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Hanley Discusses Budget, Clean Air Problems

When a county bases most of its income on real-estate and personal-property taxes, said Fairfax County Board of Supervisors Chairman Katherine K. "Kate" Hanley, it can lead to trouble.

"This two-legged stool is bearing too big of a burden funding our education and transportation," she said. "It's too much of our revenue stream."

Hanley was speaking, Monday night, at the quarterly meeting of the West Fairfax County Citizens Association (WFCCA). She focused mainly on the county's FY 2004 financial forecast and on Northern Virginia's problems in meeting federal clean-air standards.

The downturned economy, she said, has caused serious shortfalls in both the state and county budgets. But regardless, the county still has to do its best to fund the most vital needs, while making good on its debts.

"We're paying off the $500 million worth of bonds we've issued over the past 20 years," said Hanley. "Two hundred million dollars were for the [Fairfax County] Parkway."

In an effort to save money, the county has made cutbacks and transferred some jobs from one department to another. "Fairfax County has about 100 more employees than it did in Fiscal Year 1991 — about 10,300 [total]," said Hanley. "If we'd employed people at the same rate as the county has grown — 21 percent — we'd have 22,000 employees."

But there's still the matter of taxes. "Real-estate taxes are almost 57 percent of our [estimated FY 2003] revenue, and personal-property taxes are about 19 percent," she said. "Together, [they account for] about 76 percent. We're too heavily based on real-estate taxes. In 2004, they'll be nearly 60 percent [of the county's income]."

And the residents will bear the brunt of these taxes. Ideally, said Hanley, county officials would like commercial properties to compose 25 percent of the real-estate tax base.

Instead, because of the increasing office-vacancy rate, commercial growth is on the decline. Although projected to grow by .52 percent in FY 2003 — compared with an estimated 16.27-percent jump in the residential sector — commercial real-estate revenue is projected to drop by 4.4 percent in FY 2004.

The trouble, said Hanley, is that the county's revenue base lacks diversification to provide a stable resource base and insure growth. And other sources of revenue are either flat or declining.

Hanley said FY 2004 sales-tax receipts are down almost $5 million from what they were in FY 2001. And extremely low interest rates have fueled a red-hot real-estate market. Prices of homes have gone way up, as have their assessed values. The problem, she said, is that the low interest rate that's good news for homebuyers is bad news for Fairfax County: "It means that the county's return on its investments is $42 million less for Fiscal Year 2004 than it was in Fiscal Year 2001."

With the federal funds' interest rate currently at 1.25 percent — the lowest it's been in 41 years — it's no wonder that the county has suffered. Interest-rate reductions by the Federal Reserve Board have had a direct — and devastating — impact on the yield earned on the county's investments. In FY 2001, this figure was $56.3 million; for FY 2004, it's projected to be $14.3 million.

As if all these things weren't enough, the county's future revenue forecasts are also on shaky ground. Besides the normal required costs associated with keeping a county of 1 million people running smoothly, the Board of Supervisors must also deal with new expenses — including the cost of the sniper prosecution and funding West Nile Virus prevention. Other uncertainties, such as the possible effects of a potential war with Iraq and the volatility of the U.S. financial markets, are also taking a toll.

So what's the solution? Perhaps, said Hanley, it could be in the county obtaining the same powers as cities. "We don't have the authority, for example, to raise the cigarette tax, and [other taxes] are capped," she said. "And that affects our education funding-formulas."

She said Northern Virginia's adjusted gross income makes Fairfax County look much wealthier than it is: "Virginia Beach, for example, has all kinds of revenue sources, but they don't show up on their adjusted gross income. So we are asking to have the same powers as cities. That would allow us to diversify our revenue stream."

The upshot of it all, said Hanley, is that Fairfax County is in for some difficult budget fights and decisions — some of which will affect public safety and schools. Taking everything into account, she said, "I think it'll be very tough for us to meet our requirements in public education. We're already $30 million apart from [what] the School Board [wants]."

She also discussed problems regarding the federal clean-air and regional-transportation requirements. "We didn't meet our clean-air goals, according to the Clean Air Act amendments of 1990," she said. "We have a regional Constrained Long-Range Plan, and it has to be tested against the state plan."

Noting that air pollution comes from a variety of sources, including vehicle emissions, power plants, construction equipment, paint and dry cleaners, Hanley said the Washington Metropolitan area got its compliance deadline extended to 2005 by the EPA. But this decision was challenged in court and, last summer, a judge ruled that the EPA should not have extended the deadline.

"So we're struggling to get a new, state and regional, clean-air implementation plan," she said. The county took some roads off its plans and learned that passenger cars — which have EPA emission controls on them — account for less than 50 percent of the air-pollution total.

But the amount of pollution emitted in this area by light-duty trucks — SUVs — went up, and they don't fall under EPA control until 2007. The result, said Hanley, is that for 2005, this area is projected to be emitting 50 tons a day more pollutants into the air than it's allowed.

She said having additives controlling diesel emissions would help, as would buses with CNG fuel. And she told the audience that roads not currently on the regional Constrained Long-Range Plan will not be on it, any time soon. So what to do?

"I think rail to Centreville is the best answer — and maybe we'll have some environmental help now," said Hanley. "We have to submit our plan, next January, to the EPA, so it's going to be an interesting year in transportation — and a complex one. And this is the kind of thing that everybody's going to have to be involved with."

Terry Spence of Rocky Run asked what percentage of county vehicles have alternative fuels, and Hanley replied, "Very few," because of their high repair costs and how expensive it is to build fuel stations for them. "We've acquired hybrid vehicles and we're testing them," she added. "And we're doing clean diesel. We're trying to find a reliable fuel that doesn't cost so much [when vehicles using it need] repair and is good for the air."

She also noted that Fairfax County has asked Gov. Warner to join the Southeastern states in suing the EPA for cutting back on the emissions requirements that power plants have to meet. Along those lines, asked Stephen Vandivere of Cabell's Mill, "Would cleaning up the power plants in Tennessee help us here?"

"Yes — and we're agitating at federal level," answered Hanley. "If we have to regulate paint, dry cleaners and construction equipment, it would be hard to enforce and could have [adverse] impacts on the economy of the region."

Little Rocky Run's Al Francese asked if she knew of "any realistic funding mechanisms that could be explored" to bring rail to Centreville. Hanley said the General Assembly is considering using the revenue from auto insurance with a local match. "It has an I-66 earmark that could be part of it," she said. "We could keep that on the plan as a study."

Mike Lannes of London Towne asked about the chances for bus service in western Fairfax County, and Hanley said this question saddened her because "the [failed] transportation referendum would have helped pay for it." And because of the budget crunch, there's no money for it at the present time.

Finally, Frank Ojeda of the Rock Hill Civic Association asked if having America's Homeland Security headquarters locate in Chantilly would help bring rail to Dulles. "Yes, and we're working on that," said Hanley. "It's one of the plusses [of this area]. The other is the National Air and Space Museum Annex opening in December — and we have to have some transportation improvements in place, at least buses."