Looking Good — Financially

Looking Good — Financially

State adds more funds for schools; county bond rating rises.

Loudoun County has cause for celebration on two fronts. The General Assembly has doled out an additional $6 million in education aid for each of the next two fiscal years, and Moody's Investors Services has assigned Loudoun its highest bond rating of Aaa.

Dr. Edgar Hatrick, superintendent of schools, said Loudoun will receive the most favorable interest rates on its outstanding debt and General Obligation bonds for financing public capital projects as a result of the increased rating.

"It will in the long term pay dividends when we borrow money for school projects, particularly if interest rates rise," he said.

He expressed optimism that Fitch and Standard and Poor's also will raise Loudoun's rating.

State Sen. William Mims (R-33) said the legislature provided significant funding for public education statewide last week, which benefited fast growing localities like Loudoun more than before.

School Board chairman John Andrews said he was glad the board deferred making $12 million more in budget cuts until lawmakers set the state budget. As soon as the Board of Supervisors passes its budget, which requires the school cuts, Andrews said he will call a School Board meeting to make them. "I do think that's doable, extremely doable, without cutting programs," he said. "We're going to receive substantially more money than we anticipated."

UNDER THE GOVERNOR'S proposed budget, Loudoun County was expected to receive fewer per student funding dollars than the current fiscal year. Now Loudoun will receive $100,323,236 in FY05 compared to $88,761,699 this fiscal year. It will receive $111,243,387 in FY06. The School Board, based on student population projections, had expected an increase in state aid, but ended up with an extra $6 million in each of the next two fiscal years.

The per student funding also will increase from $2,179 this fiscal year to $2,299 in FY05 and $2,348 in FY06. A half cent increase in the sales tax generated the additional revenues.

Del. Richard Black (R-32) attributed the increase in educational aid to growing pressure by area legislators on the distribution formula. He introduced bills to change education and transportation formulas to improve Northern Virginia's share, but they did not pass.

Mims said he is pleased the increase in school funding did not come from an increase in income taxes. "That would have hit Loudoun hard," he said.

Del. Joe May (R-33 ) applauded the educational aid, but pointed to "the greatest disappointment in the budget" as the failure to generate more money for transportation. "I tried hard, but there wasn't any moving it," he said.

What can Loudoun County do now? "If nothing else, we can address it in next year's budget review," he said. "That will probably be our best chance."

THE CHANCES are slim of passing a gas tax to increase revenue for transportation, he said. Other possibilities are public/private partnerships or hot lanes that have a private business pay for a road and then have tolls to pay it back. Another idea is to pay a toll to use additional lanes that would otherwise be restricted to traffic, he said. "It will provide some relief, but it's not the answer for everything."

Mims said the region's delegates and senators need to go back and push for additional transportation revenue. "We can't give up," he said. "The problem is only going to grow."

Scott York, chairman of the Board of Supervisors, said the board could consider a bond referendum and other mechanisms to finance transportation. "You either have taxpayers pay for it, or have a special district like Route 28 that pays taxes to do the improvements on Route 28," he said.

Black cited another shortcoming of the General Assembly — the failure to dismantle the car tax. Lawmakers capped the annual reimbursements to counties for the car tax. "Loudoun County will pay more than any other county in the state," he said. "We need to go back and totally eliminate the car tax."

He said it is totally unacceptable to renege on a promise to voters to abolish the car tax.

Black also criticized the tax package's effect on senior citizens. It eliminates the senior tax deduction for anyone who turns 62 this year. The formula softens the blow when a senior citizen turns 65. "That is going to be very hard on seniors, especially in Northern Virginia," he said. "It's very hard to live on a fixed income here because of the high cost of living here."

He criticized the General Assembly for increasing taxes and spending, instead of reforming the tax package.

MIMS APPLAUDED the increase in the cigarette tax. "Virginia had the lowest cigarette tax in the nation and it was certainly time to increase the levy," he said.

York welcomed the bond rating. "This will save taxpayers money," he said.

Bruce Tulloch, the board's vice-chairman, said the bond rating agencies were impressed with the board's ability to manage outstanding debt.

Moody's cited key factors contributing to the new rating:

* Diverse tax base with a strong housing market and considerable commercial activity.

* Leading county nationwide for job growth in the one-year period ending June 2003, with a 5.2 percent employment increase.

* More than 300 new businesses were established during the first half of 2003.

* Unemployment rate remained low at 2.3 percent as of January 2004.

* High level of wealth, with a median family income that is 63 percent above the state average.

* A manageable debt burden.

County Administrator Kirby Bowers said the rating shows Loudoun has demonstrated solid financial operations over an extended period of time. "And they were impressed by current efforts to manage our finances and debt loads," he said.