County ponders $1.2-million revenue shortfall in face of no tax hike mandate

Tough crowd, tough job – above from left, Supervisors Fox, Carter and Murray listen intently as staff describes the dynamics of a projected $1.2-million revenue shortfall. Below, the county administrator and attorney may be thinking we didn’t do it … Photos/Roger Bianchini

FRONT ROYAL – Warren County staff and elected officials are trying to balance the coming Fiscal Year budget in the face of a projected $1,178,347 revenue shortfall. At a March 6 work session, the board of supervisors fourth in this year’s budget process, that shortfall was attributed to several primary factors, including: the loss of over $570,000 in Dominion Power tax revenue; the necessity to add funding for two firefighter positions the State had been covering during construction of the Morgan’s Ford Bridge ($112,371); a 12.1% hike in health insurance costs ($277,433); increases in waste hauling and disposal fees ($170,000); funding a Career Development Program for the sheriff’s office ($143,146); as well as a number of smaller operational and personnel items.

County Administrator Doug Stanley explained the loss of the Dominion Power Real Estate Tax revenue as due to a State Corporation Commission ruling that pollution mitigation equipment was tax exempt. Stanley later elaborated to Royal Examiner that the SCC ruling resulted in $87.75 million in plant value being deemed tax exempt. That ruling resulted in the loss of $570,399 in real estate tax revenue at the County’s rate of 65-cents per $100 of assessed value.

The supervisors have indicated that departments should come in with relatively flat budgets in the face of a collective elected body desire NOT to raise taxes this year. Early projections indicate an FY2019 County budget of $50,990,110 without public schools factored in. That compares to $50,533,943 in the current FY2018 budget year. And while that plus $456,167 isn’t bad in the face of the above-cited “out of our hands” added expenditures or lost revenues totaling almost $1.2 million, as an astronaut whose name escapes me at the moment once observed of the earth – “That ain’t flat.

And in the face of that fact, Board Chairman Tony Carter challenged his board – “Mr. Fox and Mr. Sayre” in particular – to sharpen their pencils in order to find places where the proposed FY2019 budget can be cut in order to create a balanced budget without a tax hike. Last April’s FY2018 budget vote turned into a sometimes testy debate over revenues, taxes and county priorities as a 3-2 majority, Fox and Sayre dissenting, approved the county budget including a 3-cent real estate tax hike. That tax increase was necessary to provide the revenue to fund operations at the new Warren County Middle School – a cost long known to be on the horizon as the school was under construction.

So, with memories of that battle close to the surface it will be interesting to see how things progress this year. County Administrator Stanley said by the next budget work session scheduled for March 20, staff hoped to have – “the magic” South River Supervisor Linda Glavis injected.

If not magic, certainly more numbers – because I know you all out there certainly enjoy reading about the myriad numbers that make up the annual municipal budget process as much as your humble reporter loves writing about them.

So to that end, I will just add that in the wake of a joint February 20 budget work session with the school board and administration, the total projected public school budget is $55,056,048, of which a $23,481,164 appropriation from the County would be required. The requested FY2019 local appropriation is exactly $60,000 above last year’s county contribution of $23,421,164 to its public schools. An estimated $31,574,884 in revenue will come to the public schools from elsewhere.

The current projected total FY2019 Warren County Budget is $106,046,158, $419,924 above last year’s $105,626,234 FY 2018 budget. And looming in the background is the County General Fund Balance estimated to be at $13,068,741, down almost $2.7 million from its June 30, 2017 balance of $15,767,047. And while general fund money can be used to balance budgets, it is recommended that the County maintain a fund balance at 15% of its annual budget in order to maintain a favorable bond rating to get preferred, lower interest rates on any future bond issues. As pointed out in the staff budget summary the projected $13-million fund balance is just 12.37% of the FY 2018 $105.6-million budget.

So with an approximate $1.2-million deficit to the currently projected $73,292,927 county revenue stream still to be resolved, that’s it till next time in our exciting high-wire municipal budget balancing act series. Stay tuned as it builds toward an exciting mid-April conclusion – it couldn’t be as exciting as last year, could it?!!?

Read story Divided board approves Warren County budget by 3-2 vote.