Chevy Chase Town Council Budget Work Session for FY11

The following is a summary of the results of the Town Council’s annual budget work session on Wednesday, March 24. Virtually all decisions were made consensually after discussion among the five council members and included the participation of the Town Manager and the Town Clerk.

Revenues and Expenditures in the Current Fiscal Year
The Council reviewed the current fiscal situation. Revenues were below estimates in the FY10 Budget in two areas: (1) highway user taxes and (2) income taxes. The State slashed Town revenues from highway user taxes from $121,000 to an estimated $6,432—a decline of $114,568.

The Town projected a sharp drop of 45% in income tax receipts in its FY10 Budget, a decline to $2.3 million from the approximately $4.2 million received in FY09, due to the severe economic recession. In fact, income tax revenues are estimated to fall by 50%--a drop of $178,825 more than anticipated in the FY10 Budget.

While total revenues fell by an estimated $293,393, the deficit projected for FY10 has increased by only $72,500 because the Town is projected to have spent roughly $221,000, or 7.4%, less than budgeted in the FY10 Budget. The total projected deficit in the operating budget for FY10 is now $327,000.

Revenues and Property Tax Rates in the Upcoming Fiscal Year
In my capacity as Town Treasurer, I worked with the Town Manager and Town Clerk to prepare a base budget in anticipation of this Council work session. The FY11 budget estimates that revenues from income taxes will remain the same as in FY10, and the Council maintained this approach in the final budget that it will propose to the community for consideration at the Town’s Annual Meeting on May 4.

The FY11 Budget takes into account that the State plans to continue transfers to the Town from highway user taxes at the drastically reduced levels instituted in the middle of the current fiscal year. Additionally, the County plans to reduce by 5% the amount it transfers to municipalities as payment for services performed by the Town instead of the County.

During the work session, the Council increased revenues over the projected amount in the base budget by a net of $7,500. The unanimous decision to retain the property tax at $0.01 per $100 of assessed value instead of reducing taxes to the constant yield tax rate of $0.0093 per $100 of assessed value yields an additional $9,000. The Council also estimated that it would collect $1,000 in municipal fines, the same level as in the FY10 Budget, which was viewed as more realistic than the projected increase to $2,500 in the base budget.

Operating Expenditures in the Upcoming Fiscal Year
The proposed budget retains all services at current levels -- from trash pickup and snow removal to policing. The Council rejected the elimination of yard trash collection between January 15th and April 1st—the only proposed cut in services—that would have saved an additional $8,000. The proposed FY11 Budget also continues the increased allocation begun in FY10 that allows the Town to employ off-duty Montgomery County police officers to patrol the town every night as well as during the afternoon dismissal at Chevy Chase Elementary School.

The base budget for FY11 considered by the Council reduced expenditures in FY11 by $28,000 from projected actual expenditures in FY10 and by $252,500 over the FY10 budget. At the work session, I proposed further specific cuts in expenditures, and the Council adopted a total of $23,500 in additional net cuts that are designed to save money without reducing services.

The most difficult decision made by the Council was to cut an additional $32,000 from the proposed FY11 Budget by delaying a planned increase in staff salaries. The Council did not take the decision lightly but felt unanimously that it is appropriate in light of the fiscal situation and current staff salary levels.

During the work session, the Council adopted a total of $63,500 in expenditure cuts, resulting in a reduction in the proposed deficit in the operating budget to $212,500 from the $276,000 in the base budget. The Council agreed unanimously that the deficit is sustainable in light of the Town’s reserves.

Capital Budget in the Upcoming Fiscal Year
The proposed capital budget for FY11 includes a little more than $1 million in expenditures needed to maintain the Town’s roads. The Town spent an estimated $1.1 million on roads this year. After FY11, the Town will have completed anticipated needed road improvements for some time with capital expenditures projected to fall dramatically as a result in subsequent years.

Budget Documents and Budget Narrative
Residents will be able to review the proposed budget online at the Town’s website (www.townofchevychase.org) by early next week. Budget worksheets posted there will include a budget summary as well as planned line-by-line expenditures, including actual numbers from FY09, budgeted and projected actuals for FY10, as well as the proposed FY11 Budget. Additionally, the Town will post the budget narrative, a document that provides a brief explanation of each line in the budget.

Budget Hearing
If you have any comments on the proposed budget, I encourage you to testify at the hearing at the Annual Meeting on Tuesday, May 4th. Residents are also welcome to speak on the budget during the public comments period at the Town Council meeting on April 7th or to write the Town at townoffice@townofchevychase.org. E-mails sent to this address are received by the Town Manager and all five members of the Town Council. Of course, you are also welcome to write me directly at dlublin@townofchevychase.org.