Brutal Budget Season For N.Va.
Wednesday, August 27, 2008
Falling property values, rising fuel costs and stagnant sales tax receipts are pushing Fairfax County and other local governments to their worst budget crunch in nearly two decades, just as the new fiscal season gets underway.
In Fairfax, Virginia's largest jobs center and one of the nation's wealthiest counties, officials are bracing for a projected $430 million shortfall in county and school spending. Even as they promise to maintain the quality classrooms, parks, police protection and highways that residents have come to expect, officials said they will have to make deeper cuts and consider bigger tax increases than they have done in years.
"These are going to be very difficult decisions," said Deputy County Executive Edward L. Long Jr., who presented county and school leaders with a warning late last month that the region's economy was continuing to sour. "People are not going to be happy."
The outlook for the fiscal 2010 budget, which begins July 1, is complicated by the intensely political environment of the 10-member Board of Supervisors. Gerald E. Connolly (D), the board's chairman, is running to replace outgoing Rep. Tom Davis (R) in Virginia's 11th Congressional District. And Vice Chairman Sharon S. Bulova (D-Braddock) and Supervisor Pat S. Herrity (R-Springfield) are contemplating bids to replace Connolly should he win the seat.
Herrity has pledged to protect teacher salaries, an enormous chunk of the school system's $2.2 billion budget. But he also has broadly criticized the county budget as wasteful and the tax rate, at 92 cents per $100 of assessed value, as too high.
Because of the depth of the problem this year, Herrity said he would be open to raising the tax rate as long as taxpayers' bills don't increase. Because residents' tax bills are based on the ever-changing value of homes, county budget officials said supervisors could raise the rate 10 cents, to $1.02, without affecting the average tax bill. Such an increase would close almost half the predicted budget gap.
Herrity and others said they welcome the difficult deliberations because they will force the board to assess every program and eliminate or streamline those that are not needed.
"I'm actually excited about the process," said Bulova, chairman of the board's Budget Committee. She has scheduled a series of public hearings so supervisors and school board members can listen to residents' suggestions on what to cut and what to protect.
"I look at this downturn as a tremendous opportunity to collectively examine as a community where we are, where we are going and how we can continue to make sure that we're a strong county," she said.
Like many jurisdictions across the region, Fairfax is particularly susceptible to the ongoing downturn because property values have declined. Fairfax relies heavily on real estate taxes to pay for government services, so when house values go down, so do county receipts.
In Loudoun County, the prospect of another brutal budget season has prompted supervisors to think about a meals tax to take the tax burden off homeowners. Prince William County will reconsider a controversial ambulance fee. And Montgomery County is considering mid-year budget trims for the second straight year.
The news has gotten especially gloomy in recent months, with forecasts in Fairfax predicting a 10 percent decrease in residential property values. That forecast is unlikely to improve by January, when assessments will be set for the year. A 2.5 percent decrease in commercial values, fueled by job growth leveling off and a glut of new, vacant office space, will make matters worse, Long said.
Similarly, flat job growth and the general economic mood have caused consumers to spend less, eating into the county's share of sales tax receipts.
And with fuel prices at historic highs, the county's costs are rising, from $19 million on vehicle fuel in 2007 to a projected $41 million in 2009. Residents, meanwhile, are not buying new cars, and they're trying to get rid of their gas-guzzling sport-utility vehicles, meaning county receipts from personal property taxes are dipping, too.
"The housing market is in the tubes. People are giving their cars away. And people are not spending money," Long said. "Those three categories, close to 80 percent of our revenue, are flat and negative."
"This is an opportunity to make real changes," said Supervisor Jeff McKay (D-Lee). "The challenge before us is so daunting that we don't really have a choice."
Staff writers Kristen Mack, Ann E. Marimow and Sandhya Somashekhar contributed to this report.