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Jeff Branscome writes about Spotsylvania County.

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Budget fallout

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So, last night supervisors approved an 86-cent real estate tax rate. Tomorrow, there will be more discussion on the specifics of that budget as well as capital projects.

I was surprised the vote came up last night, and it sounds like most of you were too. County staff at last night’s meeting also didn’t expect the vote.

First, a lot of you have asked about the 83-cent tax rate proposal. You can find the PowerPoint shown last night here. Here are some other details:

An alternative budget proposed at last night’s Board of Supervisors meeting suggested deep cuts, based on reducing Spotsylvania’s real estate tax rate by 3 cents per $100 assessed value on houses, land and businesses.

Those cuts would effect: plans to add four career firefighters and medics, five social workers and $1 million more for Spotsylvania public schools. Another casualty would be plans for 1 percent cost of living raises for county employees starting in January.

At a March 24 public hearing, many county residents asked supervisors to support an 83-cent real estate tax rate  instead of the current 86-cent rate suggested in County Administrator Doug Barnes’ proposed budget.

Spotsylvania’s proposed budget includes 358 pages and thousands of numbers.

But one figure has captured the interest of county residents and supervisors more than any other: $6 million.

That’s the estimated surplus in  Barnes’ proposed budget.

Depending on who you talk to, those $6 million provide a safety net for a county facing rising fuel costs and uncertain revenues. Or they prove that county taxes are too high.

That money figures prominently in a battle over 3 cents. Last year, Spotsylvania supervisors approved a real estate tax rate of 86 cents per $100 of assessed value. This rate was 3 cents more than the equalized rate.

Last week, Supervisor Jerry Logan asked county finance staff members to craft a budget showing what shaving 3 cents would do to the county’s spending.

“My position last year was that adding the three cents on top of the equalized rate was just adding insult to injury,” said Supervisor Jerry Logan, who argued against the increase.

Last night, Spotsylvania’s budget analysts presented that plan, which eliminates the proposed small raise for county employees, increases the county’s debt for some building projects and removes several new positions.

Reducing the tax rate would also cost the county $1.8 million this fiscal year because real estate bills go this spring before the budget year ends in July.

Logan didn’t expect so many cuts, because this year’s proposed budget included $6 million extra in the county’s general fund.

“The easy answer is that we’ll just take it out of the surplus,” Logan said. “But I’d like to look at other factors, too. We’ve still got some cost-cutting measures we could look at.”

Barnes didn’t want to eliminate the excess money, saying it could be used to reduce the county’s long-term debt and to boost economic development incentives.

He said the surplus shouldn’t be used for recurring expenses and that the extra money could help as the county faces an uncertain financial future.

Steve Thomas, chairman of the Spotsylvania Republican Committee, argued the lower tax rate would benefit the county in multiple ways.

“Rolling back the 2010 tax hike is a necessary first step in a comprehensive plan to create jobs, solidify homeowners and businesses, and get our county back on a path to prosperity,” Thomas said.

At last month’s public hearing on the budget, Thomas and many other county residents said that a lower tax rate would help homeowners stay afloat in a floundering economy.

Logan said the lower tax rate would also help business owners like himself. Commercial property owners didn’t see the dramatic drops in value that homeowners saw in recent years. And so a three-cent tax hike was doubly hard on business owners, Logan said.

His commercial property taxes rose by more than one-third, Logan said, and he expects to see his taxes go up this year, even with a level tax rate.

“I knew how hard it was going to hit the commercial property owners, “Logan said. “And rolling back the 3-cent tax rate in this budget just seems to make an awful lot of sense to me.”

Here are some specifics on the plan presented last night:

  • Finance staff used these guidelines to craft the plan: education and public safety are top priorities, surplus money can’t be used for ongoing costs, fiscal policy guidelines must be adhered to, no reductions in force, and the budget must look ahead to fiscal year 2013
  • Reducing the tax rate by three cents would have a $3.6 million impact on the budget for the next year and $1.8 million for the rest of this fiscal year
  • Cuts spending to schools by $1 million
  • Most new positions suggested in the 86-cent budget are eliminated. This includes four firefighters and five social workers

Additionally, most of the discussion over the $6 million surplus focused on bond ratings. A memo from Davenport and Company reads:

Over the past two decades, Spotsylvania County has seen its credit ratings rise. Today it is one notch below the highest level attainable–’AAA,’ by virtue of establishing and then following a series of Fiscal Policy Guidelines that are in accordance with “Best Practices” by industry standards. Amongst these is maintaining an adequate operating reserve of ‘rainy day fund’ also known as the Fund Balance.

Also, employees said that when it comes to bond ratings, the credit agencies would ask about the county dropping its tax rate while projecting budget gaps for the next few years. For those of you who, like me, start falling asleep at “bond ratings,” these levels determine interest rates and a higher rating can save the county a significant amount of money.

There has been a lot said about the honesty of the 83-cent budget presented. Obviously, I have no way of judging that, but I can tell you what Barnes said when Logan questioned it last night. He said that he used the same fiscal guidelines for the 83-cent budget as he did with the 86-cent proposal. And that the budget had to balance, so he could either inflate the projected revenue or he could cut expenses.

Tomorrow, supervisors will bring up their suggested cuts or additions to the budget. Last night, they talked about social services, outside agencies, employee raises, new positions in general and the farmers market. County budget analysts said that so far, most of the suggestions seem feasible. This leads me to wonder if they can come over to my house and I can just give them a list of things I’d like to see in my own budget, since that never seems to lead to a balanced checkbook.

Permalink: http://news.fredericksburg.com/spotsygovt/2011/04/06/budget-fallout/

  • http://rightwingliberal.wordpress.com/ D.J. McGuire

    Amy,

    Thanks for putting up the Barnes presentation.

    One problem, though. Taking the March 1 version of the Excess Fund Balance ($6.6M) and running through Barnes’ 83 cent effects on the Balance, I come up with a remaining number of $3.2M, not $1.3M.

    That disconnect would wipe out nearly all of the cuts Barnes said was “necessary” under the 83 cent scenario – unless he’s insisting on his $1.8M “holdback” fund (it was not mentioned at all in the presentation).

    I also find it odd that “education and public safety are top priorities,” but $450K in cuts to Public Safety were put in while eliminating the newly created Community Development Director was not.

    Strange. Very, very strange.