County Executive Bob Tucker has revealed details of a projected $4.1 million budget shortfall for Albemarle’s current fiscal year. The Board of Supervisors were also briefed on possible strategies to address the deficit at a work session on September 10, 2008, and were warned that state budget cuts could cause the shortfall to grow larger.
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Tucker said the shortfall is due to a general decline in tax revenues. Property taxes are down because of reduced property values because of the slower housing market. Fewer vehicle sales has translated in lower than expected personal property taxes. People are spending less money, which means sales tax revenues are also lower than anticipated.
While Tucker admitted the shortfall is bleak and will involve some reductions in service, he expressed confidence the County government is equipped to ride out the economic downturn. He said the County took steps in fiscal year 2008 to shrink the County’s operating budget. A million dollars was saved by leaving seventeen positions unfilled, and another $1.49 million was saved through “significant savings and efficiency measures.”
Tucker suggested several ways the County can respond this time around. First, the hiring freeze would be extended to a total of 32 vacant positions, with the brunt of unfilled positions in Community Development and Finance. Those positions will only become open if new revenues from fees can cover the salaries. Over-time, travel, training and other discretionary items will also be reduced.
One of the Board’s decisions will also involve whether to use funds that were placed in the so-called “lock-box.” When the Board adopted a 71 cent tax rate for the current fiscal year , a penny of the tax was set aside to address potential any short-falls.
According to Tucker, of the total $4.1 million shortfall, local government operating revenues will be reduced by $1.4 million, or 1.8% of the County’s operating budget. The budget for the Capital Improvement Program will be reduced by $300,000. County schools will have operating revenues fall short by $2.4 million.
Tucker said services that deal with health and public safety will remain at current funding levels. Existing staff will be redeployed necessary to meet the County’s most critical needs. Expansion of existing programs will be delayed.
Chairman Ken Boyd (Rivanna) asked if a salary increase was still factored into the proposed budget. Tucker said his projections are still calculated with a 4% raise, but the County could save about $1.5 million if that were cut back to 2%.
Supervisor David Slutzky (Rio) asked Tucker if he thought the County could still adequately function with so many open positions. Tucker said that the County had no choice this year, but that staff would find a way to balance things.
Slutzky, who is in line to be Chairman when the Board approves the FY2010 budget, said staff had done a good job of laying out the County’s path to savings. “It looks like you thought this through the way I would want you to,” he said.
The Board spent time discussing if any action needed to be taken regarding the “lock-box.” Tucker said he would rather wait and see the extent of cuts the state might make in order to balance its budget. Virginia’s budget shortfall for the current fiscal year is over $1 billion. Should the “lock box” funds be needed, Tucker recommended splitting them 40:60 with County schools.
The Board’s next set of financial decisions will come at an October 1st work session on compensation recommendations for FY2010. Then the Board will hold a strategic planning retreat on October 24, 2008 at Zehmer Hall at the University of Virginia. That will be followed by a review of the County’s Five-Year Financial Plan. During that exercise, the Board’s strategic goals will be aligned with projected revenues.