One change in the General Assembly can have a big effect on a town budget, as a new procedure for collecting telecommunications taxes has shown in Blacksburg.

A recent dip in the monthly revenues from telecommunications businesses, such as cellphone companies, may be temporary, Blacksburg Finance Director Susan Kaiser said. But if it continues for a few months or even a year, it could turn into a significant problem.

That adds a little more stress to Blacksburg Town Council's expected vote tonight on a $49 million budget for next year. If revenues drop in one area, monies from somewhere else have to cover those costs, or the budget must be cut to offset the loss.

As council prepares to finalize the budget tonight, the telecommunications tax is not the only revenue stream that staff budget writers are worried about: Cigarette tax revenues are decreasing, perhaps because people aren't smoking as much or because they are buying cigarettes outside the town limits, according to Deputy Town Manager Steve Ross.

The town's restaurant meals tax is already one of the highest in the state, and if it were raised again to get more revenue, that could hurt local restaurants by sending diners to Virginia Tech. On-campus restaurants do not charge local meals taxes.

Telecommunication taxes account for about $1.3 million of the town's revenues -- the fourth-largest revenue source. A state law passed last year, however, changed the way the tax is collected. In January, telecommunications companies started to pay their taxes to the state, rather than the town. The state then forwards Blacksburg's share to the town.

Under the new system, Blacksburg and other localities must pay an administrative fee to the state to get those revenues and wait up to four weeks longer than usual to get them. Telecommunications companies argued for the change because they wanted to pay a lump sum to the state instead of being billed different amounts by various state localities.

In the first month of the new system, Blacksburg's payment was $25,000 less than expected, causing some concern that the telecommunication money might not be as stable as in the past, Kaiser said.

In the worst-case scenario, that could mean a loss in the next 12 months of about $300,000.

Town expenses continue to grow, especially health insurance for the more than 250 full-time town employees. Health care is the fastest growing town expense, and it is expected to rise 11 percent in the coming year. Meanwhile, the list of unfunded town projects, such as a new rescue squad building and a town museum, languish.

All these factors make the budget more dependent on real estate taxes, which this year will account for 19 percent of all revenues. That's up from 18 percent last year, Ross said.

This year's recommended budget keeps the real estate tax rate at 22 cents per $100 of value and caps spending across all town departments at about 2 percent. The tax bill for the average Blacksburg homeowner, however, is projected to rise by an average 33 percent because of the recent Montgomery County reassessment. Such an increase, based on Blacksburg's rate, would generate $145 more in annual taxes on a $200,000 home.

The reassessment overall is projected to pump more than $800,000 of new revenue into the town's 2007-08 budget, according to town documents. To keep from raising town's real estate tax in the four years between reassessments, however, town staff is looking for ways to diversify the tax base, Ross said. Development, always a controversial topic in Blacksburg, is one way to inject new money into the government.

The 40-acre South Main Street redevelopment project, concept plans for which show a large number of retail stores and restaurants, could generate significant revenues for the town, including business licensing taxes and meals and sales taxes, Ross said.

This year's budget also includes some increased fees developers would have to pay to the town for review of building plans and other services.

But neighborhoods nearby the South Main development are already organizing to protest any so-called big-box retail proposed for that site. And council has put on the fast track an ordinance proposed by Councilman Don Langrehr that might restrict the size of retail businesses across town.