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Cuts in Spending, Increases in Taxes Considered to Offset Revenue Drop-Offs
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Fairfax County Executive Anthony H. Griffin has asked his departments to cut 1 percent from personnel budgets in the coming weeks to hold the county's increase in spending next year to 3 percent, officials said. Overall county revenue is projected to grow by a scant 3 percent next year.
The region's real estate market is expected to continue stabilizing through spring, according to a recent report by the Northern Virginia Association of Realtors. Houses are taking more than twice as long to sell, and the average price of a home in Northern Virginia last month was $524,236, a 4.7 percent drop from the previous year.
In the District and Montgomery County, property assessment increases are capped at 10 percent a year. But the slowdown in the residential housing market is cutting into the money Montgomery collects when property is bought and sold, according to Timothy L. Firestine, the county's finance director.
The transfer and recordation taxes, which provide a glimpse of how homes are valued, as well as the number of sales, are substantially down from last year in Montgomery, officials said.
The county could lose about $64 million of the $263 million it had projected it would collect from the taxes this year, according to one recent estimate.
Because of the steep drop in taxes linked to home sales, council member Marilyn Praisner (D-Eastern County) said she warned the school system and the public works department to be "cautious about asking for anything new" in next year's capital budget.
The county had expected to collect about $26 million in taxes on developers used to build schools and roads, but that estimate might be optimistic, officials said.
Jonathan R. Seeman, director of management and budget in Prince George's County, said the cooling housing market has resulted in a drop-off of about 20 percent in revenue from taxes collected on home sales. But the county had anticipated a drop-off of 27 percent, so no cuts will be necessary, he said.
Staff writers Miranda S. Spivack, David Nakamura, Rosalind S. Helderman, Timothy Dwyer and Amy Gardner contributed to this report.
