Kilmarnock conducted 1st reading of $12 million FY24 budget

Mar 28, 2023

At the May Town Council, Kilmarnock had the first reading of its $12,039,383 FY24 budget.

The Town's General Fund includes administrative, public works, and law enforcement. It gets revenues from taxation and is what the Town uses to pay its bills and cover capital projects and debt service.

In FY24, the General Fund is expected to have revenues of about $2.6 million with the largest component of that being the meals tax. Despite the pandemic, there has been a positive trend with meals tax revenue over the past several years.

Kilmarnock is projecting about $50,000 more in meals tax than in FY23 partially because, Subway has reopened and there will be five new restaurants coming on board. Whereas for FY23, the current fiscal year, town manager Susan Cockrell is projecting about $805,000 from meals tax. In FY24, that projection jumps to $850,000.

Cigarette tax revenue continues growing and is expected to bring in over $20,000 more than in FY23.

The budget calls for the town to hold its real estate and personal property tax rates where they are.

Kilmarnock is expecting $107,000 in grants, primarily from the Virginia Tourism Corporation to market the Town. Cockrell said $47,000 has already been awarded and the money will be coming in the fiscal year ahead.

A 5% pay increase is built into the budget for employees, which according to Cockrell, is an effort to keep the Town competitive with surrounding localities amid a particularly tight labor market, especially in Lancaster County, she noted.

The budget also includes $556,000 in capital projects. Most of that money is slated to go to the Town Centre Drive sidewalks from N. Main St. to E. Church St. as well as concrete repairs, mostly curb and gutter work, in Steptoe's District.

Other capital projects include adding public restrooms in Steptoe's District, replacing a public works truck, and beginning a mountain bike trail at Town Centre Park.

The Enterprise Fund, which consists of water and sewer revenues, is intended to be run like a for-profit business, said Cockrell. You don't have to make a profit, but you want your revenues to cover your expenses. A town shouldn't have to subsidize water and sewer from other funds, she explained. That is a struggle many localities have, and Kilmarnock is no exception. But the Town is making significant progress, according to Cockrell.

Sewer is a $1.4 million budget for FY24. The budget calls for $122,000 to be transferred to the sewer fund balance. That is the smallest subsidy in years, said Cockrell, who noted that just a few years ago the Town was shifting over $600,000 to it sewer operations.

However, the sewer fund is not generating money for future capital projects, and there is a tremendous amount of pricing pressure involved with the operation. Since COVID, materials and supplies are up between 25% - 30% and the pipeline for supplies is still not where it should be, said Cockrell.

With that, the FY24 budget calls for an increase of $15 per 60-day billing cycle for sewer customers. That change is slated to take effect July 1.

The capital projects slated for the sewer operations include $45,000 for DEQ requirements related to infiltration and inflow of stormwater, $45,000 for pump replacements, and $30,000 for repairs at the wastewater treatment plant as the Town goes into full renovation of the plant.

There is about $240,000 in debt service that will mature in 4 years with one loan that has 0% interest and the other at 2.31%

In the upcoming budget, Kilmarnock is projecting $560,890 in the water fund from rates, connection fees, and capital recovery fees, which are paid when people hook on to the town's system.

For water, the Town has generally been able to cover the costs without any underwriting. But this budget also includes a $5 increase for each 60-day billing cycle. That increase is set to take effect July 1.

Kilmarnock is expecting to spend $95,000 in capital projects related to water, including $50,000 for inspection and maintenance on an elevated tank, $25,000 to meet a DEQ requirement for an observation well for assessing water quality, and $20,000 for a pump replacement at the hospital well.

The town has about $50,000 in debt from 2011 for new lines that matures in about 4 years and the rate is 2.31%.

Overall, debts related to the Enterprise Fund are at a manageable level.

Kilmarnock has what it calls the Wastewater Treatment Plant 2.0 Fund (WWTP 2.0) to renovate its aging plant. The Town has planned for $5.3 million of work on that project to be completed in the next 12 months.

The Town will use an interim loan from Chesapeake Bank to begin. However, this project will be covered by a $6.6 million USDA loan along with another $2.6 million grant, and Kilmarnock is hoping to receive an additional $5 million grant from DEQ.

Kilmarnock has upwards of $1.1 million in federal ARPA money remaining and has identified two projects to invest those funds in. One is sewer line extensions for new customers, "because new customers help pay the bills." Part of the goal is to expand in a way that allows the Town to expand its footprint to bring on other new customers.

Also $111,000 is specifically for police equipment, which will include two new patrol cars and the Town is looking at in-car computers to help the officers have more information more readily available and it gives them the ability to complete reports while out in the field.

The second reading and adoption of the FY24 budget will occur at the June 26 Town Council meeting.

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