Another $40 million in expected revenue for FY 2004 is not enough to meet the county’s budget demands, said Budget Officer Ben Mays.
“Things are slow, that’s the problem. Our revenues are shrunk, but we still have population growth,” Mays said at the Oct. 4 meeting of the Economic Development Commission. “Residential growth doesn’t pay for itself.”
The county’s revenue growth is expected to drop from an average of $60 million to an average of $80 million in the past two years. The drop comes from a decline in property and other county tax collections.
“There’s less commercial construction going on than there was in the past. Sales tax revenue flattened out. Personal property tax has stopped growing as fast,” Mays said.
With less revenue and an increase in demand for expenditures, the budget for the upcoming fiscal year is expected to be short by $100 million to $110 million.
“You have the issue of continued growth and debt services,” said Scott York (R-At large), chairman of the Board of Supervisors. “Even with revenue growth of $40 million … we have to figure out how to increase revenue or make cuts.”
THE COUNTY FACES a debt increase of $28 million combined with projected operating budget increases of $67 million for the schools and $10 million to $15 million for the county. A tax increase of 26 cents would cover the shortfall, providing 21 cents for the schools and 5 cents for the county.
“We are looking at a 26-cent tax hike in an election year, which is totally unpalatable,” said Randy Minchew, member of the Economic Development Commission and a lawyer in Leesburg.
In addition, the county expects to receive less funding from the state, which is facing a $2 billion shortfall.
“Every average household is paying more in [income] taxes than they did a year ago. We’re getting back less on the dollar than we were, and that’s hurting us,” York said. “We have been the cash cow for Virginia. If they don’t reinvest in infrastructure, we can’t continue to do this. There has to be reinvestment in this area.”
Mays agreed. “Every time we score an economic success, we lower the amount of money we receive per child from the state,” he said. “We’re going to get punished for the next couple of years for what we’ve done to help the state.”
THE SCHOOL DISTRICT’S enrollment increased by 8.2 percent this year, but the district received an increase of 1.2 percent in funding, said Schools Superintendent Edgar Hatrick. “This problem cannot be solved locally. I hear a deafening silence from the state on solutions,” he said.
The county is limited to a few funding sources, York said. The sources include property taxes, sales taxes and a portion of the income taxes that are returned from the state.
“Our difficulty has been the real property tax. The people who demand most of the services are real estate poor,” York said. “There are probably several things we can do to raise revenue without hurting those on the flat end.”
The county ended FY '02 with a positive fund balance of $32.1 million, $5.7 million less than expected of the estimated $37.8 million in funds. For FY '03, the ending balance is expected to be $6.6 million, in addition to $8.1 million in savings required by County Administrator Kirby Bowers.
“FY '03 we’ll probably get through just fine,” Mays said. “Our revenue is still strong. We have to see what happens with the state.”