Meals Tax Collection in Fredericksburg Unaffected by Shutdown
Revenue is exactly where it was last year and other economic trends are "generally good." Staff recommend releasing funds held in reserve from the budget for this fiscal year.
By Adele Uphaus
MANAGING EDITOR AND CORRESPONDENT
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Meals tax collection in Fredericksburg City this fiscal year is trending exactly on line with the last two years, despite turbulence in federal workforce this year.
The city has collected just under $3.7 million in meals tax in the first four months of the fiscal year—exactly the same as this time last year and slightly more than the year before.
The data, which was presented to City Council at its meeting on Tuesday, includes collections through the full month of October, when the federal government was shutdown—a “good sign that there’s still plenty of activity happening in the city,” finance director Amanda Six said.
“That really surprises me, that you don’t see the shutdown in the meals tax,” said Councilor Will Mackintosh during Tuesday’s meeting. “But that gives me some confidence and makes me happy.”
When City Council approved the budget for fiscal year 2026—which began July 1—it included a resolution to hold $6 million in reserve. This was in response to the potential for an economic downtown related to the Trump Administration’s attempts to reduce the size of the federal workforce.
At a joint meeting of City Council and the School Board in April, Six said the city relies more heavily on “consumer-driven revenues” from sales, meals, and lodging taxes than do surrounding localities.
“So when we head into the next [fiscal] year, we do need to pay closer attention to consumer driven revenues, which tend to change on the front end of an economic change,” Six said in April. “We know there are a lot of behaviors that may be changing just because of uncertainty and consumer confidence, but also, we have a close proximity to Washington, D.C.”
The data presented this week, however, shows that meals tax has been unaffected and that there has also been “a significant uptick in [revenue] from permits and licensing.”
“We have seen several projects moved out of planning to construction, and that’s also a good sign that we are continuing to move along with economic activity,” Six said.
The only revenue source that is lagging behind previous years is hotel lodging tax, which is down about $100,000. Six said this is “nothing that would be a crisis-level trend,” but that it does bear keeping an eye on, as lodging tax is “one of the major revenue sources.”
Josh Summits, the city’s director of economic development and tourism, said the lag is likely the result of a reduction in government travel.
Six said there could be a public hearing at the December 9 Council meeting on whether to release the $6 million for appropriation. A vote would follow.
Of the $6 million, $1.5 million has been allocated to the school division’s budget. The division compensated for this hold-back in part by not filling vacant positions such as the Director of Curriculum and Instruction, staff told the Advance over the summer.
The Advance asked on Thursday whether this position, which has been vacant since July, will be filled if the full allocation is released. Deputy superintendent Matt Eberhardt said in an email that the division is “thankful to the City [for] considering a release of the monies held this fiscal year” and that “There are several options and opportunities to consider when those funds are released. We are talking about those now.”
Eberhardt said the division is in the final stages of hiring a new Chief Academic Officer to replace Lori Bridi, who resigned this fall.
“It is possible that we will be able to bring a name before the Board at its next regularly scheduled meeting on December 1,” he said.
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