New FY21 budget based on nearly 5% reduction in projected revenue due to COVID-19

The Stoney administration today unveiled the adjusted FY2021 proposed budget, which was designed to align with a $38.5M projected general revenue fund decrease.

Budget and council staff have been working together tirelessly since the mayor declared a state of emergency in the City of Richmond, aiming to adapt the proposed FY21 budget to the new restrictions posed by the economic effect of the pandemic. 

The FY21 budget outlined in Mayor Stoney’s March 6 presentation was based on a $782.6M general fund revenue projection. That projection has been updated and is now estimated to decrease by $38.5M and now stands at an estimated $744.1M. That represents a decrease of 4.9 percent from the budget presented to City Council on March 6th. 

The city is now projected to face a shortfall at the end of FY20; a surplus was originally expected. The city has implemented cost-saving measures such as a hiring freeze and a moratorium on all discretionary spending to help offset the effect. 

Currently, the updated budget still aligns with Richmond’s priorities: supporting schools, fixing roads and sidewalks, and making the city a more equitable, safe place to raise a family. 

The revised FY21 budget will still allocate more to RPS than the city did in FY20, following council-approved guidance to dedicate a certain percentage of real estate tax revenue to schools. A total of $181M will now go to RPS, compared to roughly $175M in FY20. 

The City of Richmond also remains dedicated to supporting nonprofit partners who meet the needs of the Richmond community. Knowing that many non-profit partners are facing challenges due to COVID-19, the mayor worked to ensure that partners budget did not receive a cut from their FY20 allocations through the city’s non-departmental budget.  

Richmonders will no longer see utility rate increases in FY21, which has a $2.5M impact on projected general fund revenues - in the form of a PILOT (payment in lieu of taxes) payment to the city. The city has adjusted for this change by making further cuts to department budgets. 

“This international crisis is forcing local governments everywhere to make tough, sometimes heartbreaking decisions when it comes to budgets,” said Mayor Stoney. “In Richmond, we’re blessed with a team unified around our shared values: equity, opportunity, and fiscal responsibility to our residents. This adjusted budget reflects those values.”

The following lists do not include all changes. The finalized amendments will be available once they are formally submitted to Richmond City Council by April 20.

The following items funded in the original FY21 budget have been eliminated:
2 percent salary increase for employees; 
Step increases for public safety personnel and base salary increases for public safety recruits;
Nearly $9.4M in currently funded full-time and part-time employee positions, and the elimination of 12 proposed new positions throughout the administration, including in Citizen Service and Response, Parks and Recreation, Human Services, and the City Attorney’s office, among others;
Parks, Recreation and Community Facilities workforce development program for returning citizens;
Doula program run through the Richmond City Health District; 
History and Culture Commission operating budget; and
Several non-departmental allocations to nonprofits that did not receive funds in FY20. 

The following items saw an increase in the original FY21 budget but have now been brought to FY20 funding levels:
The Affordable Housing Trust Fund, which was slated to receive $3.5M but will now receive $2.9M;
The Eviction Diversion Program, which was slated for a $201k increase but will now receive $485k; and
Many non-departmental allocations to nonprofits that received funds in FY20. 
  
The budget amendments will be formalized and submitted to Richmond City Council by April 20, at which point they will become publicly available.