property tax refunds,” Glenn said. “We hope that won’t significantly change the amount of tax money we receive.”
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