Albemarle looking at million dollar shortfall

Albemarle County staff is projecting a million dollar shortfall for the current fiscal year and the coming year, which could mean less money for schools or other cuts.

The Board of Supervisors not only produces a fiscal year budget, which ends on June 30th, but also develops a Five Year Expenditure Plan, county spokeswoman Lee Catlin said. Each fall, the board convenes for the five-year financial planning work sessions. In preparation for this year’s meetings beginning Nov. 9, the staff began to review the county’s revenue.

“Based on what were seeing right now, we think it is likely that we will see a revenue decline of $1.07 million,” Catlin said. This makes up approximately 0.5 percent of the county’s total $304 million budget.

The revenue projections are largely due to an estimated fall in real estate property assessments in 2012. Moreover, the staff anticipates an additional 1.5 percent decrease in property values in 2013, which may cause an additional $1.02 million dollars in revenue reduction for fiscal year 2012-13.

“Like a lot of communities, we hoped we had seen real estate values stabilize, but what is happening on the national and international levels continues to make things still volatile for us. Our community feels the impact of that,” Catlin said. Because real estate taxes are a main source of revenue for the county, she said that even a slight variation can have a significant impact on the budget.

If correct, these reductions could cause an estimated $448,000 decrease in school funding, as well as an $80,000 decrease in local funding for capital projects in the current fiscal year. Next year, the school division could see an additional $188,000 decrease in funding, and the capital program an additional $30,000.

Because the county operates on a budget that allocates 60 percent of all revenue toward the school division and 40 percent to fund the local government, the school system suffers the most under revenue reductions.

In November’s work sessions, the board will come together to bring forth specific ideas as to how to balance the budget. In particular, Catlin said the county will carefully consider any and all new hires.

“Rather than automatically filling a position, we will look very closely to see if it is a core position that needs to be rehired, or if it could be left vacant or possibly eliminated,” she said.

Albemarle Supervisor Rodney Thomas said he thinks that the most effective way to balance the budget is to increase revenue from sales taxes.

“People aren’t buying anything because they are just a little bit leery of the market right now,” he said. He suggested the county keep sales taxes low to encourage more spending.

Thomas and fellow board member Dennis S. Rooker agree that the county should be careful in its own spending.

“We need to be cautious at making new expenditure commitments at a time when real estate prices have not yet stabilized,” Rooker said.

Of course, this is not the first time that the county’s revenue has come up short. In fiscal year 2008-2009, the county faced $4.1 million in revenue reductions, with $2.4 million falling on the shoulders of the school division.

Rooker also noted that while the county’s revenue from real estate taxes appears to be declining, this is only one aspect of the overall budget. The board has yet to receive updated information on other sources such as state and federal revenue or revenue from sales taxes.

“This is not the same situation we were in a couple years ago where we had to take very drastic steps, but we are in a place where we have some hard budget choices ahead of us not just for this year but for future years,” Catlin said.