Fallout to ripple through city

City officials say the latest news about layoffs at Invista’s Waynesboro plant is expected to have a trickle-down effect on the city’s coffers.

The city’s unemployment rate, at 5.6 percent in October, is expected to rise following Wednesday’s announcement by Invista that more than 210 of company and contract workers will be laid off, coming on top of last week’s news that 132 contract workers would be out of work by the end of the year.

The total of 342 Invista company and contract workers targeted for layoffs in the last week accounts for 12 percent of the city’s manufacturing work force.

Council members were in agreement that the job losses will have an adverse impact on the city’s economy.

“You’ll see higher unemployment rates,” said Councilwoman Lorie Smith. “We’ve already had to do a reduction on the machinery and tools taxes. I’m sure we’ll continue to see a decline in M&T tax revenue from Invista.”

The council, in October, learned that it will be receiving $450,000 less than the more than $1.5 million total in machinery and tools tax money the city had anticipated. That news forced City Manager Mike Hamp to propose budget cuts to make up the difference.

Machinery and tools tax monies in Waynesboro have declined by half since fiscal year 2006, from $2.2 million to $1.1 million currently.

Through the first quarter of 2008, Waynesboro had about 2,110 manufacturing workers out of 10,552 people that are employed here, according to statistics from the Virginia Employment Commission.

Invista, the city’s largest employer, had 1,100 company and contract workers at the start of the year, more than 10 percent of Waynesboro’s total workforce. Mike Laczynski, Waynesboro plant manager, said there were about 910 company and contract workers at the plant, which will be reduced to about 568, with more layoffs expected once the number of contract workers to be laid off is determined.

Vice Mayor Frank Lucente said people are going to be less likely to spend money, which will affect the number of people eating out and result in declines in sales and meals taxes.

“It’s certainly going to be a challenge for the city, but we’re all in this together,” Lucente said.

In the last 12 months dating to Sept. 2008, the city brought in $5 million in sales tax revenue, according to the Virginia Department of Taxation. In fiscal year 2007, the city brought in nearly $2.2 million in meals tax revenue.

Councilwoman Nancy Dowdy said, however, that the city has worked hard over the last six years to diversify its economic base, and needs to continue that. Imperative, both Dowdy and Smith said, is the need to hire an economic development director.

“I think we all need to buckle down and realize that this recession is hitting Waynesboro and the surrounding communities,” Dowdy said.

The recent closing of Valley Building Supply, she believes, is another indicator of the recession’s impact.

Dowdy touted the lowering of the real estate tax rate in her six years on the council from 97 cents per $100 of assessed value to 70 cents per $100 of assessed value, but said the city would have pull together to weather the gloomy economic news. Council members have pledged not to raise the tax rate.

“I think it’s going to be very difficult, but I think we knew that going into this new budget season,” Dowdy said.

She said the proposed increases to water, sewer and trash services, though regrettable given the economic climate, are needed to support those enterprise fund activities. Because they are a part of the enterprise fund, she noted that those services have to support itself, and that any cuts made would have to come out of the general budget.

“I think we have to make more cuts where it’s reasonable to do so,” Dowdy said. “I just think we’ve cut so much it’s going to be difficult to cut much more.”