Griffin's Lean Budget Is a Sign of Trying Times
Thursday, March 6, 2008
In Ernest Hemingway's "The Sun Also Rises," Michael Campbell, Lady Brett Ashley's fiance, is asked how one goes bankrupt.
"It happens in two ways," he says. "Gradually at first, and then all of a sudden."
Fairfax County is in no danger of bankruptcy. But the $3.3 billion budget proposed last week by County Executive Anthony H. Griffin can be read as a narrative of economic trends that have been gathering force for the past three years.
In the fat days, when the housing market was on overdrive and tax revenue was rolling in, the biggest question surrounding the budget was how much of the windfall the Board of Supervisors would hang on to and how much it would return to residents in the form of a lower tax rate.
In 2003, subprime mortgage loans were 4.2 percent of total home lending in the county, according to data assembled by Fairfax officials. In 2005, a house was on the market an average of 38 days. Fewer than 200 properties were subject to foreclosure that year. Month by month, the fat days turned lean, and in some cases mean. By the end of 2006, houses averaged 96 days on the market. Subprime loans made up 13.9 percent of mortgage lending. Last year, 4,527 houses in the county were foreclosed upon.
With residential property values down an average of 3 percent, Griffin's budget for the fiscal year that begins July 1 provides no growth in spending for schools and government services. It would keep the property tax rate at 89 cents for each $100 of assessed value, producing a tax bill of $4,450 for a $500,000 home.
The county's economy is spiraling downward with such velocity that the budget had not even returned from the printer in January before the projected revenue gap had to be revised upward, from $120 to $152 million. In nearly every respect, it is the worst financial outlook for county government since the recession of the early 1990s. And Griffin did not hesitate to use the R-word. "In terms of the county's budget, this is a recession," Griffin said in his budget message to the board.
Although no basic services are being cut, they will become more expensive. Residents will pay more for refuse collection, sewer hookups and ambulance service. Police are likely to be unable to pay overtime to officers who had been focusing on crime trends in specific neighborhoods or on sobriety checkpoints. Pay raises to county employees will be cut, as will the county's annual required contribution to a fund designed to pay long-term health-care costs for current and future retirees.
To bring the budget into balance, Griffin created a patchwork of diverted funding streams that amounts to a massive fiscal coronary bypass, routing new supplies of cash around arteries that have been closed off.
He proposes to pay for 93 staff positions in the Transportation Department and half of the county's annual contribution to Metro with a new 12-cent surcharge to the commercial property tax rate. For the first time, revenue from the tax rate set aside for affordable housing and storm-water management will also pay for some staff in those areas. A one-time pot of money from Cox Communications, resulting from delays in development of a new television system for the school district, would be used to help finance upgrades in the county's information technology system.
Griffin acknowledged in his budget message that the situation was not pretty but said that he had a yawning revenue gap to fill.
"Working to balance this budget has been extremely difficult," he said. "And some of the strategies, such as using one-time fund balances, are not ideal and in fact come with some accompanied risk." The risk is that such moves leave little maneuvering room in the event of major, unexpected expenditures.
Some of Griffin's revenue juggling was not well received. William D. Lecos, president of the Fairfax County Chamber of Commerce, called use of the surcharge to support employees "disconcerting," since it was imposed by state lawmakers to pay for transportation and road improvements.
"It's shell games," said Supervisor Pat S. Herrity (R-Springfield), who said Griffin's plan avoids painful decisions on substantive funding cuts.
The board has until late next month to make changes and adopt a final budget. Board Chairman Gerald E. Connolly (D) said he understands the economic distress that the new budget represents and said that the situation is likely to get worse before it gets better. "We can't expect that all of our worthy causes are going to be fully funded," Connolly said. "We can't expect to fund new initiatives in this context. And we have to recognize that this is going to be a two- or three-year process."