Grim State Budget Forecast Ups Anxiety

Projection Comes as Arlington, Prince William Counties Set Legislative Priorities

State legislators brought bleak budget projections to officials in Northern Virginia yesterday, increasing the anxiety of local governments scurrying to find spending cuts.

Senate revenue projections show the state's fiscal picture darkening since October, when Gov. Timothy M. Kaine projected a $2.5 billion drop-off in revenue during the two years covered by the state budget. The Senate Finance Committee's staff now forecasts a $3.2 billion shortfall as the full effects of the recession are felt statewide.

Yesterday, Kaine (D) and his financial advisers discussed a projection closer to $2.8 billion, although that remains in flux.

The governor will present his budget revisions to the General Assembly's money committees Dec. 17.

"We have no good news for you," Sen. Mary Margaret Whipple (D-Arlington) told members of the Arlington County Board, who were outlining the county's priorities yesterday for the upcoming legislative session. The Prince William Board of County Supervisors also took up its priorities yesterday, approving a wish list that includes millions in transportation funding.

The recession's impact is being felt unevenly in Northern Virginia, just as it is around the country. For example, Arlington's large commercial tax base has been a key asset, but vast drops in home values in Prince William have gutted county finances.

"Arlington is better off than Prince William, and Virginia is better off than some other states," said Whipple, a member of the powerful Finance Committee. Whipple reminded Arlington officials that less money going to Richmond means less for local governments.

"Aid to localities is more than half the state budget. It's impossible to ignore that," she said.

Arlington officials are considering an increase in the real estate tax rate of about 1.7 cents next year, although that would still leave a budget gap of tens of millions of dollars, according to estimates. Decreases in property values are the main driver.

"It's a whole sea change of difference from where we were in the last six years, where you were seeing dramatic increases in the values of [residents'] assets," said County Board member Jay Fisette (D). He said some board priorities in Richmond, including environmental policies, don't depend on large funding increases.

Prince William faces a $190 million shortfall in school and county spending in the coming budget year because of an expected 30 percent decrease in home values. The board is considering an increase in the property tax rate to help offset the shortfall, but bills will still decrease because assessments have dropped so sharply.

In setting their legislative priorities, the Prince William supervisors voted to seek reinstatement of $300 million in annual transportation funding for Northern Virginia as part of a regional effort.