City, County Wrestle with Budget Questions

After years of increasing property values—and property taxes—the collapse of the real estate bubble has left both Charlottesville and Albemarle are facing some hard decisions on their budgets and tax rates. They don’t know how to forecast revenues for the upcoming budget years, and that makes it tough for them to know what they’ll be able to fund. Worse still, state budget cuts will likely reduce services to local governments (but without corresponding state tax cuts), leaving localities having to make up the difference.

Rachana Dixit explained Charlottesville’s situation in the Progress on Tuesday. The city has to raise its tax rate in order to maintain existing services, unless they want to end up with a $1.8M deficit (about a 1.5% overrun). Alternately, of course, they can cut $1.8M worth of services. Council has assumed no tax rate increase as their starting point, Sean Tubbs reports for Charlottesville Tomorrow, though that’s a philosophical approach that doesn’t indicate how they’ll ultimately plug that gap.

Brandon Shulleeta explained the county’s predicament in the Progress a week ago. They’re facing a $4.9M shortfall with their existing 71¢ property tax rate. County staff figures they’d have to let 47 positions remain vacant, get rid of all raises for employees, delay the Crozet library by two years, push back maintenance on the jail for five years, eliminate much of the funding for new fire stations, and slash funding for transportation. In part because their board is split between Democrats and Republicans, the talk there is all about tax rates. BoS chair Ken Boyd wants county staff to establish a budget using a 74.5¢ rate, a number that would preserve the same dollar value of tax payments as the current rate, but would require lots of spending cuts. David Slutzky, on the other hand, wants the budget to begin at a 90¢ rate, the level at which the county could maintain services, and figures they can decide what to cut out from there.

Given the state of the economy—bad, with genuine fears of sliding into a depression—it’s tough to see how municipalities can justify increasing real estate taxes now. We’ve all got less money, and the sensible among us are cutting our spending as a result; Charlottesville and Albemarle will have to do the same.

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