City and school division bank on federal funds to restart high school project, make up for revenue decline

By Katelyn Waltemyer and Isabela Gladston, contributors

Money that Congress approved last month to help local communities in the wake of the pandemic could help restart construction on the new Harrisonburg high school soon and is expected to fill revenue holes in the city’s budget.

Money from the $1.9 trillion American Rescue Plan Act, which President Joe Biden signed into law in March, could reach Harrisonburg in the coming weeks in time to resume building the high school even before the city approves its budget for the coming year, said Harrisonburg City Public Schools Superintendent Michael Richards. 

While the city government isn’t sure how much it will get from the 2021 stimulus bill, the Virginia Department of Education has already notified Richards that the school division will receive about $12 million. When the funds come in, Richards said, the bulldozers will resume their work on the 60-acre parcel of land nestled between South Main Street and Interstate 81. Work has been paused since April 30, 2020, because of uncertainty about how the pandemic would affect the city’s ability to fund the project, which is expected to cost more than $100 million.

“We’re actually going to enter into conversations with the builder, maybe even this week, about how much building we can do with that money,” Richards told The Citizen in an interview after Tuesday’s meeting of the City-School Liaison Committee.  

Richards said he hopes the new high school can be completed in time to open in fall 2023.

Richards said 20% of the $12 million in federal funds would go toward learning, but the rest would be dedicated to the new high school. Richards said building the facility is about more than overcrowding. 

“The further we move this back, the further we move back opportunities for our students in Harrisonburg to avail themselves of the … modern STEM and workforce development opportunities that other students have in the state of Virginia,” Richards said. 

Details aren’t “set in stone” yet, but Richards said the federal funds could pay for up to nine months of construction. However, when federal funds dry up, the school board must coordinate with the city.

City leaders hashed that out with school division officials at the City-School Liaison Committee meeting Tuesday afternoon. The group includes Richards, City Manager Eric Campbell and select members of the city council and school board.

In order for the city to fully commit to funding the new high school instruction, the group laid out benchmarks, including:  

  • Six consecutive months of lodging/meals tax revenue exceeding 90% of pre-pandemic revenue levels;
  • And six months of employment exceeding 85% of pre-pandemic employment levels for the Harrisonburg-Rockingham area 

After laying out these benchmarks, committee members agreed to evaluate taxes and employment in Harrisonburg in four months from May 1.

However, Harrisonburg’s Director of Communications Michael Parks said in order for the city to contribute funding — despite the numbers reported at the four month marker — there needs to be six consecutive months of revenue progression. 

“We have to make sure that things are returning to normal here in the city, that revenues are up,” Parks said. “That’s why we’re not prepared to commit at this time, to any kind of schedule on moving forward until we can establish these benchmarks.”

City manager unveils proposed Hburg budget

Federal spending is expected to play a key role in the proposed city-wide budget of nearly $293 million — especially filling in revenue gaps caused by the pandemic’s effect on food and lodging tax revenue and city leaders’ pledge not to raise taxes and fees.

City Manager Eric Campbell outlined the proposed budget to the city council at Tuesday night’s meeting and said the focus on the proposed budget will be to make up for lost revenue.

From April 2016 to March 2021 the restaurant food tax revenue dropped 25%, which is equivalent to a loss of $3.5 million in meal tax revenue, Campbell said. Similarly, from April 2018 to March 2021, the lodging taxes shrunk by 42% roughly equalling $1.4 million of lost revenue to the city. 

Because of difficult financial situations many Harrisonburg residents and businesses have faced over the last year, Campbell and the city council members stressed multiple times Tuesday that the next fiscal year budget, which begins July 1, won’t include any tax or utility fee increases.

Campbell said the city is waiting on its first payment from the American Rescue Plan Act. The first payment is expected no later than mid-May or 60 days after President Joe Biden signed into law, and a second payment would arrive at least a year after that. Harrisonburg is awaiting official communication from the U.S. Treasury on the amount the city will receive. The funds will be available to use until Dec. 31, 2024. 

Proposed budget highlights

The initial proposed budget includes a 4% increase for the city’s general fund, which is the largest portion of the city’s budget covering fire, police, planning, parks, recreation, public works and city staff. The proposed Fiscal Year 2022 budget calls for nearly $123.3 million, up from $118.4 million in the current budget. 

Campbell said the proposed school budget is nearly $93.3 million to cover school administration, instruction, maintenance, transportation and technology.

Other budget highlights include:

  •  a $722,000 increase in debt service payment related to the new high school project, 
  • $1.29 million that will go to a 3% cost-of-living increase for employees 
  • and a $4 million transit bus replacement that will come out of the transportation fund.

“Some budget developmental challenges include uncertainty of when the COVID-19 pandemic will subside, thus making it difficult to move forward with confidence that pre-pandemic revenue numbers will return this fiscal year,” Campbell said.

The Harrisonburg City Council will hold a work session in late April to continue working on the Fiscal Year 2022 budget. 

Editor’s note: This story was updated to correct the membership of the City-School Liaison Committee.

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