Next year’s budget already has a $38 million shortfall
Less money from the state, lower real estate taxes because of declining property values and reduced sales tax revenue is causing Chesterfield County to project $20 million less in revenue for FY11 (the year starting July 1, 2010). The county also anticipates $18 million in new expenditures.
The lower revenue projection is likely to hit county schools the most. The school system’s budget is expected to decline $5 million in FY11, down from $623 million this year and $638 million the previous year. But in FY12 (starting July 1, 2011), there’s yet another projected dip to $598 million.
While there are some positive economic signs at the local, state and national levels, county leaders think it will be 5-10 years before the local economy returns to the prerecession level, and maybe later. Much of the current favorable activity, they believe, is artificially caused by federal stimulus monies, which end next year.
While the school system’s budget continues to decline, it’s still experiencing gradual increases in student enrollment. Student achievement standards are also getting tougher. Clover Hill School Board member Dianne Pettitt pointed out that achievement standards for all of Virginia’s public schools are becoming more demanding “just to be accredited.” Pettitt, other school board members, the Chesterfield Board of Supervisors and other county leaders met last week for another joint meeting of the boards to mostly discuss revenue projections.
Matoaca School Board member Omar Rajah pledged not to support any future budget cuts that might lead to teachers losing their jobs, but School Board Chairman Marshall Trammell said it is too early to determine where cuts might be necessary in the next budget cycle. About 64 percent of Chesterfield County Public Schools’ (CCPS) operational budget is for instructional staff and their benefits.
“Home prices have yet to find the bottom,” Budget and Management Director Allan Carmody told the boards. Vacancy rates for Chesterfield’s offices, retail and industrial space are also up.
“When we met with local retailers, they said flat [sales] is the new up,” commented County Administrator Jay Stegmaier. Over the past 90 days, retail sales in Chesterfield are off 7.8 percent over the corresponding period last year.
Carmody said $3.8 million is expected to be cut from state funding, including $2.1 million less from sales tax revenue that goes to CCPS; $784,000 in funds for constitutional offices; and $591,000 for monies earmarked for the Chesterfield Police Department.
Among local governments, Chesterfield is the first to report a shortfall for next year – primarily because its Budget & Audit Committee wants to educate citizens on the tough decisions for FY11. Midlothian Supervisor Dan Gecker and Dale Supervisor Jim Holland, who serve on the committee, are seeking input from citizens before the budget is approved in April next year.
Gecker in particular is pushing the county government and CCPS to give citizens more information earlier so they can be part of the dialogue. He believes the county and school system have not shared enough budget information in the past, and that is a mistake.
Last February, Gecker was the lone board vote against advertising the property tax rate at 95 cents per $100 of assessed value, saying a 97-cent rate would allow the board more flexibility to deal with state budget cuts. County officials can’t increase the tax rate after it runs in a legal notice, but they can lower it. About half of this year’s general fund of $715 million – how the county pays for services – comes from property taxes.
Gecker is now advocating for a 1 percent decline in property tax revenue for next year’s budget. Because property values are expected to be 5 percent lower, after factoring in new development, that would likely mean an increase in the tax rate. Previously, he asked the school board to consider endorsing a rate increase if it encounters budget problems. About half of county revenue goes to CCPS.
Last spring, when the budget was being decided, Gecker said about 90 percent of his e-mails favored no increase in the property tax rate. He acknowledged that hiking the rate 18 months before supervisor and school board elections in 2011 could be risky politically.