Housing Market Pounding Fairfax

"We're unduly dependent on property taxes for our revenue," said Board of Supervisors Chairman Gerald E. Connolly (D). (By Dayna Smith -- The Washington Post)
By Kirstin Downey and Maria Glod
Washington Post Staff Writers
Tuesday, August 7, 2007

Fairfax County officials are predicting that the budget shortfall for the coming year could hit $120 million because the slumping real estate market has led to the lowest annual revenue rate increase in 15 years.

One casualty could be the school system, the nation's 13th largest. Members of the Board of Supervisors, many running for reelection this fall, said yesterday that the county's share of the school budget probably will not rise next year. The school system, which was given a 4 percent increase this year, has asked for 3 percent more next year.

Throughout Northern Virginia, local governments are grappling with falling home sales and prices and more foreclosures, which are driving down real estate assessments. About 60 percent of Fairfax's revenue comes from real estate taxes.

"All of us are in the same boat in Northern Virginia," said Board of Supervisors Chairman Gerald E. Connolly (D). "We're unduly dependent on property taxes for our revenue. That's because the state of Virginia keeps local jurisdictions on a short leash" in allowing them to find new sources of revenue.

Maryland and the District are cushioned somewhat from a downturn in the housing market because they rely more on income taxes to finance government services. They also cap their property assessments, which limits their revenue compared with Virginia.

In February, Fairfax County Executive Anthony H. Griffin will submit a budget proposal for the fiscal year that begins July 1. Virginia governments are required by law to balance their budgets, so supervisors might have to consider raising taxes and/or cutting services to erase the deficit. In 1993, the last time there was a similar precipitous drop in revenue, the board raised the tax rate, froze salaries and cut jobs.

Connolly said yesterday that each government department has been asked to trim its budget 2 percent. "Some initiatives will need to be put on ice," he added.

But some employees may need to be hired.

The Department of Tax Administration is asking for 10 additional appraisers to handle the increased workload because of what officials called the "changing real estate landscape." The county is also seeking 10 code enforcement workers to help with the crackdown on illegal boarding houses.

About three-quarters of Fairfax's $2.2 billion school budget comes from the local government.

School Board member Jane K. Strauss (Dranesville) said that even without adding any programs, it would be difficult to maintain services. Nearly 86 percent of the school budget goes toward salaries and benefits, Strauss noted, and any cost-of-living increase has a large price tag.

Enrollment is steady, but the number of students who require extra help because they have limited English proficiency or need special-education services is increasing.

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