Given the extraordinary circumstances of the COVID-19 emergency, the Council adopted an Interim Emergency Appropriation for the First Quarter (1Q) of FY21 at $5.0 million on June 9, 2020.  The Proposed Budget for the balance of FY21 Second through Fourth Quarter (2Q-4Q; October 2020 through June 2021) is $16.0 million for a Total FY21 Budget of $21.0 million.  The remainder of the appropriation must be approved prior to October 1, 2020 (beginning of second quarter).

The initial FY21 Town Manager Proposed Annual Budget was presented on March 18.  In accordance with discussion at the March 24 meeting, the Town Manager provided a FY21 Revised Annual Budget reducing expenditures by ($1.2M) that eliminated the need for contemplated tax and fee increases.

The budget was discussed three times following the installation of the new Council.  The first discussion was held on July 14 where the Finance Director and team presented a detailed analysis of projected revenue.  The second was a full work session on July 28, where following the staff presentation, the Council motioned no need for additional work sessions and directed the proposed budget public hearing be scheduled for September 8 to receive public comment.  The public hearing was held on September 8 and no public comments were received.  The Finance Director provided answers to Town Council questions via email on September 10.  A summary of the FY21 budget process, relevant documents and staff reports can be found on the Town’s budget webpage at https://www.purcellvilleva.gov/921/FY-2021-Budget

The State budget requirements for local governments are established in the following code sections and may be a helpful resource as Council considers action required to appropriate funds:

§ 15.2-2503. Time for preparation and approval of budget; contents.

All officers and heads of departments, offices, divisions, boards, commissions, and agencies of every locality shall, on or before the first day of April of each year, prepare and submit to the governing body an estimate of the amount of money needed during the ensuing fiscal year for his department, office, division, board, commission or agency. If such person does not submit an estimate in accordance with this section, the clerk of the governing body or other designated person or persons shall prepare and submit an estimate for that department, office, division, board, commission or agency.

The governing body shall prepare and approve a budget for informative and fiscal planning purposes only, containing a complete itemized and classified plan of all contemplated expenditures and all estimated revenues and borrowings for the locality for the ensuing fiscal year. The itemized contemplated expenditures shall include any discretionary funds to be designated by individual members of the governing body and the specific uses and funding allocation planned for those funds by the individual member; however, notwithstanding any provision of law to the contrary, general or special, an amendment to a locality's budget that changes the uses or allocation or both of such discretionary funds may be adopted by the governing body of the locality. The governing body shall approve the budget and fix a tax rate for the budget year no later than the date on which the fiscal year begins. The governing body shall annually publish the approved budget on the locality's website, if any, or shall otherwise make the approved budget available in hard copy as needed to citizens for inspection.

§ 15.2-2506. Publication and notice; public hearing; adjournment; moneys not to be paid out until appropriated.

A brief synopsis of the budget which, except in the case of the school division budget, shall be for informative and fiscal planning purposes only, shall be published once in a newspaper having general circulation in the locality affected, and notice given of one or more public hearings, at least seven days prior to the date set for hearing, at which any citizen of the locality shall have the right to attend and state his views thereon. Any locality not having a newspaper of general circulation may in lieu of the foregoing notice provide for notice by written or printed handbills, posted at such places as it may direct. The hearing shall be held at least seven days prior to the approval of the budget as prescribed in § 15.2-2503. With respect to the school division budget, which shall include the estimated required local match, such hearing shall be held at least seven days prior to the approval of that budget as prescribed in § 22.1-93. With respect to the budget of a constitutional officer, if the proposed budget reduces funding of such officer at a rate greater than the average rate of reduced funding for other agencies appropriated through such locality's general fund, exclusive of the school division, the locality shall give written notice to such constitutional officer at least 14 days prior to adoption of the budget. If a constitutional officer determines that the proposed budget cuts would impair the performance of his statutory duties, such constitutional officer shall make a written objection to the local governing body within seven days after receipt of the written notice and shall deliver a copy of such objection to the Compensation Board. The local governing body shall consider the written objection of such constitutional officer. The governing body may adjourn such hearing from time to time. The fact of such notice and hearing shall be entered of record in the minute book.

In no event, including school division budgets, shall such preparation, publication and approval be deemed to be an appropriation. No money shall be paid out or become available to be paid out for any contemplated expenditure unless and until there has first been made an annual, semiannual, quarterly or monthly appropriation for such contemplated expenditure by the governing body, except funds appropriated in a county having adopted the county executive form of government, outstanding grants may be carried over for one year without being reappropriated.

A review of the Town’s current expenditure reports as of September 15, 2020 indicates the available balance of the initial FY21 1Q appropriation is limited and an additional appropriation is needed before October 1, 2020 to ensure continuity of operations. It is our recommendation that Council fully appropriate funds for the balance of the FY21 budget to reduce the administrative burden on departmental and Finance staff to manage budget and procurement system control overrides associated with interim appropriations. In addition, staff needs to focus resources on preparation of the FY22 operating budget, 5-year capital plan and the long-term fiscal strategic plan.

The proposed appropriation for the remainder of the FY21 budget for Second through Fourth Quarters (2Q-4Q) are shown in the attached budget amendment BA 21-005 totaling $15,895,129.  Also attached is BA 21-006 to correct the omission in the Operating Budget for the proposed $96,780 transfer to the Wastewater CIP Membrane project (Note: Accounting processes require the budget entry for cash funding to be shown both on the operating and capital fund budgets.  This budget amendment is an administrative correction and does not change the intent of the budget request).  The combined total of the proposed amendments is $15,991,909, resulting in an Annual Budget total of $21,037,671 when combined with the FY21 1Q appropriation of $5,045,762 approved on June 9, 2020.

Once these budget amendments are approved and processed, the annual Revised Budget will be reflected on future YTD Budget Reports distributed to Town Council and posted on the Town’s website.  Revenue streams and expenditures are compared to budget and are monitored by management and shared with Council via the Quarterly Budget Status Report, also posted on the Town’s website under Financial Documents. 

“I move that Council approve BA21-005 and BA21-006 totaling $15,991,909 to fund the balance of Fiscal Year 2021 2Q-4Q Budget (October 2020 through June 2021).”