PE Eyes Budget Direction

Published 4:13 pm Tuesday, February 8, 2011

PRINCE EDWARD – County supervisors took a first step in the budget process at their January work session by giving input on a range of issues to the County Administrator.

One of the discussions, however, centered on taxes.

Leigh District Supervisor Don Gantt reflected on increases last year (which included a cent increase on real estate and raising the vehicle license fees).

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“I'd like to take that off the table…send a clear message now that we're not gonna raise the taxes on those two items,” Gantt said.

He suggested in the discussion that you can say you're not planning on it.

Board Chairman William “Buckie” Fore agreed that you can say “you're not planning on it, but you can't say you're not (going to) do it because you don't know what the total cost of running this government's (going to) be yet. Neither do you know the cost of what the state is going to fund you to run the government.”

The best thing to do is to leave it alone, he suggested, see what you need, see what the shortage is and then you can say you're short “but we're not (gonna) raise taxes or we're short and we need a small raise in taxes.”

The work session involved a lengthy discussion on a myriad of budget related topics. The consensus seemed to be for the administrator to build the budget based on known revenues, leaving the rates as they are if at all possible.

Still, the discussion on taxes opened some philosophical discussion. Gantt offered that they need to send a message to everyone in the county that they're not going to raise the taxes now “so that they can make plans, business plans-“

“You can't send that message yet…that's what I'm sitting here telling you,” Fore cautioned.

County Administrator Wade Bartlett offered that they could say it is the board's preference not to raise taxes. He added that it's fine if they want to make a broad statement saying the board is going to do its best not to raise taxes.

Gantt also cited that if you can lower some taxes on some businesses and give them a little growth, you can increase revenues to the county in a different direction and maybe increase some jobs.

“In this report, our unemployment rate was over ten percent. That's a couple of points higher than the federal government. One out of ten of our citizens didn't have a job,” Gantt highlighted.

He hinted at chiseling away at changes in taxes.

“And the message doesn't have to be we won't raise taxes. The message could be we will find a better way to tax that'll help families and businesses and at least we're looking into it,” he said.

Bartlett cited that they have a tax committee and could look at that in the course of the next three or four months. However, he cited that in Virginia local governments can only do what is allowed by that state. They have a lot of restrictions that others don't and they have to work within those.

Changing anything in your tax code-local, state or federal government-there are winners and losers, Bartlett said.

Gantt, highlighting the costs of social services, pointed to the benefit of putting people to work and if they could put a couple of more trucks on the road.

“The people that I see that are having the problem is the guy that's got to go down and buy a fifty some thousand dollar machine…and then he's gotta pay interest on it and then he's gotta put a butt in that seat to make it run and then he's gotta have the truck to haul it back and forth to the job,” Gantt said. “Those are the ones that are having problems.”

Supervisors also discussed the merits of the decision last year to zero out the machinery and tools tax.

“…Anybody that wanted to put a business in Prince Edward County into the industrial park, should have been able to see that at least we're trying to bring more businesses in,” Gantt said.

Fore assessed, “I think we shot ourselves in the foot…because we gave away one of the bargaining tools to get people here.”

Every company that they have helped come into the county, he said, they have used that tax as part of an incentive package.

Gantt stated that “everybody does.”

Fore commented, “Well if you don't have it, you can't use it.”

Gantt likened it to “smoke and mirrors.”

More Discussion

Bartlett had listed several broad areas where the board may wish to have input and opinion was offered. While nothing has been set in stone and funding has yet to be worked out in the General Assembly, the initial guidance in developing a draft for the board of supervisors is expected to:

*consider level funding for the schools and, if the revenues are suitable, look at $1.397 million shortage.

*look to level-fund fire and rescue units.

*place a hold on any special projects beyond a monument plan currently in the works to recognize public service workers who lost their lives in the line of duty.*

*look for a recommended figure on capital equipment/projects that, as Fore recommended, would give some flexibility in equipment purchase and the Rt. 628 project.

*and wait to see the direction the state takes in dealing with the issue of pay raises for state workers/retirement system contributions.

Fore suggested that they take a strong look at donating to organizations that help the widest number of people throughout the county. There again seemed to be a consensus that they not take on any new charitable organizations.

An Overview

The work session also afforded an overview of the County's economic status and expected funding issues.

Among the highlights:

*Bartlett cited that it appears the economy is growing slightly, but he also noted in a written memo to the board the Governor is recommending $191.5 million in spending cuts, many of which will impact local governments and especially public schools.

*The state is expected to require local governments to pay insurance premiums associated with the Line of Duty program which provides benefits to the individual or their survivor to those who are disabled or die in the line of duty and provides benefits to public safety employees. While Bartlett did not know the exact cost, he estimated it would range between $15,000-$30,000. The County would pay about $60 per volunteer, which he expected to increase “considerably.” It was a benefit the state approved in the past, but would be passed onto localities. Localities can opt out of the state's program and fund it on their own.

*Virginia Retirement System (VRS) rates are projected to increase, which is expected to mean about $65,000 for the County and, while Bartlett cited he has not received any information regarding health insurance premium increases, ten percent would mean about $48,000.

*There are other reductions anticipated associated with Social Services and the Comprehensive Services Act, although it was unknown what the impact would be.

*Localities are also expected to chip in 100 percent of the cost of VA Risk Management Liability and Surety Bond Premiums for constitutional offices. The state had paid the cost in the past, but localities were required to pay 50 percent last year. In addition, the Governor's budget proposal reduces the state reimbursement to the locality for the registrar and electoral board by four percent. The two are expected to cost the county about $12,000.

“…The governor is gonna look good because he's cutting all this money, but he's passing it down to the localities,” assessed Hampden District Supervisor Charles McKay.

There is no doubt, Bartlett offered, that that is not only the direction, not just of the current governor but the General Assembly, over the last five to six years.

McKay noted that it's “making it harder on us.”

*On the plus side of the ledger, property taxes are expected to be about $196,000 over their budget. Other local taxes, which factor such things as local sales tax, consumer utility, gross receipts, vehicle license, tax on deeds, tax on wills, recordation-local, and communications are running just slightly ahead of forecast.

“Overall, it looks like we'll have about $260,000-$300,000 more in revenues than our budget,” Bartlett said.

While it is a “big number,” he cited, it's only about 1.6 percent of their overall budget.

*It looks like they are not going to exceed their budget on expenditures, Bartlett reported, and probably have some savings.

“Right now, our budget says we're gonna pull about $400,000 out of the fund balance, but when all is said and done, it's looking like we'll be about equal,” he said.

*Bartlett highlighted in the report to the board that the general fund budget is about $20 million, but not all of it is available for reduction. Certain expenditures are fixed, such as debt service, and if the board wants to level fund the schools, that would be about $7.9 million.

*He noted that constitutional officers and department directors have taken steps to reduce expenditures in the last several years. He further assessed that the County is running an efficient operation.

“With those reductions we have taken, department directors and constitutional officers have informed me that any further reductions in the departmental budgets could only be realized with reductions in personnel costs,” Bartlett said.

Reducing personnel costs would have a direct impact on the level of service, he cited.