County eyes budget

By Caitlin Sullivan
Washington County News

A public hearing on the county budget is set for Thursday at 5:30 p.m.
The biggies in the county budget this year are potentially drastic reductions, due to state funding cuts, to schools, Constitutional Offices and the Southwest Virginia Regional Jail Authority.
The fiscal year runs from July 1 through June 30. The county sets an annual budget and the state a biannual budget.
This Saturday, the Virginia Senate and House of Delegates will have to come to an agreement on the Virginia budget. The resulting proposal will be passed on to the Governor to OK.
Right now, the county is dealing only with rough estimates as to the amount of money it may or may not get from the state. Still, County Administrator Mark Reeter said the Washington County Board of Supervisors must set the local tax rate and approve a preliminary budget before it knows for sure how much money the county can expect.
Reeter’s $122 million proposed budget recommends a 2-cent increase in real estate tax rate from 56 cents to 58 cents. If the county was to approve the $128 million worth of budget requests by departments and agencies, the real estate tax rate would have to be increased by 20 cents.

Revenues
The recommended budget estimates gross revenues at $122 million, $44 million of which is county money received from taxes.
County Accounting Manager Mark Seamon said the economic picture has the county looking at small increases in local revenue.
“Normally, in the past, the county could always look toward a 2 percent growth rate in real property taxes,” Seamon said.
He said there’s been very little residential construction in the county lately.
According to county records, fiscal year 06/07 showed a 2.7 percent growth rate in new construction. In fiscal year 07/08 it dropped to 1.8 percent increase and in year 08/09 it was 0.1 percent.
“The bottom fell out in growth revenues,” Seamon said. The current year the county is looking at a 1 percent growth. He said in fiscal year 10/11 the county estimates a 0.5 percent growth.
“We’re hoping it bottomed out in 0.1 percent,” Seamon said.
Commissioner of Revenue David Henry said he’s been conservative in his estimates for next year because he’s not convinced people will spend.
“People don’t trade cars as often, don’t have as many tools, RVs, motorcycles,” Henry said. “As a general rule, people are simply making due with what they got and are trying to hopefully make it through this short term budget crunch.”
As for the sales tax revenue, County Treasurer Fred Parker said it isn’t as bad as it could be.
“We’re not seeing a huge decrease in sales tax revenue,” Parker said. “A lot of counties are seeing a 20 percent decrease in sales tax.”
According to estimates sales tax revenue is expected to remain the same from last year at $6.2 million.
And the new Lowe’s store at Exit 19, Parker said will draw some business from Chilhowie and Johnson County, Tenn.
“There will be some bleed (from the Exit 7 store) and some gain,” Parker said.
He said what the economy needs is some good news.
“The fallacy of the whole economy right now is consumer confidence,” Parker said.

Constitutional Offices
Constitutional Offices include the Sherriff, Treasurer, Commissioner of Revenue, Commonwealth Attorney and Circuit Court Clerk. They are all elected and have certain mandates and services they must fill, but that’s proving more and more difficult as the state pares down funding.
It’s looking like this fiscal year the counties may be left to pick up some of the tab for these state mandated offices.
“We’re getting calls from other localities to see how we’re handling this,” Seamon said.
“There’s a very unique relationship between the State Compensation Board (which allocates the funds for most of these offices) and the county government,” Seamon said. “Historically the state hasn’t given the authority to the localities to determining services. We’re into a new territory in terms of constitutional offices. It still hasn’t been determined what authority the county will have should these reductions in funding remain.”
Parker said they’ve been taking cuts for years.
“Last year we took a 10 percent cut in the budget and this is will be the fourth year of no pay increases,” Parker said. “We’ve been taking hits from the state for several years. We’re getting to the point of greatly reducing services.”
The proposed budget has an increase in some areas, but that’s mainly due to increase health and retirement costs, Reeter said.
“Health insurance costs are expected to increase 20 percent,” Parker said.
Seamon said, “The state is increasing the county contribution to the county retirement system 2 percent of gross wages this coming fiscal year, about $200,000 more. We’re also looking at a 21 percent increase in health care expenses this year, about a $350,000 increase.”
Reeter said, “The board may be inclined to make some adjustments to constitutional offices.”

Schools
The Washington County School System anticipates $6.8 million in cuts next year. The school general fund makes up 66 percent of the county budget.
“There’s no way to make up a $6 million for the schools, not in local money,” Parker said. “To make $6 million for the school we would have to have over 17 cent on the tax rate on real estate.”
Last week, Superintendent Alan Lee sent an e-mail that said, “Governor McDonnell proposed a budget that would reduce funding by approximately $5,000,000, to which we would add approximately $1.8 million in anticipated increased health insurance, Virginia Retirement System, and utility costs.  I expect that that $6.8 million figure will be reduced by the final actions on the part of the House and the Senate next week.
“In the interim before we know the final figures, I am asking the board to consider reductions in all aspects of our budget.  These proposed considerations include zeroing out many funds within the budget and drastically reducing planned expenditures in nearly every area.  Sadly, the proposals include reduction of staff in all schools, central office, and other county-wide operations. Because of the negative impact of such potential layoffs, another action being considered is an across the board salary reduction, as is being proposed in approximately 50 percent of the school systems across the state.  A 2 percent reduction is equivalent to approximately $1,000,000, and could save approximately 20 jobs.  This, along with the other suggested budget modifications, is not a decision that has been made, but only a possible solution.”
In the recommended budget, Reeter added an additional $550,000 on top of restoring the funding reduction the schools had this current fiscal year.
“There have been some proposals to delay implementation of increased benchmarks in testing,” Lee said. “But I don’t see the state board or federal government backing off of (current mandates) at this time.”
He did say that there was a scare when one state budget proposal cut school technology funding when the state is moving toward mandating all SOLs be taken on computers instead of paper. But he thinks Gov. Bob McDonnell’s budget will put that back in.
Schools Director of Finance Melissa Caudill said this current fiscal year the schools lost $1.1 million in funding. She said former Gov. Tim Kaine’s cuts this year would have been more but instead allowed for a ‘VRS Holiday’ allowing the school system not to pay into the Virginia Retirement System for several months.
July 2008 was year four of a five-year planned salary increase. There hasn’t been another increase since.
According to county records dating back to 2002, last year was the first year the county has decreased funding to schools.
Caudill added that each budget proposal coming from Richmond proposes further cuts in fiscal year 11/12. She said the Virginia Senate budget proposes a $430,000 decrease, Virginia House of Representative proposes an $800,000 decrease and Gov. McDonald’s budget proposal includes a $500,000 decrease in the following years school funding on top of this years cuts.

Future
Reeter said he has not recommended any pay raises, pay cuts or job cuts. And, currently, they are no immediate vacancies in the County’s administrative division and they’re already pretty bare-bones.
County Treasurer federal stimulus money will be dried but come next budget year.
“That can have a dramatic impact on the state level,” Parker said. “So much of it depends on the economy and the speed in which it rebounds.”
Parker said he’s getting some good news from northern Virginia, “the economic engine that drives the state.”
“Apparently they’re seeing a pick up in retail sales and if that’s true that bodes well for the rest of the state.”
Seamon said the second year of the state’s two year budget usually gets adjusted.
“The county is trying to hold its own but there’s no way to make up state cuts,” Seamon said.