Run-Up in Home Values Runs Down in Fairfax

"This is a soft-landing budget," Connolly said. "We didn't develop the appetite for all that extra revenue."

Griffin proposes to further cushion the landing by imposing a 2 percent across-the-board reduction in the personnel budgets of county departments and agencies. The plan calls for no layoffs or pay cuts, but the county hopes to save $16.3 million by not filling positions that become vacant.

Should the residential real estate market remain stagnant, however, new difficulties could surface. Griffin enjoyed several advantages in assembling this year's budget that may not be available in 2008.

Fairfax had the benefit of $33 million in unspent funds it was able to carry over from the current budget -- a pot that might not be there in the future. County finances are also bolstered by increases in the value of apartments and commercial and office property. The value of apartments in the county rose 22.5 percent; high-rise office buildings are up nearly 16 percent; and regional shopping malls are assessed at nearly 13 percent more than a year ago. The county's dwindling supply of commercial vacant land rose nearly 15 percent.

"This has made the difference between this being an extremely difficult budget and being able to maintain our programs," Griffin said.

But Griffin warned that increasingly speculative office construction in the county could lead to a glut that depresses values.

The county also faces at least two other issues that could result in major new financial challenges over the next year. Under the Republican-backed transportation package approved Saturday by the General Assembly, Fairfax County would be required to pay for the planning and construction of roads, a responsibility currently borne by the state.

Connolly denounced the provision yesterday as a "poison pill," and he called for its removal from the legislation. The board voted to ask Gov. Timothy M. Kaine (D) to veto the package if the new road obligations remained.

The county also faces the potential loss of $17 million in schools funding because of a dispute with the U.S. Department of Education over reading tests given to thousands of immigrant children.

Griffin's budget will be reviewed and adjusted by the Board of Supervisors in a series of hearings before final adoption April 30.