A committee Albemarle County Board of Supervisors tasked with recommending ways to close a projected long-term funding gap has begun its work.
“Even through we’ve been through a recession and a slow economy, the population has not stopped growing and neither has school enrollment,” said County Executive Tom Foley.
The Citizen Resource Advisory Committee was formed in May to suggest ways to pay for the cost of urbanization in the county beyond property tax increases.
“We certainly don’t have city-like services right now, but we’re seeing some of the demands that cities face,” Foley said. For example, Foley said, the school system has seen an increase in lower-income students who need social services such as free or reduced-price school lunches.
The county’s budget cycle is guided by a five-year financial plan that factors in projected growth, mandates from the state and federal government and other potential items that create increases in expenditures.
Supervisors balanced the budget this year by increasing the real estate property tax rate by 2 cents to 81.9 cents per $100 of assessed value.
The estimated budget gap for next fiscal year is $8.8 million. That gap will increase to $32 million by fiscal year 2021 if population trends continue. Part of the committee’s charge is to suggest ways to balance the plan without raising real estate taxes further.
The five-year plan already assumes an additional 0.9-cent tax increase in the next fiscal year and a 2.1-cent increase in fiscal year 2019.
Committee member Dennis Rooker, a former Albemarle supervisor, estimated that covering the gap likely would require increasing the tax rate by 20 cents. Foley said that likely would not happen.
“It’s not going to take care of the problem, so you can take that off the table,” Foley said.
Bill Letteri, the deputy county executive for financial and management services, said there are many unmet needs that are not included in the plan at this time, including potential expansion of pre-K programs and a move towards geo-policing.
Foley most of the new residents have moved into the urban areas, as called for in the county’s Comprehensive Plan. However, Foley said there are issues that must be addressed.
“We’re seeing some decay and decline in our urban areas,” Foley said, adding that the county’s urban ring is geographically three times larger than the city of Charlottesville.
One idea the committee will study is whether portions of the designated growth area should pay a higher tax rate to support urban infrastructure specific to their communities.
“There are not very many sidewalks in rural Albemarle, but we are trying to put more sidewalks in areas with a pedestrian orientation,” Foley said.
The committee will also evaluate whether a bond referendum should be issued. If so, it also will recommend what capital projects should be funded by that mechanism.
Another potential idea would be to seek more taxing authority from the General Assembly. Currently, the county cannot levy a cigarette tax such as the one in place in Charlottesville.
One complication for Albemarle is the revenue-sharing contract signed in 1982 that requires an annual payment to Charlottesville.
This year’s payment will be $16.1 million, but that will increase to $18.9 million by fiscal year 2021.
Committee member Mark Roberts suggested the county examine whether it has any unused assets, such as land it could sell.
“To me, those assets that are not being used have a return on investment of zero,” Roberts said. “They could be a good source of cash flow to get through some of this need.”
Several members of the committee told staff they should also be looking at ways to reduce expenditures.
“The expense side certainly has to be looked at here because the political reality is there aren’t that many sources of additional revenue that I am aware of,” Rooker said.
Rooker suggested conducting another efficiency study of both schools and general government to see if the gap could be tightened partially that way.
Foley said the committee’s main charge is to focus on new revenues.
“We don’t expect to spend a lot more time on expenditures,” Foley said.
Roberts asked if the potential for new revenue from increased economic development activities have been included in the five-year plan.
“If there is a strategy to grow in certain ways that’s going to affect the overall revenue streams,” Roberts said.
Foley said an update on economic development will be given, although the exact strategy has not yet been completed.
Rooker cautioned against pursuing too much economic development because more jobs could increase the population rate, which he said is driving the increases in expenditures.
“If you attract things that generate more people, you also have to consider what the fiscal impact of that increase will be,” Rooker said.
The next meeting of the group is scheduled for July 29 in Room 241 of the Albemarle County Office Building on McIntire Road.