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.

15 thoughts on “City, County Wrestle with Budget Questions”

  1. Whatever decisions are made, I think it’s a given local government employees would at the very least have a pay freeze, which is better than what folks in the real world are contending with out there: many are losing jobs or experiencing pay cuts, so putting local government employees in their own little secure bubble at the expense of everyone else is just plain wrong. I’d like this to extend out to school administrations and teachers too. I’d also like to get at the healthcare industry too, but that’s just taboo here…

  2. Gotta agree with Majunga. Raises for county employees and a hiring spree – both at the expense of higher taxes that most people can’t afford right now – would be an outright insult. Any responsible employer holds salaries in check when economic times are hard, and the government should be no different.

    As for a 90-cent tax rate, maybe David Slutzky missed what happened a couple of weeks ago. Voters learned that they really CAN throw the bastards out.

  3. Well, it’s important to remember that Slutzky isn’t advocating a 90-cent rate. He’s just advocating that the first draft of the budget begin there, and that the BoS whittle it down from there.

    I work for the university. We were all supposed to get raises in a couple of weeks, but those are out the window. And I can’t complain—the state doesn’t have the money. (Though I’m a university employee, not a state employee, but whatever.) Now my household is dual income, no kids, and we live frugally, so I really can’t complain much. But as a quasi-public employee, I think it’s reasonable that I take a hit now, provided that this sector doesn’t become chronically starved for cash. We want public service to attract the best and brightest (and…uh…me), not folks who can’t find anything better.

  4. One of the things I’ve written about recently, is the Counties apparent decision to cut funding for ACE, while maintaining the Land Use tax break large wealthy landowners get.

    It seems wrong, especially in an economic crisis, that we would preserve a tax break for Albemarle’s wealthiest citizens, and shift that tax burden to everyone else. While there is a legitimate argument to be made that suspending ACE is justifiable since properties aren’t in as much danger of being developed, one would think the same logic would have applied to Land Use. Futhermore, the inability to fund conservation programs, like the Natural Heritage Committee, may mean that those programs won’t exist anymore once we clear this crisis.

    Why we’d even go so far as to risk the ability to pay county employees and fund vital programs so that we could maintain such a regressive taxation system is beyond me.

  5. I don’t really know the details of how it all works like some of the folks here, but I feel it’s safe to say that the city will just raise taxes on whatever to cover any shortfall and that’s that. They don’t want to see anything cut out because, let’s see, how did Maurice Cox put it one time when asked about why C’ville has such a hight cost of living? I think he said something like, “that’s what makes Charlottesville a humane place to live.” So it’s all about humanity, see?

  6. This is going on around the country, and it ought to be a scandal but isn’t. Look at city revenues for the last ten years here:

    and expenditures here:

    Real estate tax revenue in 1999: $20,975,381

    Real estate tax revenue in 2008: $47,665,000

    Total expenditures in 1999: $67,447,689

    Total expenditures in 2008: $134,662,600

    Incredibly, in roughly the same period the city’s population has *declined* by around 10%.

    Now, how many people here who were working full-time in 1999 have seen your after-tax income *double* over the past decade? How many state and city workers are earning 200% of their ’99 salary?

    The only “crisis” here is that the city government, like other localities across the nation, has been even more irresponsible than Wall Street, subprime lenders, or their customers, getting addicted to spending money like Sarah Palin in Neiman Marcus, and now the thought of giving up a small part of the absurd embarrassment of riches they’ve been rolling around in naked for the past decade is intolerable to them. The budget Armageddon they’re wailing and moaning about is the excruciating cutback from 200% of their 1999 revenues to 190% or 195% of their 1999 revenues.

    They don’t need more revenue, they need rehab.

    What would people say if next year Exxon posted profits 10% lower than this year’s record-breaking ones and turned around and asked for a government bailout because the profits weren’t as high as they’d gotten used to?

    (I don’t feel like hunting for Albemarle’s numbers again, but I’ve seen them before and they’re nearly as bad. They’ve also seen explosive revenue increases and are now unwilling to consider making do with slightly less than that enormous windfall.)

  7. Waldo, I applaud your not going ballistic over your disappearing pay raise. You’re the only local city, county, state or federal employee I haven’t heard whining about these last minute disappearing pay raises this year. They all speak as if the raises were something they were entitled to and still should get. And in the case of the people I know and personally speak of, it simply shows the ones who aren’t really in public service to help people, it’s all about the money and benefits in their minds.

  8. Demopublican, I applaud workers who work for the money.
    From the Planning Commission’s agenda for December 9, 2008:

    “Charlottesville Capital Improvement Program FY 2010-2014: Consideration of the proposed 5-year Capital Improvement Program totaling $71,252,849 in the areas of Education, Economic Development, Neighborhood Improvements, Safety & Justice, Facilities Management, Transportation & Access, Parks & Recreation, Technology and General Government Infrastructure. Report prepared by Leslie Beauregard & Ryan Davidson, Budget Office”

    It is clear to me that council needs to pare down it’s capital improvements program that is averaging $14M /year.

    It would also be great if the city and county stopped giving hundreds of thousands of tax dollars to the convention bureau to subsidize their advertisement budget. There are enough restaurants and hotels in the area that the convention bureau should be self-supporting. The local governments have no such relationship with any other local industry.

    The city and county have contributed millions of dollars to “affordable housing” initiatives that have not started. Over the last two years the city has contributed $3.5M in local tax money. It’s time for them to say “no more money until you spend what you have and complete some projects.” It is particularly egregious for the city to give hundreds of thousands of dollars to the federally-owned (but locally managed) housing authority that continues to fail its annual maintenance evaluations . This gifting is a recent occurrence and the money given has not provided one living unit. If the housing authority was performing better HUD would be providing it with planning grants and technical assistance that the city’s money is expected to help pay for. The city should stop thinking of itself as the mecca for the low-income and demand that the area counties provide for their own low-income residents. By not attracting central Virginia’s low income to these 11 sq. mi. the city should start seeing some savings in the Comprehensive Services Act expenditures that increase by hundreds of thousands of dollars each year.

    It appears that the state and surrounding counties will not be giving employees raises this year. The city is expecting to give not only raises but also pay for performance bonuses (staff has announced that it will not be asking for additional funds for salary market-rate adjustments which only costs several hundred thousands a year). I think its time the city join in an stop thiis salary competition in central Virginia. How many non-governmental workers are getting wage increases this year? The school system should also take this advice. Will the employees still get raises? Yes, of course, they will see it in their rising health care costs. Localities should start talking to employees about their total pay packages and not just their take home pay. Not giving wage raises should also decrease the amount of money the city is putting into retirement funds.

  9. You’re the only local city, county, state or federal employee I haven’t heard whining about these last minute disappearing pay raises this year.

    Well, like I said—dual incomes, no kids, living frugally, so it’s easier for me to roll with the punches than a lot of folks. And I’m also compensated well for a job I like, working with people who I like. There are lots of public-sector jobs that aren’t real glamorous, but that somebody’s got to do, being done by folks who are the sole breadwinners for families in dire financial situations right now. Those people are probably feeling a bit like Clark Griswold right now, and understandably so.

  10. Wlado: “There are lots of public-sector jobs that aren’t real glamorous, but that somebody’s got to do, being done by folks who are the sole breadwinners for families in dire financial situations right now. Those people are probably feeling a bit like Clark Griswold right now, and understandably so.”

    True, and I certainly understand their feeling that way, but what they have to realize is that everyone is hurting. If they keep their jobs at all they’re among the fortunate. Few workers in the private sector will be getting much of a raise this year either. To me the question isn’t whether public-sector workers deserve raises, it’s why their needs outweigh those of the equally hard-up people, many of them also struggling to raise families, who’ll be that much worse off when their taxes go up.

    And yeah, to be honest, my DINK household is pretty well-off and it would be fair if our taxes went up a little to help out people who really need the help. But that wouldn’t be necessary if our elected officials showed the fiscal restraint of a five-year-old.

    Anyway, it looks like deflation may ease the pain of no raises for those lucky enough to keep their jobs.

  11. I have two areas which I would like to see the city cut, first the $100K for marketing and PR to let people know that the downtown mall is still open for business as the bricks are being replaced. Secondly, I would like to see the $100k for design of the McIntire Park retectangular fields stopped. I know only $200K but every little bit helps.
    Oh, I forgot eliminate curbside recycling. Save over a million per year. For those who want to recycle let them take their recyclables down to the McIntire Recycling center as they travel about.

  12. To all our politicians that want to raise taxes before trimming the budgets. If you cannot see that everyone in county needs to cut back to survive these hard times. Then you should be tossed out of office. Why is it that you cannot keep reserves to weather harder times? Why is it that you always think taxes are the answer to everything? Why is it that you cannot keep cost under control? Why is it that you always put more money into bad projects? Why is it? Speak up and let us know!!! You’re all such good spin doctors.

  13. Politicians are extremely generious when spending other people’s hard earned money. As far as common sense goes, I have never seen a politician yet with one good spit worth of common sense.
    All raises for city employees making more than $50K need to be eliminated for the upcoming fiscal year. All departments need to be told that they will have to operate with the same amount of funding as they operated on for this past fiscal years budget and make adjustments accordingly.
    City council says they make have to cut services, well with the exception of public safety services I can’t think of any services that are essential to my daily existence. I would like for council to give the citizens a list of the services they want to cut in order to keep the budget under control. Or is this just one of their scare tactics?

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