On May 6, the Hanover County Board of Supervisors adopted a $478 million Fiscal Year 2021 County budget that reflects the impact of the COVID-19 coronavirus.
County Administrator Cecil R. Harris Jr. identified $10.2 million in cuts to the general fund, a decrease of about 3.7% from the budget he had proposed in February. The changes included elimination of the proposed 2% merit pay increase for county and school employees and removal of funding for new positions in FY21.
The other largest decreases from the budget proposed in February were $2.8 million in capital improvements and $2.4 million in operating costs.
“A lesson learned from the recession was the importance of retaining cash,” Harris told the Board. “With that in mind, this budget not only reduces capital costs, I also restricted the use of $2.1 million for capital projects until a financial evaluation is completed in January.”
The County’s contribution to the school system increases by $1.3 million in the adopted budget. Further impacts to Education funding from the State are being reviewed with the School Board.
Harris expects an $8.9 million decrease in ongoing revenue due to the impacts of COVID-19 on state and local economies. Revenues affected include real and personal property taxes, sales tax and other taxes such as lodging tax.
The County Administrator said the budget maintains the focus on the Board’s priority service areas (education, public safety and human services) while responding to an economic environment that is constantly changing.
“Should the economy recover faster than the assumptions in this budget, we can rely on the balanced 5-year plan to guide decisions relative to restoring funding to our most critical areas,” he said. “However, should the economy be less favorable, this budget is positioned to transition from an economic pause to a downturn or recession if necessary.” Harris said he talked with constitutional officers, agency heads and the superintendent of schools about plans for either scenario.
“A large number of the members of this team weathered the recession and the recovery here,” Harris noted. “We did this with no layoffs while maintaining our Triple AAA bond rating. Based on that experience, I present you a budget based on those same financial principles that worked for us in the past.”
The Board voted unanimously to adopt and appropriate the budget and five year financial plan, which includes no tax rate increases. There also will be no increases in Department of Public Utilities rates or fees in FY21. The budget proposed in February had included rate increases of 3% for water use, 4% for sewer use and 5% for capacity fees.