State budget woes being felt locally

By Jimmy LaRoue

Published: November 11, 2008

The news is only going to get more grim from the state in December, when Gov. Tim Kaine is expected to outline a third round of budget cuts in the wake of a $2.5 billion shortfall in the current, two-year budget.

Around Virginia and throughout the region, localities have been making, or planning to make, cuts of their own in the wake of state cuts and local revenue shortages while trying to maintain sensitivity to the current, and volatile, economic climate.

In Waynesboro, the City Council enacted a 45-day hiring freeze Monday, and last month slashed more than $500,000 off its current fiscal year budget.

Pat Nicosia, Waynesboro budget director, said during a Finance Committee meeting Monday that the city is closely monitoring its expenditures.

“We don’t exceed ’em because we’re not authorized to do it,” Nicosia said.

Anne Showman, finance director, said the city is “in good shape” financially. It is taking in an extra $514,000 in revenue locally, while seeing flat state revenues and a slight, $108,000 increase in federal money coming to Waynesboro, she said.

Nicosia, Showman and Waynesboro City Manager Mike Hamp say they are acutely aware that the city has to hold the line on spending, and say they are being conservative in their projections.

“I can tell you we have been quietly preparing for the situation that we may have misjudged,” Hamp said.

On Thursday, the Staunton City Council will consider a proposal from city staff to make $1.3 million in cuts due to state revenue cuts and declining local money.

According to a draft report, Staunton is expected to lose more than $1 million from declining real estate and local tax revenue alone. The report proposes $524,093 in salary and benefit reductions, $486,570 in operational savings and $292,830 in capital expense cuts.

Staunton has also drafted a resolution, which in part calls for the state to restore funding cuts to the city. Kaine, in his next budget slash, is expected to cut k-12 education and mental health money.

The state is scheduled to give $64.3 million to Augusta County public schools, $17.4 million for Waynesboro and $18.3 million to Staunton in the current fiscal year.

The current state budget calls for $6.4 billion in direct aid to public schools this fiscal year, up from $5.9 billion last year.

Superintendents in Augusta County and Waynesboro have said they are readying themselves for the state cuts, though the impact may be mitigated in Waynesboro with an expected increase in local sales tax revenue, which the city shares in part with the school system. This year, Waynesboro schools received just $156,000 versus the $709,000 it received from the city in the 2007-08 school year.

While Charlottesville’s city budget has increased by 25 percent in the past four years, officials there are looking at a $1.8 million deficit by the end of current fiscal year. City Manager Gary O’Connell has asked all departments to submit “flat” budgets, as well as ones with 10 percent cuts.

Several factors could change the outlook in Charlottesville, however – a possible surplus from the fiscal 2008 budget, uncertain effects of state budget shortfalls and plans to cut future city programs that could leave it more money than expected.

County supervisors in Albemarle had already projected a $4.1 million shortfall, but that has risen to $4.9 million with a weakening housing market along with slow tax collections.

Albemarle County Executive Robert Tucker has stopped hiring and is not filling open positions. The county school system is also considering a freeze on teacher pay in the next fiscal year. 

Augusta County, meanwhile, has delayed reassessments amid conflicting reports on real estate values. While the company performing the reassessment – Blue Ridge Mass Appraisal Co. – estimates real estate values would rise by 33 percent, a county realtor disputed that and says that prices have increased there by just under 12 percent in the past four years.

Augusta County Supervisor Tracy Pyles has said current economic times would make it difficult for residents to pay the taxes on an increased assessment.

During a recent Virginia Municipal League conference, Waynesboro Councilwoman Lorie Smith said the city is faring better, comparatively, than other areas in the state.

“Relatively speaking with the other localities … it seems that they’re in a little worse shape than we are,” Smith said.

Smith said she is “cautiously optimistic” that the city can weather December’s state cuts expected to also impact education and mental health – issues previously untouched.

“Those state cuts tend to roll downstream to the localities, and if it starts to impact service levels, we’re going to be in a position where we’re going to have to make some tough decisions,” Smith said.