Unlike a business, an increase in residents, demanding increased services, did not bring in more revenue last year for Loudoun County.
As announced last summer, Loudoun County moved up from being the third fastest growing county in the country to the second, falling behind Douglass County, Colo., according to the U.S. Census Bureau's April 1, 2000 to July 1, 2001 census. Loudoun's population grew from 169,600 residents in 2000 to nearly 184,900 residents in 2001, a 9 percent increase.
Over the past decade, the population more than doubled from 86,100 residents in 1990 to 186,200 residents in 2001, growth that is projected to continue at a slower pace reaching 304,200 residents by 2010. The school population expanded from 28,700 students in 2000 to 31,800 students in 2001, and to 34,500 students in 2002. Public-school enrollment is expected to continue increasing by 7.5 to 8.4 percent a year through 2008, according to Loudoun County Public Schools officials.
"Residential growth doesn't pay for itself," said Ben Mays, budget officer. "Things are slow, that’s the problem. Our revenues are shrunk, but we still have population growth."
MANAGED VACANCY FREEZE
Loudoun faces a drop in county revenues and reductions and emergency cuts in state funding. In March 2002, County Administrator Kirby Bowers initiated a savings plan in operating and personnel expenses to cut $8.1 million from the fiscal year (FY) 2003 budget to keep the budget balanced at year’s end. County departments had to achieve 6 percent in savings, except for the county’s public-safety agencies, which were required to cut 3 percent. The departments and public-safety agencies delayed 100 new positions or enhancements and carried out Bowers’ proposed managed vacancy freeze, initially keeping 100 staff positions vacant of the 2,595 full-time equivalent positions authorized by the Board of Supervisors for the FY '03 budget.
"We still filled some positions and we kept some positions vacant," Bowers said.
The vacancy freeze and other cost-saving measures generated an estimated $8.5 million in savings.
A lack of state funding and a tax structure that is not "tapping into the real wealth of the county" contribute to the county's budget problems, Bowers said. The county’s main source of local tax funding comes from property taxes, since the county cannot charge impact fees and receives a limited portion of state income taxes filed by county residents.
In October, Gov. Mark Warner (D) announced plans to cut $858 million from the state budget, a plan aimed to recover a $1.5 billion shortfall in FY '03. As a result, the county could face up to 15 percent in cuts in state-funded staff positions and programs.
"Because of the state budget, we anticipate we’ll see even less revenue coming back from Richmond," said Board of Supervisors chairman Scott York (R-At large). "The more growth we’ve had, the less backing we’ve gotten from the state."
REVISED COMPREHENSIVE PLAN
Despite state and county cuts, the county is expected to continue growing over the next several years. The Board of Supervisors approved the Revised Comprehensive Plan in July 2001 to manage that growth.
"The work this board is doing will have an impact on managing growth in the future. But in the near term, we're subject to the market because of past rezonings by previous boards," York said, referring to 36,900 homes already approved for development from 1989 to 1995.
The 20-year county planning document reduces by 41 percent the number of new homes that can be developed and reduces zoning densities in the west, while keeping the suburban densities in the east the same. The plan predicts the county's build-out to be 109,000 new units in 20 years, compared to 186,700 new units as outlined in the 1991 Comprehensive Plan. The reduction is expected to save taxpayers $250 million in new infrastructure costs.
Once the plan was adopted, the county began work on the zoning ordinance, an enforceable document that codifies how construction is done and to what standard. In spring 2002, several Loudoun residents organized into focus groups to offer advice on different aspects of the zoning ordinance revisions.
That summer, the Planning Commission began work on revising the zoning ordinance, which in turn is needed to revise the county’s zoning map. On Oct. 10, the commission submitted a recommendation on the ordinance to the Board of Supervisors. The board was expected to adopt the ordinance by the end of December 2002 or at the first board meeting in January 2003.
COUNTY’S DEBT SERVICE/BUDGET
Even with the growth-slowing measures, the county faces an increasing debt service. The county’s debt service in FY '04 is expected to increase by $28 million from $73.9 million in FY '03. Comparatively, the debt service in FY '98 was $26.6 million.
"You have the issue of continued growth and debt services," York said.
The county ended FY '02 with a positive fund balance of $32.1 million, $5.7 million less than expected of an estimated $37.8 million in year-end funds. For FY '03, the ending balance is expected to be $6.6 million, added to the expected $8.5 million in savings from Bowers’ savings plan.
"We don’t project we’ll be running a deficit at the end of this year," Bowers said. "That’s important for next year ... because of the pressure we have on the expenditure curves and increasing debt service."
The FY '04 budget is expected to hit a $100 million to $110 million shortfall, a number that will be finalized when the budget is adopted in April 2003. The FY '03 budget included $862.7 million in expenditures, funded in part with a tax rate of $1.05 for every $100 of assessed value. The Board of Supervisors set a funding target for the FY '04 budget to avoid increasing the tax rate by more than a few pennies. The board asked Loudoun County Public Schools to develop a budget limited to a $22 million increase from the FY '03 budget to accommodate student and inflation growth. As for the county, the board asked for a limited increase of one cent on the property tax to provide additional funds for public safety.
"I think you should look at all the needs to find what is essential and fund that, rather than set a limit and simply say, ‘If you can’t fit within that limit, you can’t be funded,’" said Supervisor Chuck Harris (D-Broad Run). "There’s a chance for essential services to be cut without a debate."
To free up county funds, the Board of Supervisors opted last fall to lease-purchase instead of paying cash for constructing and equipping the Adult Detention Center. The detention center, which is scheduled to open in May 2005, will replace the current jail facility in downtown Leesburg. The lease-purchase financing option, which will cost $22.6 million, is expected to provide $16.9 million in local tax funding from the FY '03-04 planned appropriations and could be used to offset $28 million in debt service for FY '04.
SCHOOL SYSTEM GROWTH
The majority of the county’s budget provides funding for school operations, which in FY '03 was $355.8 million, compared to $297 million in FY '02. The public schools opened five schools in 2002 and plans to open another five schools in 2003. Since 1995, the school district built 24 schools and faces a Capital Improvements Program (CIP) for 2004-08 of building 14 new schools in the next five years, making the district the fastest growing school system in the state.
Hatrick’s recommended CIP for fiscal years 2004-08 proposes building nine elementary, two middle and three high schools and renovating two existing schools, along with other capital projects, at an estimated cost of $498.7 million. Projects proposed for FY '04 are expected to cost $109.5 million for two elementary schools in Belmont Country Club and the Leesburg area, renovations at a middle school and at Loudoun County High School, ball field lighting and heating and air-conditioning system installations.
The projects for FY '04-08 CIP address a growing student population from 37,532 students this year to a projected 54,728 students in the 2007-08 school year. Next year, more than 2,700 students are expected to attend Loudoun schools, pushing the population up 7.2 percent to 40,250 students.
Supervisor James Burton (I-Mercer) questioned the proposed CIP, since the first two years of the CIP more than doubled the amount of funding approved by the Board of Supervisors last year. The CIP asks for $109.5 million in FY '04, compared to $36.3 million as outlined in the CIP for FY '03-08. The FY '05 CIP adds a high school in the Purcellville area at an expected cost of $59.7 million to bring the total for the year to $107.8 million. Last year's funding request was for $50.9 million.
"I was looking forward to a dip next year. Now I see something three times as high as I expected," Burton said.
Over-development and traffic are the "two biggest issues facing Loudoun," York said.
Several road expansion projects are planned in Loudoun County, including completing the four-lane divided section of Loudoun County Parkway between Route 7 and Redskin Park; constructing a full interchange with an overpass at Lansdowne for completion in early 2004; paving the dirt road section of Sycolin Road between the Leesburg Airport and Ashburn, a state-funded project; and building six interchanges along Route 28, three of which are in Loudoun County.
York met with Leonard "Hobie" Mitchel, member of the Commonwealth Transportation Board, in 1999, about improving the Route 28 intersections with Routes 625 and 628. The two realized that improving the intersections would push the traffic problems to the next intersections along the corridor.
"It had to be corridor improvements. … You’re not looking at one interchange at a time. You’re looking at corridors," Mitchel said.
The project expanded to 10 interchanges and two additional lanes along the corridor from Route 7 in Loudoun to Interstate 66 in Fairfax County. Loudoun County formally agreed in October 2002 to join Fairfax County in issuing a 30-year moral obligation bond for six of the interchanges, a bond that will be coupled with the state’s bonds. A bond-rating agency gave a low bond rating for the original Public-Private Transportation Act (PPTA) project, which combined the efforts of the Virginia Department of Transportation (VDOT) and the Route 28 Transportation Taxing District of commercial properties along the corridor.
The moral obligation bond will require the two counties to fund a portion of the project if debt services fail from the taxing district, which earns about $11.5 million a year from a 20-cent tax imposed within the district. The project will be paid primarily through the special tax.
AOL, WORLDCOM AND OTHER LAYOFFS
In early 2002, America Online Inc. laid off several employees from the Dulles facility. In June of the same year, WorldCom Inc. in Ashburn, which houses the Network Operations Center, laid off 530 employees. That fall, the company transferred 500 employees from Crystal City to the Ashburn facility. The company represents 4 percent of Loudoun’s workforce of 98,000 employees and is one of 5,100 businesses in the county.
"Loudoun County will continue to be a great place to work and live and the reasons it exists as a place to work and live will continue despite WorldCom’s bankruptcy. I think we will continue to grow from a business and commercial perspective," Harris said.
Evidence of that growth comes in part from the number of building permits the county has issued. The permits peaked in 2000 at 6,100, dropping to 4,700 permits in 2001. By the end of 2002, the permits were expected to increase again to 5,000.
The permits issued for nonresidential construction dropped 64.7 percent from the first half of 2001 to the same time period in 2002, while housing sales increased 7.7 percent, according to the Economic Indicators report from the Department of Economic Development. The county issued 22.5 percent fewer residential permits in 2002 through June than the year before.
"It’s unfair to expect Loudoun to continue to rank second or third of all counties nationwide for a number of years, and I think the growth we experienced two years ago was a phenomenon probably not to be repeated for some time in the Northern Virginia area," Harris said. "It’s unique and we shouldn’t be compared with those peak years of growth as if that were a normal occurrence. We certainly need to be careful to ensure we continue to attract quality business and reasonable residential growth."