Loudoun County Offers Dismal Budget Outlook
Thursday, September 3, 2009
Loudoun County, joining a growing list of area jurisdictions in financial straits, forecast a worse-than-anticipated budget shortfall next fiscal year and the possibility of resulting program cuts, job losses and a hefty increase in real estate tax rates.
Ben Mays, Loudoun's deputy chief financial officer, told county supervisors at a meeting Wednesday that his office has projected a shortfall of about $72.6 million and that Loudoun's real property values could fall next year by at least 5 percent. An additional $84.2 million in expenses is projected, including operating costs associated with three new schools for 2,850 students and a new county jail.
"These are conservative numbers," Mays said. "We're trying to be cautious and they are preliminary, but they really are reasonable estimates."
The numbers included a suggested 21-cent increase in the real estate tax rate, to $1.458 per $100 of assessed value. Officials said that without the increase, the county would have to come up with an additional $156.8 million. If the increase is approved, the average real estate tax bill for Loudoun County's 280,000 residents would go up about $779 if county residential assessments stayed flat. The current tax rate of $1.245 per $100 of assessed value is the highest of any Northern Virginia county.
Budget officials in Loudoun, one of Northern Virginia's wealthiest suburbs, are placing the blame for the shortfall on commercial assessments, which are expected to continue to decline next year. With residential home values hitting bottom in the first and second quarters of this year, analysts expect commercial property values and assessments to follow over the next 18 months.
"We're going to see commercial values decline as much as residential housing, but it's on a different cycle," said Gregory H. Leisch, chief executive of Delta Associates, an Alexandria-based real estate analysis firm. "We're only at the beginning."
Loudoun is just one of many Washington area jurisdictions grappling with grim budget projections.
In neighboring Fairfax County, officials said last month that they are expecting a $315.6 million shortfall in 2011, which could mean significant cuts and the consolidation of more than 50 county agencies. Salary budgets are expected to be cut at least 3 percent, and overtime funding is set to be slashed as much as 50 percent for most departments. The value of nonresidential property is expected to fall by 18 percent.
Last month, the D.C. Council slashed more than $100 million from the District's budget and raised its cigarette, sales and gas taxes to close a $666 million shortfall over the next three years. The spending cuts will probably hit every aspect of D.C. government, including a rare reduction in school resources.
Officials in Montgomery County have forecast a $370 million shortfall in 2011 since last spring and are sticking to it, but that follows three years of decreased spending and cuts, to the tune of $1.2 billion, said county spokesman Patrick Lacefield. Spending last year was cut by 2.2 percent, resulting in the lowest level of budget growth in Montgomery in almost two decades.
"Our budget process has involved a lot of pain over the past three years, so we've been planning for it," Lacefield said.
In Prince George's County, years of hiring freezes, spending controls and employee furloughs have helped cut into anticipated shortfalls, but the county still had to cut $102 million from last year's budget, said James P. Keary, a county spokesman. State officials also announced last week that they were cutting $22.7 million from the county's general fund, which will result in slashed spending for street and sidewalk maintenance and health and police services. Projected revenue for 2011 won't be publicly announced until March.