By Stefanie Jackson – Northampton County Finance Director John Chandler on Jan. 25 presented supervisors with the county’s projected revenues for its fiscal year 2023 budget, totaling nearly $34.5 million in the general fund.
He began by explaining the county has four main types of income: federal, state, local, and non-revenue – the latter is the money in the county’s capital fund and undesignated fund or “savings account.”
About $29 million of the projected FY 2023 revenue is local, Chandler said.
Northampton normally receives little annual federal aid; the county accepted federal funding of about $31,000 in FY 2019 and $364,000 in FY 2020.
The $2.2 million in federal funding the county received in FY 2021 was from the Coronavirus Aid, Relief, and Economic Security or CARES Act, Chandler said.
Northampton’s share of American Rescue Plan funding did not appear in the FY 2022 budget because the budget was adopted before the funding was awarded. Those funds will roll over into the FY 2023 budget, he said.
Of the $29 million in local revenue, about $20 million is from Northampton’s general property taxes – real estate and personal property tax revenues combined.
General property tax revenue is expected to increase by nearly $558,000 in FY 2023. Chandler compared Northampton’s tax billings for FY 2022 and FY 2023 and noted, “In one year, tax billings went up basically $700,000.”
Real estate tax revenue is projected to increase $391,000 this year – not because of property reassessments but because of things like new additions, he said.
Delinquent real estate tax revenue should decrease by about $167,000; this revenue category previously was budgeted higher because county officials thought more real estate taxes would be delinquent due to COVID-19, but real estate tax collection was quicker than expected, Chandler said.
Personal property tax revenues are estimated to increase nearly $214,000, and delinquent personal property taxes should increase $68,000, as the county has not been as successful collecting personal property taxes as it has been with real estate taxes.
Northampton’s sales and use taxes are projected to be $2 million, an increase of 25%, or $400,000.
County officials had predicted sales tax revenue would drop during the COVID-19 pandemic, but the opposite happened, perhaps partly because Northampton residents were shopping more online and not traveling to stores across the Chesapeake Bay or in Salisbury, Md., according to Chandler’s report. (Online sales taxes are calculated based on the locality to which the order is shipped.)
The Coastal Precast Systems concrete plant in Cape Charles has taken on large, taxable projects that “increased our sales tax collection significantly,” the report added.
Northampton’s additional 1% sales tax, which supports capital improvement projects at Northampton public schools, is expected to generate $1.9 million in revenue, an increase of $650,000.
If Virginia’s 2.5% grocery tax is eliminated, it could result in a revenue loss of $400,000 to $800,000 for the county and schools combined, the report stated.
However, the additional 1% sales tax for Northampton’s public schools will be unaffected, as it is not applied to groceries.
Transient occupancy taxes (TOT), charged on overnight stays in lodgings such as hotels and short-term rental homes, are expected to reach $600,000, a $200,000 increase. The TOT tax is 5%, and 60% of it helps promote Northampton tourism; the other 40% is added to the general fund.
The TOT revenue estimate of $600,000 does not include Cape Charles, which is projected to bring the county $150,000 in TOT revenue, a $50,000 increase.
Food and beverage taxes are expected to generate revenue of $400,000, an uptick of nearly $85,000.
Revenue from police fines has dropped significantly compared to previous years and is projected to bring in $222,000 in FY 2023. Total police fines collected in previous years included $409,000 in FY 2022, almost $485,000 in FY 2020, nearly $606,000 in FY 2019, and $755,000 in FY 2018 (the amount for FY 2021 was omitted).
Chandler said the decline was part of a “conscious effort” to lower the number of fines issued – which are an unpredictable revenue source.
He noted the total fines collected are from traffic tickets written by the Northampton County Sheriff’s Office and do not include fines issued by town police departments.
A presentation on Northampton’s proposed FY 2023 expenditures in forthcoming.