With real estate assessments continuing to fall and the school system continuing to expand, the current real estate tax rate would leave a $251 million shortfall in Loudoun’s budget for the 2009 fiscal year, according to the county’s budget office. The gap would be close to one-fifth the size of this year’s entire $1.4 million budget.
Property taxes currently account for 73 percent of the county’s overall revenue, said budget officer Ari Sky. Meanwhile, schools were budgeted for about 65 percent of this year’s total expenses and the superintendent’s proposed budget for the next fiscal year is considerably larger.
"This is a very tentative number," said Sky. "It doesn’t represent the budget that will be presented in February." He said the number was reached based on the current real estate tax rate and the proposed school budget, which are likely to change. In order to cover the shortfall on its own, the real estate tax rate would have to be raised from 96 cents to about $1.24 per $100 of assessed value. The best news to come out of the report was that assessors are projecting that the drop in housing prices will slow next year.
"In Virginia, real estate tax is the primary form of revenue," said Sky, adding that there is little the county can do to alter "the structure we’ve been blessed with by the state." He said cutting the car tax, which was collected by local jurisdictions, had increased reliance on real estate taxes.
BROAD RUN Supervisor Lori Waters (R) said the county would have to make some changes in its spending. "I don’t think raising the real estate tax to $1.24 is in the best interest of the county or the taxpayers," she said. She noted that the budget gap also was based on the county’s projected capital improvements plan for the coming fiscal year. "I have, for four years, said we need to cut back on the cost of these facilities," said Waters, especially citing school construction.
She said the school system had proposed costs of up to $139 million for the construction of a high school, while Stone Bridge High School had been built for $40 million. "Obviously, construction costs have gone up, but not by $100 million." Waters said the county had managed to reduce the schools’ budget by 10 percent this year and the superintendent’s proposed budget would bring it back to its previous size, a move she called "fiscally irresponsible."
In November, Schools Superintendent Edgar Hatrick presented a proposed fiscal year 2009 budget of $801.4 million, representing a $110.9 million increase over FY '08. Earlier that month, Hatrick presented a proposed fiscal year 2009-2014 Capital Improvement Program totaling $1.3 million.
"WE’RE GOING to ask residents to recognize that problems that took years to create are going to take some time to solve," said incoming Dulles Supervisor Stevens Miller (D), adding that some real estate tax increase was likely. However, he said he was optimistic that more taxable commerce was moving into Loudoun, taking some of the future tax burden off of homeowners.
In the meantime, Sevens said, the county would also have to look for areas to cut spending. He said it was too early to determine what to cut but added that there was "some room for negotiation" in the school budget. "And I’m always intrigued by the possibility of consolidating services."
A draft budget will be presented in February and the final budget will be adopted in early April.