Council briefed on budget shortfall, Recovery Roadmap, outdoor ABC licenses

As of today, there are only eight days left until the beginning of Fiscal Year 22. On Monday, June 21, the five elected officials got a glimpse of where things stand through the first eleven months of Fiscal Year 21. A shortfall related to the economic shutdown that began in Fiscal Year 20 is not as bad as initially reported. 

“Based upon the current conditions of what we’re seeing in terms of revenues, things are continuing to trend in a positive direction,” said Ryan Davidson, a senior budget management analyst for the city. 

In April, budget staff estimated there would be a $8.35 million gap, but revenues picked up and the current forecast is for a $7.42 million deficit for fiscal year 21. (staff report)

“We’re continuing to see some volatility month to month in some of our larger economic driven revenues,” Davidson said. “Sales, meals, lodging. But we’ve been seeing more of a positive trend in these areas.”

After the fiscal year, the accounts for FY21 will be audited which will take several months. The city will likely use a mixture of sources to make up the shortfall, including the American Recovery Plan Act (ARPA). Other options include the $7.3 million reserve set aside in previous federal funds and use of surpluses from previous years that have not been appropriated. 

“Should we need to use the ARPA funds to cover any of the remaining budget variance that’s not covered by other means, we’ll know those figures after the close of the fiscal year and have those final audited amounts in the November or December timeframe,” Davidson said. 

This table is available in the staff report for the discussion

Let’s take a closer look at where the shortfalls are coming from. The adopted budget for FY21 estimated the city would bring in $14.3 million in meals taxes, $6.3 million from lodging taxes, and $1.34 million in income from parks and recreation. The current projections show the potential actual amounts as missing those targets by $3.5 million for meals, $2.6 million under for lodging, and $910,824 short for parks and recreation.

To get those numbers up for the soon-to-be-current fiscal year, the Economic Development Office is implementing a Recovery Roadmap and Economic Development Director Chris Engel provided an update on how it is going. (staff report)

“This process emanated out of a discussion the Council had at the beginning of the budget season late last year, November and December, where you indicated that helping businesses recover was one of your priorities,” Engel said. 

Engel said there are 15 specific initiatives in the roadmap clustered in four categories. They are financial assistance, training and resource access, infrastructure needs, and marketing and advertising. 

Exploring DORA

As of July 1, Virginia law pertaining to carrying alcohol outside of a licensed establishments will become more flexible to allow people to explore Designated Outdoor Refreshment Areas (DORA).  Jason Ness is the Deputy Director of the Economic Development office.

“The designated outdoor refreshment area concept has been on the books with [Alcoholic Beverage Control Authority] for quite some time and really the fundamental change that takes effect on July 1 is that it is now localities have more control over these types of events,” Ness said. “In the past it was a permitted system both at the state and the locality. The new legislation will allow for cities to create ordinances to control these.”

Take a look at HB2266 if you want to see how what the legislation looks like and what it does. Ness said there would still be restrictions.

“You couldn’t take a cup from one ABC license holder to another, so you could not go from restaurant to restaurant but you could go into retailers if they would allow that,” Ness said. 

Ness said the city is in talks with the Ix Park for a community block party for this fall. One idea would be to get the local DORA ordinance in place to allow that to be extended to the Downtown Mall. 

Mayor Nikuyah Walker expressed concern that inviting alcohol consumption across a wider geographic area could lead to behavioral issues as well as unequal treatment. 

“We’ve had a lot of concerns about drinking in public, drunk in public, those types of conversations,” Walker said. “I am hoping that we resolve those and that we’re not allowing some people just because they’ve purchased it in a restaurant when we know that other people are already drinking and there is different treatment.”

Councilor Michael Payne said he was open to the idea and shared Walker’s concerns.

“I couldn’t say that I’m 100 percent behind it at this point,” Payne said.

There was enough support from Council to give Engel the go ahead to work on pursuing an ordinance. Ness said he heard the concerns of Payne and Walker.

“Those are the important questions that we need to consider and flesh out all the answers on how things like that are going to be handled before we actually put that into place,” Ness said. 

Vice Mayor Sena Magill said if the city seeks to explore a DORA then it needs to be about more than just one place.

“If we’re developing something like this, I don’t want it to be Mall-focused,” Magill said. “I want to make sure that if we’re developing it, that it can be developed for all areas of Charlottesville.” 

Under the legislation, localities could set up three DORAS to explore. 

Other economic development ideas

Other ideas in the Recovery Roadmap include a twice-yearly clean-up day to address maintenance issues identified by businesses as well as a buy local effort. 

Engel said his office is making a request for $1 million in American Rescue Plan funding to help boost the tourism sector. Part of that money would be used to replace revenue losses that have led to a decrease in available funds for the Charlottesville-Albemarle Convention and Visitors Bureau 

“The Visitors’ Bureau revenue due to the transient occupancy tax in the city and [Albemarle] has been reduced by about $1.5 million and since the city and the county both fund that entity, the request that we’re both making through the ARP process if for half of that,” Engel said. 

Walker asked whether this use of the ARP funding was the highest priority.

“If we do give those dollars, the $750,000, what are they used for and how do weigh the direct  aid to businesses against the money to CACVB for their loss?” Walker asked.

Engel said the budget for the Visitors Bureau is based on previous years, so they won’t feel the effects until the new fiscal year begins.

“The funds are intended to replace the drop for next year and the year after,” Engel said. 

Councilor Payne also questioned whether the city should use its share of the ARP funding to make up the losses. He suggested the General Assembly could vote later this summer to appropriate state money for the purpose of tourism marketing. 

“If that money doesn’t come, or doesn’t cover the gap, I’m very curious to know what data and research exists about what is the actual return on investment to the tourism board and what return on investment do we actually expect and anticipate, recognizing that the ARP money is limited and its all about trade-offs and ensuring that we’re making an investment that’s having the most positive impact on our community,” Payne said. 

Engel said if the General Assembly did allocate funding to tourism, it would most likely be in the form of grant funding and not a direct replacement of lost funds. He said he would return to Council with information along the lines that Payne requested.

Before you go: The time to write and research of this article is covered by paid subscribers to Charlottesville Community Engagement. In fact, this particular installment comes from the June 23, 2021 edition of the program. To ensure this research can be sustained, please consider becoming a paid subscriber or contributing monthly through Patreon.

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